Homebuilders and their partners face a dos and don’ts challenge.

Do … relentlessly continue to work make new homes and communities for buyers of varying payment power to strive and achieve the dream of homeownership

Don’t … detach business goals and operational models from an essential promise to make that dream attainable as a core strategic principle.

This is a reflection at a critical moment, on the eve of the Federal Reserve’s vaunted

Image: Courtesy of NAHB Eye On Housing

The NAHB “pyramid” that accompanies the second bullet point above notes that there are 75 million households in the universe “priced out” of homes with a price tag of $325,000 or higher.

At a recent residential real estate conference event – with its inevitable hyper focus on built-to-rent business, investment, and operational plans – word is a principal with major land development firm said something like this:

Home ownership is one of the foundations in America. When institutional investors are buying and building so many homes for the rental portfolios it becomes much harder for people to purchase their first home. The BFR companies have become so dominant it’s impacting affordability and forcing them to remain renters if they want to live in a single family home.”

We come back now – in a moment in business time overflowing with spinning plates, moving targets, and crises du jour – to the dos and don’ts challenge for homebuilders and their partners, who have been an essential part of the fabric of the merit-based American Dream of homeownership.

We’ll go back to the HBR piece with lists dos and don’ts for leaders at this time of converging uncertainties and risks:

— Don’t rely on forecasts as extreme uncertainty prevails; flimsy in the best of times, they remain out of reach.
– Do build the capabilities to analyze and model the transmission of shocks and stress test using scenario planning.
– Don’t assume that shocks deliver structural change – they can, but in the fog of the moment the bar for inflection often appears deceptively low.
– Don’t assume that pricing power persists. As growth moderates and inventories build, firms may well return to defending market share.
– Do think of productivity growth as a sustainable source of competitive advantage.

Then we’d put it more simply. Don’t be who you’re not. Do double down on who you are.

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