By Oren Jacobson, Market Analyst - New Home Star
I distinctly remember a conversation with an industry mentor in 2010. We were talking three full years into the downturn. The good times seemed so far behind us and so far away. “I can’t wait until we can look back on all of this from some future year when the market is strong, but that seems so far away,” I said to her. Her response was exactly what you would want from a mentor, “When we get there, Oren, we better not lose the lessons of this moment. We can’t take success for granted and can’t get sloppy simply because the market gets hot.”
Here we stand at the end of Q1 2017; we’ve experienced an extended period of stable economic growth. Incomes are finally rising as is consumer sentiment and job growth has been steady, though not overwhelming. The recent spike in interest rates, combined with the natural evolution of people’s life cycle and distance from the recessionary fears, have driven demand up and New Home Star just experienced record-setting months and quarters.
Some of that success no doubt comes from the secret sauce and unique culture of our team. Some of that success comes from our ability to identify talent and train. Some of that success is built around great land decisions. Some of that success, though, is clearly a function of the market.
Strong markets, as my mentor hinted back in 2010, have a way of masking our flaws. They can make us overly confident because we can generate results even if we aren’t as sharp as we should be. In fact, the escalation of demand can make us more sloppy (less efficient operationally) as we struggle to manage it all.
It’s one thing to celebrate success. It’s another thing to misplace the reasons or overvalue our own “greatness” in the story of that success. Hot markets can trick us into overconfidence. Don’t fall into that trap. We should be even more focused than we ever have been on doing the right things, the right ways, for the right reasons. That is the only way to ensure our results can sustain market changes, and that, I believe, is the real lesson of the last recession and the battle out of it.
