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What I learned about the future of housing

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Data & Research

What I learned about the future of housing


September 20, 2011

You know that phenomenon where you hear a reasonable sounding, logical guy armed with facts that presents an convincing analysis of a problem and his solution and you think, “You know, he’s right” … and then you hear another logical guy armed with facts that presents a totally contrary analysis of the identical problem and a completely different solution and you think, “Whoa, wait a minute … HE is right … I think … maybe.” So now you don’t know who to believe and then it occurs to you that had you heard just ONE of these two guys, you’d be in his camp, probably quoting him to your friends, not knowing that another totally logical and completely opposite approach is even out there. There should be a handy name for this, and if you know of one, please advise.

I had that experience 5 or 6 times today and as a result my mind is spinning. I am at a conference with a lot of really smart people with great pedigrees – economists and such. I have listened all day to their explanations of what happened to the economy, where it is going now and what has to be done to fix it – and more specifically, for the housing industry. So I can tell you this for sure, based on what I gleaned from the experts:

  • The government should stay involved in the mortgage business – or not.
  • Fannie Mae / Freddie Mac should be dissolved – or not.
  • Interest deduction for mortgages will go away – or not.
  • 2012 will see improvement in housing 2013 will be very strong and 2014 will be huge – or not
  • There is no more than a 35% chance of a rebound recession – unless the chance of that is higher.

There you go. You now have the answers and you did not have to buy an airline ticket, pay for a very expensive hotel room and a substantial conference fee. I am not being critical of these analysts. In fact, I am glad I am here and as I sort through all the information, I know I am picking up a lot of valuable insight. I am simply illustrating how incredible complicated all of this is and how many variables there are.

There are so many ways to line them up and weight them, so many assumptions that have to be made, such as what happens in Greece. Who the hell knows what’s going to happen in Greece?

So what do we do in the meantime? I cannot predict sales or markets. But I do know that there is not a builder in America who cannot reduce cost through concerted Lean strategies and tactics, and do it without collateral damage to suppliers, trades or customers. Get your costs down and things turn up, you make a lot more money. If things turn down even further, then you just may survive. 

      

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