Opportunities and Risks for Today’s Builders

February 8, 2022
Premier Homes Serenity Development

Today’s market continues to move at a breakneck pace. Demand is up, inventory is limited, and buyers are looking for a change. All this spells opportunity for builders. But on the flip side of opportunity is always some risk: risk of not being able to deliver, risk of squeezed profits, and risk of missing out on upcoming opportunities.

Per the U.S. Census Bureau’s Monthly New Residential Construction report, 1.2 million new residential units were completed in January 2022 alone. The time is right to charge ahead.

Here are some of today’s top opportunities for builders—as well as a few timely risks to avoid.

Opportunity: Skyrocketing demand

The biggest opportunity for builders today is that demand remains high. Buyers are looking for a change and ready to invest. Though demand from buyers is high, competition among builders is high, too.
Builders have lots on their plates as they juggle delivery demands currently impacted by supply chain disruptions and labor shortages. Consulting with real estate sales and marketing experts can help builders stay ahead of the curve by keeping an eye on the elements that affect delivery, compromise buyer satisfaction, and can negatively impact price points.

Opportunity: Affordable housing

As demand rises, so do prices, and middle-market homebuyers are feeling the squeeze. Builders can serve first-time and middle-market buyers by increasing density. Two- and three-story homes are becoming more common. Adjusting the layout to homes and communities can increase buildable space without compromising the feeling the community is trying to achieve. Building a few additional units in the same footprint improves profitability. When it comes to affordable housing, minor changes can have a major impact down the line.

Opportunity: Luxury

On the other end of the spectrum, the demand for luxury is also rising. We encourage builders to diversify their portfolios even further to include more luxury construction. Consulting with real estate sales and marketing experts can help builders who are newly entering the luxury market identify the market’s most in-demand amenities and those which command a higher price point.

Risk: Releasing product too soon

Every builder has started to feel the impact of supply chain disruptions and worker shortages on their ability to deliver product on time. Delays impact buyers and builders must keep this in mind when developing their overall real estate sales and marketing strategy. Releasing product too soon can incur additional costs (ex. rising lumber prices between contract signing and close). On the other hand, months-long delays increase buyer anxiety and frustration. Working hand in hand with real estate sales teams from the start can establish a more accurate timeline, help set buyer expectations, and achieve a better performance target.

Risk: Lot availability

Due to the construction boom, builders are facing a shortage of finished lots. Combined with the demand for housing, this can create complications for acquiring land for upcoming projects. California has always been tight, but we’re seeing this trend stretch into less competitive markets like Reno. Now, more than ever, builders must be looking a few years ahead and remain vigilant about securing lots today for future builds.

Partner with real estate sales and marketing professionals

Sales teams have “boots on the ground” experience with buyers, so they know what buyers are looking for and what are some of their biggest challenges. Working with experienced real estate sales and marketing consultants brings in a fresh set of eyes and frees up builders to focus on completing projects, instead of managing buyer expectations. This expertise keeps buyers in contract for shorter periods and increases builder efficiency. Here are some of the ways experienced real estate sales consultants provide an advantage for builders:

  • Create detailed sales strategies to balance the demand and sales process
  • Land analysis and development studies to determine which location, density, and layout will yield the highest profit
  • Plan review and recommendations (trending design features, popular layouts, in-demand amenities, community layout)
  • Tailored marketing communications to appeal to luxury or middle-market buyers
  • Unbiased perspective and marketing knowledge

2022 is off to a strong start. Builders have the chance to maintain momentum throughout the year if they protect themselves from delivery pitfalls and are ready to take advantage of all of today’s emerging opportunities.

Strengthen your strategies to sell more homes. Our experienced real estate sales and marketing teams are ready to help.

Related Insights

Expert insights straight to your inbox.

Be the first to see what our experts are saying. Sign up for The Advantage Group newsletter today.