Real estate reporter Rhonda Kaysen's story [gift link] in the New York Times this morning portrays a housing market outlook of managed disappointment: A "nobody wins" stalemate of attrition will make sellers feel like they're not getting nearly enough and buyers feel as if they're paying too much for an indefinite year or so ahead.

After a tumultuous few years, we seem to have arrived at a standoff: Buyers are no longer able to overpay, and sellers are unwilling to lower their prices — and, in many cases, even to sell their homes."

That may be as good as it gets, and for some, avoiding an extinction moment of any kind is a win.

A wild card – in a domestic and global economic and environmental backdrop with more wild cards than when one of my single-digit-aged five brothers would call "Aces, deuces, one-eyed Jacks, and Jokers wild!" before a cardgame of Spit – goes to new home sellers – the homebuilders.

In some ways, the tighter the tension-wire of aggravation and frustration between sellers and buyers of existing homes, the more of a win that impasse can add up to for investors, developers, builders, and their partners trying to make up for a big underlying dearth in so many markets that are struggling to ingest Millennial and GenZ adults as they form households and families.

• While high mortgage rates continue to price entry level buyers out of the market, that impact may be more than offset by those high rates locking in potential resellers with dirt-cheap mortgages from the past. Low inventory nets out as a win for new home sellers.
• Secondly, new home builders – many of them with captive mortgage finance divisions – can do more on the mortgage rate buy-down front to price-in would-be buyers on a monthly payments bubble.
• Third, a point BTIG's homebuilding equity research analyst Carl Reichardt nails succinctly in this Barron's piece by Shania Mishkin:

The builders have more ability to adjust pricing and inventory levels to meet demand."

That ability can be taken for granted, but shouldn't.

Reichardt himself recalls a time in all of our recent memories where the best homebuilders could do was to put themselves in a position not to lose it all:

There are 11 publicly traded home builders that were around in 2005, the last peak in housing, that are public today. The debt to cap in 2005 for that group was 42%. At the end of 2022, it was 26%.

This group of 11 are building almost exactly the same number of houses as they did in 2005, about 260,000 units. Today, those 11 builders have 42% share of the market, and in 2005, they had 20%.

But here’s the number that I love the most: The 11 companies in 2005 generated a grand total of negative $18 million in operating cash flow. In 2022, those 11 companies generated $9.2 billion in operating cash flow."

Coming out of the GFC, homebuilding companies made progress, some of them in ways they had to do but don't get a lot of credit for. It's said often that organizations tend to "solve for the last crisis," but homebuilding enterprises needed to address and improvements that predated the mid-aughts housing meltdown and its causes. They needed to become professionally run organizations; and they needed to learn more about how to secure and retain trust among partners, customers, team members, etc. And their business leaders needed to begin to these companies as ranking, materially important participants in both the economy and in our social and community lives. As citizens.

Fifteen years ago homebuilding organizations were – to a large extent, with exceptions – playing not to lose. What they've done leading into this moment of great uncertainty, volatility, and risk in broad economic terms, is position themselves to win.

Part of that owes to commitment and rigor many of these organizations to do something that's easy to say and hard to do:

Do what you say you're going to do."

Start doing that, keep doing it, and never stop doing it and that way people learn to believe and depend on and eventually champion you as somebody to trust.

Newsweek and its data partner Statista Inc. recently recognized 700 corporate citizens that get, commit to, and invest in the constancy and clarity of their stand on being trusted and trustworthy.

Five national homebuilding organizations – Century Communities, LGI Homes, Beazer Homes, Ashton Woods, and KB Home – won honors as part of the 2023 cohort of America's Most Trustworthy Companies.

From a prepared statement:

Our cornerstone goal has always been to deliver 'A Home for Every Dream®,'" said Dale Francescon, Chairman and Co-CEO of Century Communities. "This recognition is a reflection of how much our employees and trade partners strive each and every day to fulfill that mission."

"This award is a testament to the power of treating your customers with
respect and demanding high standards," said Rob Francescon, Co-CEO and
President of Century Communities. "From building exceptional new homes in prime locations to making it easier than ever for our customers to purchase and finance their dream home, we are focused on continually raising the bar for what the homebuying experience should be."

The Francescons, both in their character and their evolution as leaders in a business community that has risen up in its crucial part to play in local, regional, and the national economy, have made Century Communities' business culture a case example in earning, and doing what it takes to sustain trust.

Too, LGI Homes CEO Eric Lipar, Beazer CEO Allan Merrill, Ashton Woods' president and CEO Ken Balogh, and KB Home ceo Jeff Mezger have each stood for decades of the commitment and investment it takes to make being trustworthy part of the DNA of the firms and teams they lead.

Their enterprises' presence among 700 other corporate citizens whose stakeholders regard them as exceptionally trustworthy affirms something critically important, especially now, when so much is unpredictable.

Trust is anything but a "soft" skill.

However hard it is to measure in terms of its place in the P&L, trust is a driver of performance results and financial and strategic success.

This is one sometimes unappreciated way homebuilders have grown up in the past 10 to 12 years, having begun focus on those improvements even before the housing crash in 2005-07.