The 2019 BIA Outlook Dinner

Industry experts came together, sharing insight to build towards success

By Julia Edinger

The annual Building Industry Association (BIA) outlook dinner for Orange County took place in Irvine, Calif. on January 28. Industry leaders from all over Southern California came together to network with professionals, share their expertise, and analyze the economic forecast provided by John Burns, CEO of John Burns Real Estate Consulting, LLC.

Builder.Media was proud to be the presenting sponsor for an event that brings homebuilding professionals together. There have been concerns in recent months regarding whether the housing market is cooling, and builders are implementing cautious strategies to combat this cooling. However, John Burns’ economic forecast highlighted the many areas of growth, strategies for success, and how demographics can play a more significant role than builders may expect.

Doug Bauer, CEO of Tri Pointe Group, opened the program with a discussion of the market and what is to come, emphasizing the importance of new faces in the industry. According to Bauer, the industry needs more young people, recently graduating from high school or college, to enter the industry early so that they can gain the necessary experience to succeed.

John Burns began with an analysis of buyer demographics, a crucial element in strategic marketing. Young buyers and retirees are making up a significant portion of today’s market: specifically, couples and families. The demographics currently seeing the most growth, according to John Burns Real Estate Consulting Consumer Insights, are young couples without kids, retired active adult couples, and young families with young children.

Geography will play a significant role in influencing the nation’s housing cycle this year. While some markets, like Chicago, are still recovering, other markets are growing towards exuberance, including Charlotte, Orlando, and Phoenix. In exuberant markets, prices surge; Austin, Texas is a great example of one such market. Unfortunately, if the market cannot maintain affordable options for consumers, sales will decline, inevitably pressuring prices back downward. It is a cyclical process, not a cause for panic. However, there are methods builders can take to smooth the natural transitions within the cycle.

Creative building strategies will allow for more affordable options, creating opportunities for home sales despite rising mortgage rates. The overall trend in homes selling well in Orange County is that builders are using smaller spaces more effectively. High-density homes, with open spaces or creative layouts to make them feel more spacious, are likely to lead in the market this year.

Burns and his team, with consideration of the views of survey respondents, predict 1.2 percent in employment growth, moderate growth in mortgage rates, and a moderate decrease in home price appreciation.

There are several investment strategies homebuilding companies should implement for success. First, companies’ risk profiles should be carefully defined. A plan should be in place for falling prices and slowing home sales. Land acquisition will play a role, and builders should be prepared for less availability; it is important to monitor public companies’ stock prices.

Burns also provided attendees with strategies for success in sales. The first strategy was, unsurprisingly, shifting towards lower prices in all aspects of the building process. This includes using more distant locations and smaller homes on smaller lots. Burns also emphasized “the value of new,” an important sales strategy that highlights things such as lower utility bills, better Wi-Fi, and lower maintenance expenses to potential buyers. It is also essential for builders to improve the online presence of their company; positive reviews and a thoughtful website and social media approach can help give builders an edge over the resale market.

With these strategies for success in mind and in action, builders can feel confident facing potential economic headwinds. Like any storm, careful planning is the strategy to weathering it. Some builders are already innovating through creative designs and affordable developments. Through events like BIA’s Outlook 2019, builders can come together to learn and grow. When the industry is strong, builders are strongest.

Julia Edinger is an Editorial Assistant for Builder.Media. She can be reached at julia@penpubinc.com

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