Housing has been dominating the news lately, and not in a good way. Shrill headlines in newspapers, magazines, and on Web sites shout that the bubble has burst, prices are crashing, demand has dried up, and there is no place to hide from financial ruin. Don’t even bother to crawl under the bed covers, because the bed is in your now-worthless house.
I don’t know about you, but I’m a little tired of the hysteria. Yes, housing has gotten ahead of itself in terms of price and supply. It will take some time for incomes and house prices to establish a healthier balance in this country. In the meantime, there will be more houses in inventory than we’ve become used to during the last few years. That should cause prices to moderate by as much as 10 percent in once white-hot markets, according to some economists. But if we were talking about a 10 percent drop in stock prices, we’d call it a correction, not a crash. Besides, once prices moderate, demand should start to pick up again.
This is not to say that a correction won’t be painful for some people. I know it will be, and I also know it will pass. As someone who has been associated with the building business for more years than I care to admit, I view this current cooling as an inevitable part of the industry’s natural business cycle. You know—what goes up must come down. And if it doesn’t come down, it won’t go up again.
The slowdown in the broader housing market could even yield some positives for many of you because custom builders enjoy greater insulation from affordability issues than do production and spec builders. And two problems that have plagued you—a scarcity of decent building sites and tight labor and trade conditions—should ease, at least for a while, as bigger builders pull back. Materials prices and availability could ease as well.
So step away from the headlines and look at this period in the cycle as an opportunity to sharpen your business and solidify its position in your market area:
