We stand in the depths of a recession, caused by a housing bust and shady bank dealings that have been the downfall for an alarming number of builders and contractors. Slowly, however, the mood is turning less sullen, consumer confidence is gradually returning, and homeowners and builders alike are starting to look to the future as potential salvation peers over the horizon.

In the chaos and hysteria that followed the bubble-burst last fall, there was a good deal of panic and a lot of shoulda-woulda-coulda talk. Well there’s no preventing what has already happened. We can, however, begin to do something about, as well as make absolutely sure that we learn from past mistakes. The building industry has a proven cyclical nature; a nature that many builders failed to recognize during the lucrative boom that preceded the equally destructive fall.

In order to help builders avoid another crash, or at least find a way to weather the next drop (assuming an impending rise), Builder Online has compiled a list of lessons for builders to take away from the current recession. Designed to illustrate some rare recession successes and prepare for a smarter boom the next time around, the six lessons are summarized below:

1. Build Smarter. Think energy efficiency, renewable energy, and smaller, lower maintenance homes. These will be key attributes of the recession-era home for the eco-conscious consumer and a government likewise determined.
2. Limit Land Holdings. Some builders were buying up every site in sight during the boom, many of whom have been left holding their hats. On the next go round builders should be thinking twice about purchasing land before its true value is known.
3. Find New Cash Streams. Banks have folded their arms and zipped their books shut in the wake of mass failures. Therefore credit is rather hard to come by these days, so some builders have been searching outside the banking arena, even overseas, or signing deals to finish projects acquired by lenders via foreclosures.
4. Respond Quicker to Market Conditions. The general excuse for recession-weary builders is that they were caught completely by surprise when the housing bubble went bust. Some builders recognized the coming storm early and began downsizing. Others are reacting with inventive programs such as mortgage protection and new marketing schemes, or reenlisting the age old tactic of keeping in close contact with former clients.
5. Value Workers and Trades. Layoffs have been rampant, and those employees remain with builders have had to take on a wider number of tasks and learn new skills in the process. Hence the value of cross-training employees, as well as appreciating subcontractors and suppliers to a much higher extent.
6. Diversify. Some builders get stuck in the stigma of single-family, new home construction during a time when new homes aren’t being built. Those builders who have diversified into multi-family and commercial building, including remodeling, are generally doing better during these hard times.

For the complete article, including more detailed explanations for each of the above lessons, check out 6 Lessons for Builders from the Housing Bust.

Tags: advice, builders, building, cash stream, holdings, housing bust, land, market, ownership, recession, trade

This entry was posted on Tuesday, May 26th, 2009 at 9:24 am and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.