WHAT IS "NORMAL" IN THE HOMEBUILDING INDUSTRY?
By: William R. Cordle

I recently read an article on builderonline.com implying that the Homebuilding Industry is now in "Normal" mode. Without wishing to throw water on someone else's view, for most of the country there is little normality to be seen. You don't have to believe me, just ask the Homebuyers, Sellers, Builders, Developers and Realtors out in the trenches. While seasonal business cycles may still hold true, for the industry as a whole, there continues to be a tangible sense of insecurity in the air. In the single-family marketplace in particular, both homebuyers and Sellers remain tentative.

Homebuyers are asking themselves: "Has the market bottomed out… "Will the home I'm buying hold its value… "Can I buy it cheaper next month?" (Builders looking at lots are asking themselves the same sort of questions.)

Home Sellers are asking themselves: "How long can I hold my price?"… "Should I spend money on improvements to try and sell it sooner?"… "What can I do to sell this home quicker and for a better price?" (Developers are asking themselves similar questions about their land holdings as they watch deals they made a year ago evaporate as prices slide)

Builders, Realtors, Developers, Homebuyers and Home sellers are still for the most part skittish about where we are with regard to a return to "Normality". About the only thing I've seen that they all agree on is that today, in most parts of the country, IT DOESN'T FEEL NORMAL.

The truth is, until it feels normal, until people believe its normal, it isn't normal. That's the final measure. Current Public perception is a far more important factor than all the statistics sewn together.

What makes a deal good is that the players feel good about it…. They perceive it as being good, they believe its good. There's an old quote, (I believe it's attributed to Henry Ford), that goes something like this: "Whether a man believes he can or believes he can't, in either case he's right"

In the final analysis, it really is what we believe that makes the difference. If people begin to believe that this is normal, (in spite of recent experience) they will begin to behave in accord with those beliefs and it will be to a degree, self-fulfilling.

As long as the News Media continuously flogs the airwaves with negative news about the homebuilding industry, the present state will continue until the public becomes so bored with it that they begin to ignore it. They will essentially accept the present state and the bad news as "normal." The tendency for the public to become inured to bad news and the fact that the upcoming elections will become the "hot" story of the day, should do the trick and set the stage for recovery (back to normal) in 2009.

William R. Cordle is Director of Purchasing for a top 400 builder, with over 30 years experience in the industry in the South and Southeastern US. He has served as a Corporate Purchasing Analyst with a top 20 Builder, and Director of Purchasing with a regional multi-family Builder/Developer. He may be reached at wrcordle@gmail.com