The mid-term elections are over, but there are still several issues that will have a real impact on home builders. Here are four points for strategic perspective that John Burns Real Estate Consulting says will influence business planning in 2011 and beyond.
1. Keep an Eye on the Banks (for good and bad): Watch closely for increased disposition of distressed homes and distressed land. The former drives prices down, while the latter provides a good opportunity to make money. The selling from banks is increasing – slowly – but there should be ample opportunity for land-buying and bulk-REO.
2. Do Your Homework: It pays off. New projects that target today’s buyers are outselling the competition.
3. Think Long-Term: A solid recovery probably won’t happen until 2012 at the earliest. But land doesn’t get much cheaper than it is now, and demographics support a strong long-term housing demand.
4. Keep Your Eye on the Upside: A robust recovery seems unlikely, but the seeds have been sown for a for-sale housing recovery. Job growth is modest, construction levels and home prices are low, mortgage rates are hovering around 4.5% and first-time buyers only have a 3.5% down payment.
There is no one-size-fits-all successful strategy, and before diving into the market, Burns advises firms to define and analyze three key components: their core competencies, geographies and appetite for risk.
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