Consulting Leader Dean Wehrli volunteered to host our new podcast. You never know what to expect from Dean.
On our first podcast, Dean talks with the guy with his name on the logo. Dean and John cover a range of topics.
Featured guest
John Burns, CEO, John Burns Research and Consulting
Today's Market
- Construction industry health. Probably no other industry is as undersupplied and behaving as disciplined as the new home construction industry is right now.
- Housing supply. If home builders could build and sell homes in good locations profitably for $200,000, they would be doing it, and we would be building far more homes.
- Mortgage industry health. While the “no doc, low FICO” days are gone, so are the days when you need a large down payment. Mortgage companies are getting more aggressive because they must to keep growing.
- The housing cycle. 15 of 33 markets have started to show signs of maturity with very high prices and, in a few cases, high supply. We have a positive 2018 outlook on all of them.
The Forecast
- The housing forecast. Few people publish a forecast, but everyone has a thesis in their head when they make investment decisions. They just don’t write it down anywhere except in their pro formas. While affordability is a problem in most places, the demand/supply imbalance looks to be leading to 6%+/- price appreciation this year and next. Economic growth matters most.
- The biggest uncertainty. The ramifications of our fiscal policy (John said monetary but meant fiscal. That is what happens in a live interview.) over the last 40+ years concerns John the most. What will this mean for the economy going forward?
Strategies
- Four winners today. 1) New rental homes, 2) new medium-density homes in the suburbs, 3) new, smaller entry-level homes with lower spec and more tech, and 4) new homes for retirees in search of their favorite amenity—their family.
- Today’s loser. Same old floor plans. Except in the lowest price points where price is the ultimate amenity, most consumers can see what is trending everywhere and expect a great new home with the latest everything in it.
- The new home tech premium. Technology in the home is improving how people live, especially if it comes with conveniences and a clean air solution. People who can afford it will pay up for their own health and convenience.
The Business
Running a housing research company in 2018 is full of challenges, which actually makes running the business far more fun:
- Revenue challenges. Clients expect us to provide more for the same price, just like when they get a new phone or a new car. We have invested heavily in new tools for great analysis and speed of execution. We have also pivoted to a few exciting new opportunities.
- Expense challenges. It was much easier to find great people (such as Dean!) six years ago. Since today is an employee’s market, we have to continue to do everything right to hire, train, and retain great people today, without lowering our standards.
In summary, we have:
- A very healthy market
- A favorable outlook
- Exciting new success strategies
- An ever-evolving and interesting business
Nice way to start a podcast!
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