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News for Product Manufacturers from Hanley Wood CEO Frank Anton
Looking for Help? Look to Detroit
People have drawn comparisons between the auto and housing industries for a long time, but never before have the comparisons between these two mainstay industries been so similar. Consider the following:
- In '09 auto production is expected to be off by 50 percent from a peak of 18 million units; ditto—and then some—for the housing industry.
- During the good times, auto industry profits to a large degree depended on sales of gas-guzzling SUVs and trucks; RIP McMansions.
- The auto industry's dealer network looks hopelessly bloated and inefficient; so does the housing industry's distribution system.
- The auto industry has been, and still is, cluttered with too many weak brands (remember Plymouth, Oldsmobile, and be prepared to add Mercury to that list) and too many models (think Pontiac Aztek); substantial consolidation really hasn't occurred among either building product manufacturers or builders, and some of the big builders until very recently were building as many as 5,000 different models (so much for economies of scale).
- New car prices are too high, and credit is too tight; new house prices are too high, and credit is too tight.
There are probably other striking similarities, but there are some important differences between the two industries as well. For example, GM and Chrysler are talking merger. And GM is essentially betting the future of the company on the development of the battery-powered Volt. In other words, the auto industry is thinking about reinventing itself, maybe after the fact of failure but maybe better late than never. The housing industry isn't.
It should be, especially if, as some are suggesting, the collapse of housing values and the horror stories about foreclosures cause many young Americans to have second thoughts about equating the American Dream with homeownership. In other words, will my 20-something daughters feel out of it if they don't own a home at 30 (as I did), or will they think they're doing the smart thing?
GM will have the Volt, a bet on the future. Housing needs a jolt, a wake-up call of sorts from a complacency that suggests everything will return to normal when prices stabilize and mortgage credit loosens up. It's time now to begin addressing fundamental structural problems that plague the industry and to begin developing a new generation of housing products that will motivate reluctant buyers-to-be. That's a rescue plan that doesn't need Washington.
Send e-mail to Frank Anton |
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News and Trends from Hanley Wood Magazines
Focus on the Housing Crisis
Keeping on top of the news regarding the housing crisis is key to business strategy. Hanley Wood's new HousingCrisis.com helps you do just that, with news, data, analysis, and conversation about your smartest options. (HousingCrisis.com)
The 2008 Builder's Choice Awards
Collectively, these top projects offer proof that design done right becomes a
strategic point of leverage, not a frivolous pursuit reserved for boom times. (BUILDER, October 2008)
2008 Remodeling Design Awards
Our team of judges pored over 340 entries to select 21 winners that represent the highest standards of design and
excellence. (REMODELING, October 2008)
Understanding the Gen Y Phenomenon
The apartment industry has long anticipated the arrival of the image-conscious,
tech-savvy Generation Y. But as this coveted demographic nears prime renter age,
property owners are discovering a slew of shackles burdening the age group. (MULTIFAMILY EXECUTIVE, October 2008)
The Crop Report: A Preview of New Tools
The Fall tool harvest will be big this year, and TOOLS OF THE TRADE has a sneak
peak to share with its readers. (TOOLS OF THE TRADE, September/October 2008)
Green Building's Five Deadly Sins
Here's a go-to guide for builders on avoiding potential red flags—and costly litigation—as they take green building to a higher volume. (BIG BUILDER, October 2008)
Great Finds for Custom Homes
Custom builders share their latest product finds. (CUSTOM HOME, September/October 2008)
Tapping Into Home Performance
Remodelers gear up to mine one of America’s biggest potential energy resources: existing houses. (REMODELING, October 2008) |
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Top Developments Affecting the Nation's Biggest Public Builders
New Home Sales Rise 2.7% in September
The Commerce Department reported a 2.7% rise in sales of new single-family homes in September to a seasonally adjusted annual rate of 464,000, still 33.1% below the same month last year.
M.D.C. Readies Switch to Offense
Following its 3Q 2008 earnings call, the company seemed less the marathoner that
management had characterized it as and more of a sprinter in a crouched position
waiting for the starting gun to go off.
Rezoning Land? Cities Say OK, Economy Says No
With the residential housing market in a dismal state, many developers are considering converting their lots or selling them for some other use.
Consumers Begin to Buy Sustainability Argument
Energy Pulse survey: More than 80 percent say they would choose one home over another based on energy efficiency.
BFS' 3Q Net Shrinks 30%; Loss Deepens From Year Earlier
Builders FirstSource, the Dallas-based pro dealer, reported third-quarter 2008 net sales fell 30.3% to $288.3 million from $413.9 million in July through September 2007.
Confidence in Apartment Sales, Credit, Even Occupancies Declines, NMHC Reports
Apartment sales are abysmal, according to the latest quarterly survey on
apartment market conditions, released this week by the Washington, D.C.-based
National Multi Housing Council.
Home Prices Slide in August
Pacific states remain hard hit by housing downturn, with home prices in that region plummeting 19.4 percent year-over-year.
Stock To Close 86 Facilities, Cut 3,000 Jobs
America's No. 2 dealer will exit 16 markets in six states. |
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Housing Statistics and Analysis from Hanley Wood Market Intelligence
- Housing Still a Drag: While the Treasury Department and Federal Reserve have attempted to swiftly address problems affecting banks and credit markets, they have yet to have any significant impact on housing. Increasing mortgage defaults and falling home prices continue to be a drag on the economy, and it will be increasingly difficult to right the ship with unemployment rising and tighter credit standards. Housing starts in September fell to their lowest levels since 1991 while building permit issuances dropped to a 27-year low last month. Correction on the supply-side is necessary but if demand doesn’t pick up, further pullbacks could possibly be needed before housing stabilizes.
- The Economy: Falling crude prices has helped ease inflation concerns over the past two months. The consumer price index (CPI) in September was roughly flat compared to the previous month on a seasonally-adjusted basis, which was helped by declining energy and transportation prices. The core-CPI, which excludes often volatile food and energy prices, increased 0.1% from August. On an unadjusted basis, headline CPI increased 4.9% from its year ago levels, while core CPI increased 2.5% year-over-year in September. This is the lowest year-over-year increase in consumer prices since May. With crude prices continuing to fall, inflation concerns are likely to ease next month as well.
More from Hanley Wood Market Intelligence |
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