A Study Survey on Home Building Industry
This paper will briefly explore how recent economic indicators such as record low interest rates for mortgages and housing starts should motivate house builders to strategize for continued economic growth.At this time while the housing bubble has not burst, it is important for such companies to focus on strategy in order to remain competitive when the bubble does burst.
This type of boom in originations has spawned tremendous economic growth with regards to employment rates, re-urbanization, new home building, consumer spending and confidence and made hundreds of billions of dollars for the players involved.The housing boom kept this country afloat during the darkest moments after September 11, 2001 when other industries like travel, hospitality, entertainment, energy and telecommunications seemed uncertain.
One can argue that such a relationship is cyclical; what comes around goes around in the manner of economic trends such as recession and depression but this is not the case with this correlation. People will always need housing. Below are strategies housing providers can implement to continue stimulating growth.
Bennett Hecht writes that economic strategies for housing begins on the local level. He writes, “Housing development is a site-specific, self-sufficiency strategy designed to help developers create jobs and other income-generating opportunities for residents of their properties” (p. 1).
This economic development strategy is founded on four objectives:
(1)Decrease Cash Outflows from Housing Developments. Whenever possible, developers should purchase goods and services from sources within their housing developments, instead of “importing” them from other communities. This promotes local growth and activity.
(2)Better Use of Space. Housing developers should use available space to sponsor the delivery of much needed services or facilities, such as child care, GED classes, or a convenience store.
(3)Increase Cash Inflows. Nonprofit developers should also use available space to increase income to the property and residents by leasing space to paying commercial tenants, by entering into profit-sharing ventures with commercial tenants, or by providing services and products to outsiders.
(4)Build Contracting Capacity. The ability to increase cash inflows is directly related to the ability of businesses to compete for work outside of the housing developments. By controlling the awarding of contracts, the developer can “incubate businesses” by awarding work to residents over a period of time until they can develop the work and contract management experience to, among other things, secure bonding necessary to compete for larger contracts.
The beauty of these objectives is that they can be implemented at both the urban and suburban levels. In this respect all parties benefit from the strategy during a time when many housing companies are not planning for the future but riding out the wave of present economic growth.