So, here’s some newly analyzed data from Livability that can tell you, in a sense, how to “follow the money,” as 40 million people moving each year give America its new geography.
As you see from Livability’s Matt Carmichael, five of the top 10 counties for population net gains are in Texas, with two in California, and one each in Arizona, Nevada, and Florida.
Let’s look, though, at where the money’s moving, at least according to the Internal Revenue Service data that Carmichael’s pored through. Here’s where, in addition to the towns with net gains in population, the reported incomes have gone up disproportionately, so while we’ll continue to see Texas well represented, Florida gets more play and Denver’s Douglas County crops up.
Tie this data to our own corporate sibling Metrostudy’s healthiest markets break-out, and you can pretty much see a proxy for developing permit demand trends.
Now here are a couple of points.
Home building and residential development stand entirely on a stool with three legs, each of which is a necessary finite resource: money, time, and land.
In each case, investment of a unit of either of the three means necessarily that that unit can not be used in any other way.
A dollar invested in residential construction stays there–unable to be used–until there’s a return on that dollar from a transaction. A unit of time spent in a project may not be spent elsewhere, and so forth.
So, too, with land. A lot invested in a residential construction project comes out of the pool of finite resources and can not be used in any other manner for a given period of time.
Now, imagine the impact, if you will, of operational excellence on each of these three resource investments.
What if, by working better or smarter than you are currently, you could make a 1% improvement on the dollar cost side? What if you could improve the time resource allocation by 1%? And what if you could improve the value-creation part of your lot by 1%, separate and aside from the other two areas of investment?
Not one, but two forces will enable 1% or 2% or even greater percentage improvements in the return on money, time, and lot investment.
One, is all about people, and specifically the way true collaboration between a supplier–who often has more information on what things really cost than a builder does–and a builder, who’s working with 25 to 30 types of suppliers on every unit, can lead to those improvements.
The other is data. Particularly, the ability to analyze it using more and more powerful microprocessing and cheaper and cheaper sensors, ultimately leading to smarter decisions, from the community planning process to the completion of each unit.
What if there are 1% improvements on the money, time, and lot value front that every home builder could map to his or her bottom line? That’s the kind of transformation you folks are working on, job site by job site, project by project, and it’s soon going to introduce a new era in home building.
Meanwhile, keep following the money.
