From supply issues to labor shortages to global pandemics, the building industry has seen many challenges recently. But resiliency is a required trait for anyone working in this field. As we face rumors of continued uncertainty with the economy, now is an opportune time to lean on the lessons of the past and keep perspective.
At Brand Vaughan Lumber, our team remains positive about business — for our customers and for our team. We talked more with Jim Hershey and Steve Nolte from our sales department to get an idea of the building industry and its overall mood on the inside.
And here’s the key takeaway — success comes from what you do best.
According to the NAHB, which declared a housing recession in August, builder confidence numbers are in decline, “falling six points to 49 and marking the first time since May 2020 the index fell below the key break-even measure of 50.”
But numbers don’t always tell the full story. Steve Nolte, Brand Vaughan’s Outside Sales Manager, saw how economic shifts and housing market changes have impacted builders (and their confidence) firsthand. Steve points out that U.S. consumers are somewhat spoiled with interest rates.
“We live in a society that has been trained to borrow money at 0% interest,” he says. “Seeing hikes in mortgage interest rates have made buying a house less attractive for today’s homebuyers. Perspective is important I think — when I bought my first home, the rates were in the teens.”
But the team at Brand Vaughan remains positive. “I tend to be optimistic when it comes to what’s going to happen with the housing market,” explains Steve.
Many of us at Brand Vaughan have been through recessions before, and while the road ahead might be bumpy, Jim Hershey, VP of Sales at Brand Vaughan, explains that the majority of customers are optimistic. “There’s lots of uncertainty overall, but level heads will prevail,” he says.
In addition, Steve thinks political events like the 2022 midterm elections “will hopefully give some balance to the economy.”
The key to navigating such unpredictability is a sense of awareness. “Different parts of the country are going to be impacted differently. For areas that are growing quickly, demand will still be high,” says Steve. “It’s important to watch the climate around you.”
But the last few years have seen dramatic changes in interest rates, new housing starts and materials supply. “We’re seeing the demand for lumber drop, the demand for windows and siding drop,” says Steve. For lumber dealers and suppliers everywhere, the supply chain issues have been hard on our bottom lines.
So how should we plan ahead? “We’re being more and more focused on any kind of warning signs so we don’t miss anything,” Jim says.
Jim worked in the industry during the 2008 housing recession, which hit Atlanta hard. “It hit in 2007, and we were laying off people,” Jim says. “It dropped like a rock, and there’s nothing you can do to prepare for that.”
Today, many home builders have reduced their prices to keep sales numbers up. According to the NAHB, “Roughly one-in-five (19%) home builders in the HMI survey reported reducing prices in the past month to increase sales or limit cancellations.”
Jim suggests that builders stay focused on “being diligent [and] not over-extending because we’re still seeing plenty of opportunity,” he says.
For builders and businesses in the industry, taking care of our team members is one of the best things we can do right now. “Get back to the basics, take care of your people [and] build your relationships with suppliers and customers,” Steve suggests.
If there’s one guarantee, it’s that we’ll always need skilled and dedicated builders, regardless of what the housing market does. “Up until two months ago, there were 20 people chasing one house and the highest bidder would get the home,” says Steve. “The housing market can even out. The reason these houses sold for way over the asking price was because the market was crazy.”
Part of getting ahead in the building industry comes from the relationships we form, and staying connected with customers will be crucial for builders and contractors in the months ahead. “Many companies just stopped marketing. They stopped spending money on marketing — besides signs — because they didn’t have to,” says Steve.
But now might be the best time to double down on marketing. “We’re reminding our salespeople that we actually have opportunities right now,” says Jim. “There are still people lined up [for business] — the line is just shorter.”
There have been so many shifts in the industry, just since 2020. “Last year, if Brand Vaughan had products that they could have put their hands on, they would have sold it,” Steve says. “They were turning people down because they didn’t have the materials. However, they still made connections with companies even if they couldn't provide products.”
Those relationships and connections with customers have kept Brand Vaughan in business, something many companies struggled with during the pandemic. “We nurtured more relationships with the pandemic,” says Jim. “We already had relationships with those people but the pandemic allowed us to use multiple ways to get in touch with our clients.”
Perhaps the biggest benefit of overcoming challenges is what we learn from the experience. “When the pandemic hit, we had all our non-critical people working from home within two weeks,” says Jim. “We’d never done that — we didn’t know we could. We got really creative about how we found business.”
We don’t have a crystal ball, but we’re certain that the next year will bring more change and challenges. But now is the time to think positive, and at Brand Vaughan, we’re proud to support the builders and businesses that are facing uncertainty with us.
Brand Vaughan Lumber has served and supported Atlanta area builders and contractors for more than 75 years now, and we’re looking forward to doing business for decades to come.