Monday, September 21, 2015

Modular Homes Starts at a Pathetic 21,000 for the Year

In August, permits for single family homes jumped to 699,000 annualized. While this is the best since 2008, it still isn't what's needed for housing to have the same powerful influence new home starts had at one time.

That 699,000 figure does not include multi-family housing permits which dropped significantly in the East in August.

If modular housing is 3% of the total new single family home construction, there will only be 21,000 new modular homes built. That leaves 678,000 site built homes. Ouch.

At last week's Modular Boot Camp, Tom Hardiman, the Executive Director of the MHBA, stated that marketing is not the entire answer to making modular a more powerful player in the new home market. Rather it is strength in numbers, being organized and working to improve the industry from within.

I couldn't agree more. Marketing is important but can be a budget buster for small builders and even large modular home factories. And just determining where to spend the money, who should be targeted, figuring out regional differences and fighting the stigma of the manufactured side of housing is expensive. Most of these efforts will prove to useless without a huge influx of money from both the factory and builder.

Then you have to ask who will be in charge of determining where, when and how to market modular housing? Nobody is stepping up the plate. There will be more misses than hits and in the end, it probably won't change our measly percentage of new home starts.

So where do we begin?

It all Begins at Your Desk. Nobody knows your market area better than you.

If you are a builder, your market area is a tight region probably no more than 100 miles from your desk. You know your market. Stop trying to promote modular housing and start promoting that you are a custom home builder. If your market is ranch style homes, show a lot of custom ranch photos and plans on your site.

If you build contemporary homes, show lots of them. Why even mention modular. You are a custom home builder. Stop alienating the huge part of new home buyers that simply leave your website because they see modulars all over the place and equate you with the double wide dealer down by the strip malls.

And please stop showing pictures of modular homes being put together on your home page. Yuck...Do you really think they want to see this? No, they want to see finished homes, finished interiors and the unique features you build.

Remember: "You are a custom home builder." Say that every morning when you climb out of bed, tell everyone you meet and let your marketing reflect it. This is a great way to effectively market your homes and it costs next to nothing.

If you own or manage a modular home factory, you've got to begin bringing in "new to modular" builders. It's time to invest in training your sales reps to spot good site builders within their territories and teach them how to approach them with an organized program that brings them into the world of modular housing.

If you think you don't have to do this, take a few minutes and look at your builder base. I bet that those factories that don't have a recruiting and retention program in place for builders are seeing an aging builder base. Your builders might have been young and eager before the 2008 recession but now they are more cautious and getting older, seeing retirement as a real possibility.

There is no fairy godmother with a wand that magically touches the head of a site builder and converts them to modular. No, that has to done by factories investing in recruitment.

Please don't sit back in your chair waiting for the Building Systems Council of the NAHB or the MHBA to do this for you. It won't happen. That is not their role.

Here are the two things you need to do right

Join the MHBA as there is strength in numbers to fight against unfair legislation and to help promote the overall modular industry.

Then invest $4.95 a month to join BuilderRadio. There is a wealth of information on marketing along with weekly Podcasts and webinars all aimed at helping you be more successful.

21,000 modular home starts for the year. We should all be ashamed of such a small market share. 


Anonymous said...

As usual Coach, right between the eyes. Now let's see how many take your advice.

Anonymous said...

Most small builders don't understand that they need to market their brand and identity not the generic process of building modular. They, also, don't understand defining a niche or market segment falling into the trap of trying to meet all needs to all buyers. Lastly, I have to ask when was the last time you saw a site builder promote or market photos of incomplete homes in framing stages of half-done or if they do are they a successful company.

It is a proven fact that home buyers start their search for a new home. Tell a story why you deliver custom details for your market with a value product not the process - site builders don't talk about their framing; the skills of their subs; of the lumber yard where they buy materials. Sure, they may reference brands or maybe cross market with a known specialty trade supplier but they sell the value of the end product in words, photos, and renderings.

Target being the dominant niche builder in your market and brand yourself in that suit of clothes