Investment propertyHow Many Builders Make Multi-Million Dollar Decisions
Risk-taking has to be one of the most unsettling aspects of offering any new
product. Whether it"s a decision to locate a fast food restaurant on a
certain corner, what time of year to introduce a new model of computer, or
how much to charge initially for a new service, it"s never easy.
Business marketing types and CEOs sweat bullets over location, timing and
pricing, hoping to get all of the most cutting edge information at their
fingertips to lessen their risk. Builders of new homes are no different,
gathering as much information as possible on the best areas to build, what
product will sell there, and at what price to begin offering it. They rely
on expert data gatherers to provide them with the latest information on
demographics, population movements, employment base shifts, and average
incomes, along with what buyers may want in a new home.
One of the largest such firms is The Meyers Group, founded in 1985 by Jeffrey S. Meyers, who recognized the vital need for more complete, accurate and
up-to-date information in the Southern California residential home building
industry. The first Meyers Group office began in a Del Mar, California
garage, and the firm has expanded 40 offices throughout the country,
delivering local data products via a single universal platform. This
platform was adopted to ensure delivery of the most accurate and timely
residential real estate information by way of using research analysts for
on-site data gathering techniques. According to company claims, the
information provided by this method provides 90-95% accuracy.
In an industry known to resist change in general, the data supplied by firms
such as this help builders and developers make multi-million dollar decisions
for change and innovation in the new home market place. Today, builders can
view a wealth of information directly from their desktops, including in-depth
sales information, color photographs of project homes and floor plans, as
well as detailed geographic information indicating where current developments
exist. CD-ROMs and software can now replace the pendulous books builders
kept on shelves, referred to as their "bibles" when deciding on new products
and areas. In the near future, Meyers will move beyond CD-ROM-based products
and allow clients to access new home data by simply logging on to the
Internet visiting the Meyers Group web site, a move that will revolutionize
data access for builder/developers.
A look into a Meyers Group book reveals page after page of detailed
information of every new home community that exists in a given geographic
area. It identifies the builder, project, unit count, price per square foot
for each home offered, configuration of each plan (single level or 2-story)
and the prices the builder offers to the buying public. Extra notes include
incentives being offered, community amenities, and type of home construction.
No stone is left unturned; enabling any builder to assess other builders"
products and sales trends, and compare or plan for his own, based on the
information he takes into account. Sometimes it is the latest round of
quarterly information supplied by firms like the Meyers Group that show
trends in the marketplace, hitting the front pages of business and real
estate newspaper sections nationwide.
Meyers also monitors rivalry between "hot" markets in the United States,
evidenced by their "In-Box" publication, which comes out quarterly. They
have created what is called their "Investor Hotness Index", designed to help
builders and investors monitor supply and demand conditions in each market.
They contends that employment growth is the most important determinant of
housing demand, and building permits are the best measure of supply. When
these ratios are out of skew, investors may use this information to act
accordingly.
Entering a model home complex for the first time finds many buyers mesmerized
by the elegance, newness, designer-like beauty and thrill of new home
presentation. Little do many of us realize what pain-staking research and
risk-taking decisions went into the end product we delight in strolling
through. Market research has become more and more sophisticated, and new
home builders are willing to pay whatever they must to get the latest
information to help them lessen their risk.
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