It’s a tantalizing reality of homebuilding that its business leaders tend to lose more sleep over dirt than they do about people.

Clearly, what we hear day in and day out is that land investment is where risk, existential threat, survival as a going concern, and copious rewards congeal – as they always have done – as an unequaled bedrock of success or slippery slope of failure.

Today, anyway, people should be the cause of more tossing and turning at night, not land. Here’s why.

Land has always been the foundation of homebuilding, where every critical decision begins. Scott Cox, in The Builder’s Daily, perfectly captures this conundrum: the intense competition for entitled land, the complexities of underwriting, and the skyrocketing costs of approvals and deposits.

The stakes are impossibly high.

Underwriting new projects has never been harder," Cox writes, pointing out that this complexity has only intensified in today's market.

But as leaders zero in on land investment strategies, they risk losing sight of an even more pressing concern — people.

People – your team members – are, after all, the only sure way to connect in a trusted way with your customers, .... who are people too.

The people who manage, analyze, and execute these land investments are the real drivers of success, particularly in a market characterized by volatility and complexity. What should be keeping homebuilding executives awake at night isn’t just whether the next big land deal will go through or if inflation projections will hold — it’s whether their teams have the skills, adaptability, and resilience to handle the challenges that the industry will face over the next decade.

The economic uncertainties, technological advancements, and changing labor market dynamics mean that building and maintaining a high-performance team is more critical than ever.

Especially when it comes down to the work of making new, satisfied, profitable customers.

The Land Conundrum: A Double-Edged Sword

Cox’s analysis illustrates why land remains the gravitational center of homebuilding strategy. With shortages of entitled land driving fierce competition and longer, unpredictable approval timelines, land acquisition is becoming an increasingly speculative gamble.

The elephant in the room is how much inflation you need to factor into your proforma,” Cox states, and the difficulty of projecting land values several years out from the start of a project only adds to the uncertainty.

This puts tremendous pressure on leaders to make smart land deals, as miscalculations could mean catastrophic losses down the road.

However, Cox also warns that many homebuilders are relying too heavily on "gut feelings" or overly optimistic inflation projections. This leads to aggressive land bets that may pay off — or lead to a financial abyss. The focus on dirt, while essential, can often distract from another equally important variable: the capabilities of the people making these high-stakes decisions, and their impact on current, would-be, and future homebuyer customers.

Building People, Not Just Portfolios

Robert Dietz, Chief Economist of NAHB, provides a broader economic lens through which to view the housing market, showing how current trends in housing starts and permits create both opportunities and risks for homebuilders. Single-family housing starts are up 2.7% in September 2024, but higher mortgage rates are poised to slow growth.

NAHB is forecasting a gradual, if uneven, decline for mortgage rates in the coming quarters,” Dietz explains.

This means that while the land investment game continues, market unpredictability will keep everyone guessing.

For homebuilding leaders, this volatility isn’t just a land challenge — it’s a people challenge. The data is clear that opportunities for growth exist, particularly in single-family homebuilding, but seizing those opportunities requires a team equipped to navigate these economic fluctuations, anticipate future trends, and make informed decisions.

Here’s where the real opportunity and challenge lie: are homebuilding firms investing as much in their people as they are in land? It’s easy to see land as the tangible, finite resource that needs constant attention, but in truth, the people who are tasked with acquiring that land, managing those projects, and driving the business forward are the true linchpin of success.

If land is the bedrock of homebuilding, then talent is the structural, heart-and-soul fabric that determines whether the business will weather the storms ahead.

Tech, Data, and the Evolving Role of Human Capital

A John Burns Research & Consulting webinar this week further underscored the growing complexity of today’s housing market, particularly in how builders and developers must use data and technology to navigate rising interest rates, inflationary pressures, and fluctuating demand.

The Burns team highlights the need for data-driven decision-making to address challenges like the rent vs. own gap, the affordability crisis, and the ability for builders to detect a strike price to ignite a baseline sales pace on a community-by-community basis.

Builders are having success with the buy-downs because the math actually starts to work," they note, pointing to the importance of having the right tools and insights to guide these strategies on an increasingly granular, real-time level.

But data, tech, and AI tools are only as effective as the people using them. In an industry that’s becoming increasingly reliant on these tools, a significant portion of homebuilders have yet to invest in the upskilling of their teams to harness the power of technology effectively.

From AI-driven land valuations to predictive modeling for buyer behavior, the tools exist, but many organizations lack the talent to fully leverage them. This skills gap represents a major risk for businesses that could otherwise outpace their competition by making smarter, faster decisions.

Takeaway: Are you investing enough in the tech, data, and AI capabilities of your team? Do you empower team members with the tools, training, and the essential "secret sauce" of your presence and institutional knowledge, all three of which they need to compete in this rapidly evolving market? The organizations that succeed and achieve staying power will be those that prioritize the development of their people alongside their land investments.

The Human Element in a Time of Uncertainty

Perhaps the most under-appreciated insight from these analyses is the critical role that human capital plays in building resilience during times of uncertainty. While land will always be a crucial asset in homebuilding, the capacity of your team to adapt, innovate, work hand-in-hand and execute in uncertain conditions is what will ultimately drive long-term success. Cox describes the complexity of underwriting land deals in an inflationary environment, but his analysis is also a call to action for leaders to think critically about their teams.

How does one underwrite for deliveries that often will occur five years in the future?" Cox asks, hinting at the unpredictable nature of long-term planning in today’s market.

The answer isn’t just in better financial modeling — it’s in having the right people in place to pivot when circumstances change, to lead with clarity in times of uncertainty, and to make decisions grounded in both experience and data.

The Leadership Imperative: Fostering Team Excellence

In today’s homebuilding landscape, leadership’s primary responsibility is to create the conditions for team excellence. As Cox, Dietz, and the JBREC team illustrate, there are no guarantees in land, labor, or housing markets. But what leaders can control is the quality, capability, and culture of the teams they lead.

Questions for Leadership:

• Are you investing in leadership development to foster decision-makers who can navigate volatility and ambiguity?
• Do your teams have the support, training, and tools necessary to make informed, data-driven decisions?
• Are you building a culture that empowers individuals to innovate, take initiative, and challenge the status quo, even as they discover the multiplier effects of teamwork?

The future of homebuilding will be shaped by those leaders who recognize that their success depends as much on their people as it does on the land they acquire.

Resilience Is People, Not Dirt

At the end of the day, land investment is still a bedrock of homebuilding, but it’s not the only bedrock. Homebuilding leaders who continue to lose sleep over land while overlooking the importance of their teams risk missing the bigger picture. As Cox, Dietz, and the team at JBREC have shown, the challenges facing the industry today — from inflation and interest rates to supply chain disruptions and regulatory hurdles — are daunting. But the true test of resilience lies in the strength of your people.

It’s time for homebuilding leaders to rethink where they allocate their attention, investment, and commitment. Building high-performance teams, equipped with the latest skills in tech and data, and empowered to lead through uncertainty, is the real differentiator that will enable businesses to thrive in the years to come. In a world where land is scarce, it’s the people who will drive lasting success.