Monday, July 27, 2009

Will the new home sale surge last?

Today's news about a stronger-than-expected climb in national new home sales shouldn't be a surprise. There was plenty of inventory to be sold at affordable prices and plenty of federal and local stimulus money (in the form of tax credits).

Don't let the good news give you comfort.

There are plenty of indicators that suggest we still have a long way to go before the homebuilding industry returns to a sense of normal. For starters, the tax incentives will be going away.

Recent reports indicate another round of foreclosures - caused by more people losing their jobs and continued difficulty with loan modifications - likely will keep prices depressed and open up more opportunities for purchases of existing homes far into 2010.

A recent report on SoCal Connected, a great public television news show on KCET, offered some interesting confirmation of this.

Also, a recent column in the WSJ points out how long it takes for home prices to climb once they reach bottom. At this stage, many builders simply can't start new construction on approved lots because they would lose money on every home they sell if offered at today's market prices.

So, the struggles are not over, particularly in places like California, Arizona and other states with high foreclosure rates and other rough local economic indicators.

As this column is devoted to public relations, the next question is: How will this continuation of a negative cycle impact colleagues connected to the homebuilding industry? In recent weeks, I've seen two great, smart colleagues either lose their jobs or have their jobs downsized to a contractor status. There were others before this. I'm sure there are more. I just haven't heard about it, yet.

The industry knows recovery is a ways away, so they continue to downsize. And, when this happens, the public relations and public affairs departments take big hits.

It is very likely some of the smartest communications professionals will be lost forever to the homebuilding industry. They can't afford to wait for the recovery and are taking posts in other industries. Sure, when the homebuilding industry recovers, there will be PR and PA openings, but the pool of applicants will be largely inexperienced, in my opinion.

Will recruiters be necessary to lure back the trained, seasoned pros? I hope so.

Current trends and analysis tell us two things about the importance of communications to any industry: That public relations is critical to a company's bottom line in any economic cycle and the profession plays an even bigger role during a period of recovery. You will hear a lot more about this at the 2009 PRSA International Conference.

What's more, the homebuilding industry will continue to face significant challenges in the years and decades before us: Environmental regulations are increasing, water supplies are questionable, communities are better organized thanks to social media, etc. Public relations and public affairs professionals will play important roles in the continued success of this important industry sector.

And, that should mean attractive compensation rates, whether you are an agency or an individual getting hired internally.

The homebuilding industry recovery is several months, if not more than a year away. But when it does recover, it likely will be financially attractive to PR pros.

In the meantime, stay current and remain engaged in the homebuilding industry (Both can be accomplished by joining an association like the Building Industry Association, reading the industry news and attending events). The homebuilding industry will be robust, again.

And, don't forget to arm yourself with the tools and information to build the business case for PR. Right now, it's difficult to make that case with a homebuilding CEO. In early 2010, his or her receptiveness will be markedly improved.

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