The Housing Chronicles Blog: Patrick S. Duffy
Showing posts with label Patrick S. Duffy. Show all posts
Showing posts with label Patrick S. Duffy. Show all posts

Monday, September 19, 2011

Lessons from Apple's Steve Jobs

Like many others of my generation, I grew up with Apple products from the Macintosh to the iPad. When I bought my last car, I made sure it offered a direct connection from an iPhone or iPod to the stereo system, and I regularly give iTunes gift cards to family members under 25. When my parents got sick of the constant viruses and software updates to run their standard-issue PC, even when approaching age 70 they decided on an all-Apple format for their home office.

In other words, this is a company which has become so pervasive that it’s cut across almost all the lines which often separate consumers – gender, age, ethnicity, religion, language and, to an extent, income – while in the process managing to shake up several legacy industries and creating one of the world’s most valuable companies. Now that Apple CEO Steve Jobs is shifting gears to become the company’s non-executive chairman, I started thinking about rare it is to have a business visionary like Jobs and what the building industry might learn from his success.

1. Jobs is a perfectionist, once reportedly forcing his team to pull an all-nighter to replace headphone jacks on the first iPod because they didn’t “click” enough to confirm a connection. I remember being in a meeting several years ago with a sales duo from a previous employer, and when questioned about some bad data in a database, instead of acknowledging the issue, one of them said, “Well, when you build the perfect house, we’ll provide the perfect database.” Can you imagine Jobs answering that way?

2. Jobs was ruthless with his own products, killing off promising technologies (such as a Palm Pilot clone) when there were better designs down the road (such as the iPhone). So, although there are certainly economies of scale when building the same floor plans and elevations in different markets, the downside of that myopia may mean tired, boring designs at a time when the foreclosure pipeline is full of them at a significantly cheaper price.

3. Jobs tapped the best experts in their fields, such as architect I.M. Pei to design the NeXT logo or naming retailing icon Mickey Drexler to the board prior to launching the hugely successful chain of Apple retail stores. In other words, casting your net beyond your tried-and-true Rolodex, the golf course or even the next HBA/BIA meeting may boost your business in ways you hadn’t thought possible before. Step away from what I call “the big bowl of beige!”

4. Jobs never stopped studying, whether it was admiring the bodywork of European cars when designing a computer case or obsessing over the collateral used by Sony to decide on the right fonts, design and paper weight for his own brochures. Although the building industry is somewhat unique in that you can actively walk through your competitor’s products, there are also lessons to be learned from the fields of retail, fashion and entertainment.

5. Less really is more. The iPod wasn’t the first music player on the market, but it was clearly the simplest, relying on a single scroll wheel instead of a hodgepodge of confusing buttons. Today’s well-designed home doesn’t need to be huge or busy or grand. It just needs to prove that it can meet the needs of a busy resident with thoughtful touches.

6. Despite his enfant terrible reputation, Jobs used the carrot a lot more than the stick, and it was due to his personal enthusiasm that the Mac design team worked 90-hour weeks for three years to make it ‘insanely great.’

While some may disagree with his methods, it’s almost impossible to argue with the results.

Thursday, September 15, 2011

BuilderBytes' MetroIntelligence Economic Update for 9/15/2011

Please click here to see the edition of BuilderBytes for 9/15/2011 on the Web. In this issue of the MetroIntelligence Economic Update, I cover why California Economist Christopher Thornberg doesn't see a double-dip recession, the rise of mortgage applications, prices for U.S. imports and exports, the producer price index, retail sales and business sales & inventory levels.

Want to subscribe to BuilderBytes so you don't miss future editions! Send a request to info@builderbytes.com.

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Monday, September 12, 2011

BuilderBytes for 9/12/2011

In a new feature for BuilderBytes, the twice-weekly newsletter emailed to over 100,000 subscribers from Peninsula Publishing, I am now going to be covering recent economic statistics released through various sources since the last edition.

This latest feature is an extension of my current relationship as a regular columnist for the publisher's flagship title, Builder & Developer magazine. I had been wanting to create a regular newsletter that was different from the others which currently fill your inbox(es) for some time, and since BuilderBytes was in the middle of being re-designed, this was the perfect opportunity to begin my new contribution.

Entitled the "MetroIntelligence Economic Update," the purpose of the new section is to provide one-stop shopping for updates on the U.S. economy in terms of unemployment, housing, auto sales, consumer confidence, mortgage applications, etc. so you can react in real time for your own businesses. Each issue will include brief summaries of the update along with a link to the original source.

Please click here to see the edition for 9/12/2011 on the Web. In this issue, I cover economist Mark Zandi's review of the Obama jobs plan, unemployment claims, the U.S. trade deficit, consumer credit and wholesale inventories.

Want to subscribe to BuilderBytes so you don't miss future editions! Send a request to info@builderbytes.com.

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Monday, June 20, 2011

The Challenges of Tracking Shadow Inventory

If there is one mysterious unknown hiding in the corner of the building industry, it would definitely be shadow inventory, or that glut of distressed homes held back by banks which could be dumped onto the market at any time. Nationally, these unsold units total as many as 1.8 million homes, which at current sales rates could add another 9.0 months to unsold supply.


Add to that total known REO listings as well as homes bought by investors to either flip or rent out, and you have a fairly significant portion of competition to both homes for sale or rent that often remains hidden from traditional metrics.

For a home builder, this kind of inventory is usually impossible to compete with on price alone, as it typically sells for less than replacement cost, which is why builders are now competing based on better locations, greener construction methods and improving technology.

For an apartment builder or investor, deciding where to build or buy takes on even greater risk if a renter for a typical apartment can find a condominium, townhome or even a single-family home at a competitive price.

Fortunately, there are tools available today to track different markets and submarkets in order to decide where to allocate capital and other resources. Recently, we were asked by an apartment investor to track various regions of Southern California to not only review the health of the multi-family rental market, but to also track potential competition in the form of rental shadow supply. The results were quite interesting.

For example, in just Los Angeles County alone, over one-quarter of all home sales during the first quarter of 2011 were REO units previously owned by banks, which sold at discounts of 24% (single-family homes) to 27% (condominiums) versus the entire existing home market. For new home sales, however, although the difference in pricing according to Hanley Wood Market Intelligence was about the same for single-family homes, for attached homes it was over 52%!

Even for the one-fifth of non-owner-occupied homes bought by investors that weren’t necessarily foreclosures, the units they bought were a bit smaller than those purchased by owner-occupants, and thus could be flipped or rented out for a lower – and more competitive – price. Compared to owner-occupied homes, these potential rental units sold for a discount ranging from 20% (condominiums) to 25% (single-family homes).

So just what does this mean for builders of new homes or apartments? In the case of home builders, it means continued competition for buyers shopping on price alone, so demonstrating the value proposition of a new home is more important than ever.

For apartment builders and owners, today’s low interest rates means that potential tenants can often find a nicer and larger home for close to what they would otherwise be paying to live in a typical apartment. In some cases -- such as when putting 20% down and borrowing the rest at 4.5% or so for 30 years -- the monthly payment for both attached and detached homes plus taxes and HOA fees could still be up to 25% less than what a tenant would pay for that traditional apartment.

Fortunately for builders of both homes for sale or for rent, this current environment will not last forever. As prices eventually stabilize and rebound, buyers will likely tire of buying fixer-uppers with higher power bills in challenging locations. And, as mortgage interest rates rise and the better deals disappear, investors in individual homes will have a tougher time competing against the rental rates charged by owners of larger apartment projects.

For now, however, it remains a game of patience.