Economic outlook: Why small builders will have the advantage in 2023

The Building Code

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1y ago 36:16

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Episode 167:

On today’s episode of “The Building Code,” Zach and Charley are talking to Mark Boud, a real estate economist. Mark’s modeled forecasts and analytics are trusted by major builders, land developers and capital groups and financial institutions. He and his team conduct master planned residential market research throughout the nation.

Tune in to the full episode to hear more about the economic outlook for construction in 2023 and how to prepare your business.

How will the small to mid-sized builders benefit in the forecasted economic climate?

“What I've seen most recently is the advantage kind of shifting to smaller builders, and I like that. I love working with small- to medium-sized private builders. They tend to be a little bit more nimble and a little bit more sensitive to market trends. And I think that can translate to them having the ability to change more quickly during an inflection point where most public builders take some time to right that ship. A smaller builder can change pretty quickly. They still need research to do that. And the weakness that I see some of those smaller builders having is that they don't necessarily invest in research the way the big builders do. That's changing. I do a lot of presentations for CBUSA and of course Buildertrend. I've seen that change mainly because of entities like yourselves (Buildertrend) have enabled them to group together for educational purposes, for supply line purposes, for all kinds of advantages that those larger entities have had in the past. You kind of translate that to the smaller builder, which I think is really encouraging.”

What economic advantages are you seeing for smaller builders in terms of material supply?

“There might be a little bit of an advantage for those smaller, more nimble builders because a lot of those larger builders during the past 24 months in fear of losing supply entered into long-range, long-term contracts at the very peak of the market in order to control that supply. So, the smaller builders were left out of that and had a real hard time with all kinds of supply issues. However, that pendulum is now shifting with those larger builders stuck with those very high costly contracts and the smaller builders being able to move in and take advantage of what I think is going to be a correction in supply. I mean, we're already beginning to see that a little bit, but I think during the next six months, the smaller builders will be able to take advantage of that while the larger builders are still trying to calm down the supply pipeline that they currently have. To me, there's a potential advantage in there for the smaller builders, now that we're in the midst of this inflection point.”

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