As a not-so-small homebuilder with a considerable stake in the matter, it’s a little weird to see housing so often headlined as a major economic indicator. It’s hard not to self-reference and feel personally involved, if not responsible. This long recession, which was caused by financial shenanigans in the housing sector, is still greatly measured and forecast on the basis of the erratic, distressed metrics coming out of our stumbling industry.
As the news of the past four or five months has bounced back and forth, so have I, making me variously the potential victim, victor, villain or beneficiary, whichever way the previous month’s housing report suggested. News about the economy is lockstep connected to housing news,which I knee jerk into a news forecast about my business, which affects my attitude for the day and plans for the future. Like I say, it’s weird. I know it’s not rational.
And so, I had a bad morning last week. I woke up feeling pretty good, grabbed a cup of coffee and got online to check the headlines. Immediately, I had a deep, sinking feeling. It’s not that I expect to find good news on the front page, but this one looked like the doomsday report for housing, for my business. Real bad. Yes, it was about me.
Here’s the headline and the first two paragraphs. You don’t need to read further into the article to get the point. In three short sentences, it would be hard to string together more negative modifiers and phrases. The highlights are mine.
U.S. New Home Sales Drop 33% in May
The new housing market has never been this bad, at least not since the government started tracking such things in 1963.
Outdoing even the pessimists’ expectations, sales of new homes declined by a record amount in May to a new low. The dismal data, released by the Census Bureau on Wednesday, followed a disappointing report on sales of existing homes earlier in the week and added to growing concerns about the strength of the economic recovery.
It sounded like the end of the recession and the beginning of depression. Emotional, economic; the whole deal. Woe unto us! Woe is me!
But wait. Let me wake up from that nightmare and unwind the rationale of the connections between the person, the business, the industry and the economy. Does any of it make sense?
First, as much as I often take my work pretty seriously, I do know that I am not my business. My life has more dimensions than my professional occupation. There are many people in my life (including associates, colleagues, clients and friends from my business connections) who are far more important than the achievements and challenges of our building company. I’m lucky enough to love my work, but at the end of the day it doesn’t define me and I don’t define it.
Good. That’s one easy disconnect. With one big counterclockwise turn of the screw, depression of the emotional kind can be avoided. No success at work doesn’t also mean no satisfaction, health or happiness.
Next, our business is not a mirror of–or a cog in–the homebuilding industry. Its ups and downs aren’t automatically ours. We alone are in charge of our fortune or failure. We are not in the thrall of trends, data and forecasts beyond those that we create and directly affect.
I’ve been in business over 35 years and have learned that the landscape we work within is constantly changing. Constant innovation and creative adaptation is the key to our survival and success, not leaping onto the bandwagon when the going is good or acceding to the collective retrenchment when times are difficult.
Things will rarely be as good or bad as they seem because both are tempered by our own vision of a company that ought to be just as sustainable as our buildings. Like our buildings, we need to be as strong in the wind and rain as we are in the calm sunshine. Like our buildings, we may be built in good weather, but it’s critical to be designed in consideration of the worst possibilities.
We are of course buffeted by what happens in our industry and with the economy, but our fate is not completely foreordained by the rank stupidity and overreaching that has caused so much trouble “out there” in the past few years. From our self-determined perspective, we’re certain our values and sense of mission and purpose can always help us create a destiny of our own.
So that’s the second big, healthy disconnect. It may be comforting to be a part of an extended industry, but industries have no brain or soul and are not usually a great thing to hitch one’s wagon to. If we see ourselves as neither victim nor beneficiary of the homebuilding industry’s gloomy or good situation, we are free to set our sights as we wish.
Finally, and most important, the homebuilding industry should not be seen as a bellwether of the economy. Among the good things that may come out of this recession, one of the best would be a realization that homebuilding’s metrics shouldn’t be seen as a singular driver or restraint for the economy at large. Its significance really ought to be knocked down enough notches so that its impact isn’t too significant to allow for ebbs in a natural cycle.
The opposite viewpoint is what got us into this mess. On the excuse that more new homes and more homeownership is the key to a robust economy, a Pandora’s Box called “No Constraints” was opened. Common sense, honesty, integrity and all good intentions were trampled by the stampede looking for action and opportunity, all for the sake of the supposed virtue associated with growing the economy.
The free-for-all arising out of the delusion that more homes is always a better thing not only created the sub-prime mortgage Kool-Aid, it also caused tens of thousands of inferior homes to be constructed. Homeowners over-committed for homes that were overpriced and under-built.
The truth is that the homebuilding industry has a limited capacity to build good quality homes. In truth, good homes can’t be built by uncaring, untrained labor. In truth, many of the industry participants who have disappeared in this recession leave it healthier for their absence. The obvious truth is that no industry is good for people or the economy if it over-extends its capabilities to the point of becoming not good at what it does.
At the height of the boom-building years, our industry tried to build almost two million homes a year. We have nowhere near the ability or the infrastructure to accomplish that without extreme compromise. Junk was built. We are on track now to build about one third that amount, depending on many factors over the next two quarters. That’s not very many, but from what I’m seeing the quality is good. Homeowners are being more sensible about what they want and builders are applying their best skills and most creative efficiency. Quality is up, cost is down.
Homes should be built to improve the quality of lives, not to stimulate the economy. By focusing on attributes to enhance living and building quality, the environment and the economy will have better long term benefits, but we have to stop using housing and our economic issues as if they exist for the same temporal considerations. Juicing the economy in the next quarter has nothing to do with homes that should be built to be a benefit to its inhabitants, to its community and to our society as a whole for many, many generations.
Now the whole thing is unwound. Let’s read the headline again:
U.S. New Home Sales Drop 33% in May
That’s not so bad. It’s not about me, not about my company, and it just might be suggesting that an industry is being decoupled from the economy, allowing greater focus on our mission to build affordable homes that really contribute to our becoming a better civilization.