Blog Post From Tim Costello: CEO, Builders Digital Experience

I was visiting Summit County, Colorado a few weeks ago. While it may not be Las Vegas or Riverside, CA, the market is in a slump none-the-less. It is plagued by the same components of housing malaise as the rest of the nation — too many homes for sale, foreclosures, short sales and just not enough well-heeled buyers to keep things going. Prices have declined dramatically and inventories remain relatively high.

Yet as I rounded the corner of yet another high-end community with For Sale signs on what seemed to be a quarter of the properties, a new home under construction came into plain view. It was so shocking; I had trouble comprehending what I was seeing, kind of like seeing an elephant in the middle of a highway. But there it was a bustling site of activity reminiscent of the pre bubble economy.

At first, I wondered if it was some builder’s final desperate folly. But then as I stared at it and studied the home, the genius of it all began to sink in. This was not just another house, this was a “new home”, highly differentiated and with features that are completely unavailable on the current market. This was not only the only home of its type in the neighborhood but one of only a few such homes in the entire county. This home was “green” from the ground up, with solar PV and hot water to boot. This builder was not building another house; he was building the first house of its kind.

And therein lies the genius of it all, if your market is saturated and demand is slack then change your offering to create your own “blue ocean” strategy, where you compete alone and harbor all demand. The building industry has a unique and compelling advantage to other industries, in that we do not build standard products. Of all the industries I have studied over the years, homebuilding has the most latitude to course correct and change its offering year to year and even month to month.

If the home building industry wants to regain its momentum without waiting for “absorption economics” to play out, then it had better change the game. Go back to the drawing board and build a product that does not compete with the current market. Borrow a card from the auto industry and create planned obsolescence to drive demand and create profound differentiation. The future of the housing market may depend on it and the country as well as consumers will certainly benefit from it.