MONTHLY MARKET UPDATE — Q4 2006

A SEASON OF CHANGE?

If you think you have your finger on the pulse of the real estate and home building trend, please let me know!  Coming out of summer and into fall, really did feel like a seasonal change – even here in Southern California. The real estate market has recently dropped dramatically and in many cases come to a stand still – and its close cousin – the construction industry, is apparently following suit. 

This being a partial election year and a premiere to the presidential candidacy doesn’t help matters much either.  With interest rates rising, increased political conflict in Iraq & Korea, economic sluggishness and a general lack of united convictions, it seems we are all on hold and waiting for the bell to ring. Not knowing whether to buy, sell, build, bid, hold or retire!   

I have the fortunate privilege of speaking to all types of contractors across the board, and literally across the country. Strangely, everyone is saying the same things and waiting for the thumbs-up to resume business as usual.  Perhaps part of the problem is that we may have had a stellar streak for a few years and this slump appears to be much darker than it really is?  Maybe we were all just a bit spoiled for a few lucrative & productive years?   In any case, we are all in the same canoe.  We have to remember that cyclical change is necessary and beneficial. The slow, down times are a chance to breathe, reassess, reevaluate and plan.  This soft market also weeds out those who cannot hold strong in the industry – creating a Darwinian pool of survivors, and eventually making the market profitable for those who hold tight.

A few considerations:

1)      Don’t commit yourself to a project unless you know it’s a go, permits are pulled, the lender is in place and the budget is approved.  Many projects have been put on hold and you do not want to be in an indefinite holding pattern.

2)      Use this time to come up with a more streamlined marketing plan for your company. The old adage is that when business is down, increase marketing – even if you have to borrow to do it.  Look into alternative avenues for advertising, marketing and client retention.

3)      With the holiday’s right around the corner, use this time to contact previous associates, clients, vendors, etc. and find out what measures they’re taking to keep business up.

4)      Take a hard look at your operation and compare yourself to your most closely related competitor.  Be honest and make appropriate changes to your operation, if needed.  

My point to all this jib-jab, is that if you are feeling a bit dark and down and your business is not what it was even a few months ago, don’t worry – most are feeling the same way.   Weather the storm… and (as my Grammy would say) god-bless we’ll come out right side up in the end!

Enjoy the fall season….. 

Hadley Wood

Hadley Wood
President, SHW Insurance Services