National Housing Market Outlook

4 Tips for Strategic Planning

John Burns photo

John Burns

November 4, 2010
Now that we have the mid-term elections behind us, it’s time to clear out the noise and focus on the real issues that will affect your future housing and land strategy. Here are 4 points for strategic perspective that should influence your business planning in 2011 and beyond:
  1. Keep an Eye on the Banks (for good and bad!): Home builders and developers, keep managing the business carefully and watch the banks for increased disposition of distressed homes (which drive price down) as well as distressed land (which provides the opportunity to make money). The selling from banks is increasing, albeit slowly, and is taking far longer than we would have imagined, but we still believe that there will be tremendous land-buying and bulk-REO opportunities in the future. 
  2. Do Your Homework: Those that have done the research are being rewarded because their newly-opened projects are targeted at today’s buyers and are outselling the competition. Also, some land buys have worked out well while others have already resulted in impairments.
  3. Think Long-Term: In the short-term, the likelihood of home price declines outweighs the likelihood of price appreciation. A solid recovery looks like it will be pushed to at least 2012.
    • That said, land doesn’t get too much cheaper than it is today. Consider that a land investment whose greatest downside risk is carrying time, or selling at a small loss to a farmer, can be a good investment for a number of reasons . . . and it probably doesn’t deserve a 20% IRR with conservative assumptions.
    • Demographics support solid long-term housing demand.
  4. Keep Your Eye on the Upside: Though a robust recovery seems unlikely, the seeds have been sown for a for-sale housing recovery. We currently have modest job growth, low construction levels, low home prices and a government-engineered 4.5%+/- mortgage rates and 3.5% down payments for first-time buyers.
The key to making smart decisions is to think strategically and make informed decisions. Successful strategies vary widely based on your 1) core competencies, 2) your geographies, and 3) your appetite for risk. Define all 3 of these, focus on them, get the facts, and make some great investment decisions!

Building Market Intelligence™

Every week, we deliver analysis to over 40,000 subscribers with our Building Market Intelligence™ newsletter. Subscribe to our weekly BMI newsletters to stay current on pressing topics in the housing industry.

About The Author

John Burns photo
John Burns
Chief Executive Officer
As CEO, John grows, leads, and supports a team of passionate, articulate, likable, and smart experts. Together, we solve today so our clients can navigate to tomorrow.

Contact Us

If you have any questions about our services or if you would like to speak to one of our experts about we can help your business, please contact Client Relations at clientservices@jbrec.com.

Products and Services Mentioned

green check icon

Research Membership

Our research services enable our clients to gauge housing market conditions and better align their business and strategic investments in the housing industry. We provide a thoughtful and unique holistic approach of both quantitative and qualitative analysis to help clients make informed housing investment decisions.
green check icon

Real Estate Consulting

Our experienced team of consultants helps clients make sound housing investment decisions. We thrive on their success and work with many clients over multiple years and numerous projects.
green check icon

New Home Trends Institute

The New Home Trends Institute pairs design inspiration with exclusive insights into the “why” behind consumers’ housing choices. Gain exclusive insight into housing preferences and pain points through our monthly survey insights reports, webinars, and proprietary surveys of builders, architects, designers, and other industry professionals.

Latest Insights

Unlocking the Potential of Generative AI and Large Language Models for Your Business
Dear Consultant: How do we get more inventory so that the housing market has more slack?
Busting Gen Z Myths—What the Housing Industry Needs to Know