The National Association of Home Builders (NAHB) has released its Multifamily Production Index (MPI) for 2015. The good news is that this study turned in its 16th consecutive reading of 50 or above. The so-so news is that this 0 to 100 measure of builder and developer sentiment about current conditions in the apartment and condominium did decline 4 points to 52 in fourth quarter 2015.
According to the NAHB, this index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse. Whew!
In releasing the MPI, which provides a composite measure of three key, multifamily housing market elements: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums, NAHB Chief Economist David Crow said. “Demand for multifamily housing remains strong, which is reflected in the fourth quarter Multifamily Vacancy Index (MVI). And while demand is strong, it’s natural that the MPI would move closer to the break-even point of 50 now that new multifamily housing has largely recovered from the downturn and reached a long-run sustainable rate of production.”
Housing recovery continues at a modest pace
The NAHB/First American Leading Markets Index (LMI) reports that of the nearly 340 metro areas nationwide, 117 markets returned to or exceeded their last normal levels of economic and housing activity in the fourth quarter of 2015 — a year-over-year net gain of 52 markets. The LMI’s nationwide score inched up to .94, meaning that based on current permit, price, and employment data, the nationwide average is running at 94 percent of normal economic and housing activity.
“Housing markets are strengthening gradually as the economy firms and job creation continues,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, IL. “While some areas are recovering at a faster rate than others, the large majority of metros are moving in the right direction.”
What does all this mean for YOUR business?
How do you perform in an up housing market? Generally, when the construction market is booming, contractors run a breakneck speed to keep up with demand for services. You push out faster pitches, quick bids, and put more of your teams’ boots on the ground. Tracking estimates, orders, personnel, change orders, payables and receivables job-by-job, day-by-day, month-by-month can overwhelm even the best back office operation. Implementing the right processes, procedures and, yes, technology, can make be the differentiator between a successful failure or a profitable success.
Which one are you?
What do you do when the market stabilizes?
Okay, a stable market is not a down market. But it is a market in which quantity of business no longer camouflages profitability. Savvy contractors must operate even more efficiently and cost-effectively. This requires better pitches, tighter bids, and a firm grasp of your operations.
How are you doing?
Flat markets or slowly recovering markets still demand good business processes
So what are you doing? Are you using accounting software like QuickBooks Pro or equivalent to help you run your business? (Although even some large contractors still run their businesses with paper/pencil/spreadsheets…don’t be that contractor.) Do you scan and process checks or go to the bank? Do you accept credit cards? Are customers paying via ACH transfer or another electronic service?
If you answered, “Yes,” to anything but paper/pencil/spreadsheets, are you extending those efficiencies to the rest of your business? Can you create and send estimates out for signature electronically? Store them electronically. Invoice electronically? You can.
Why stick to paper and spreadsheets, when technology (the right technology), can help you institute best practices and deliver complete transparency into hours, job assignments, client management, and productivity to ensure your projects stay on schedule and on budget? You wouldn’t.
So how do you get there? Do your research. Knowify, for one, can help. We’re already helping contractors integrate their business management needs with their accounting systems from an easy-to-use interface accessible from any device — in the field and in the office. If you have any questions or wish to share your feedback, you can find us at firstname.lastname@example.org.