Couldn't help powerful feeling of deja vu.

The broad context is economic volatility. Within that backdrop, steady-state expectations are that for-sale existing home choices will remain scarce, ultra-steep shelter affordability hurdles remain, and a still growing, newly-minted generation of digitally-native adults heads into a family-formation/higher earnings zone. Within this context, three things work.

• New
• Now
• Simpler

Listening Wednesday to KB Home C-suite executives talk through details of the KB Home team's strong second quarter operating and financial results triggered the deja vu experience.

While we continue to prioritize our built-to-order model, we are supplementing our starts with additional inventory homes given market conditions and a lack of supply." Jeffrey Mezger, Chairman, CEO, president KB Home

And here, KB Home executive VP and COO Robert McGibney explains marked operational improvements – including construction cycle times, more reliable supply chain management, access to skilled frontline construction crews, together with materials costs trends netting to direct input cost savings per home of $23,000 off their August 2022 peak:

The construction time improvement was driven by a normalizing supply chain and better trade labor availability, as well as our ongoing initiatives to simplify our product offerings, design studio choices, and structural options. We have reduced our SKUs by 43% over the past 18 months, retaining the studio options that are most frequently selected by our customers and those most readily available in the supply chain. These changes have created efficiencies for our teams, our trade partners, and our customers, while helping to lower our cost and time to build."

Plan simplification.

A player like KB Home, whose build-to-order promise of attainable, high-volume personalization is baked into its DNA, nevertheless recognizes that both economic forces and household preference trends beg for simplicity and for standardization. The moment – perhaps a sustained one – of extremely scarce available existing home inventory, higher-longer mortgage rates, stubbornly high inflation, and an ongoing Millennial generation demand stream of young adults who grew up accepting standardization in more aspects of life seems like an inflection.

McGibney's comments sparked the sense of deja vu. It didn't take long to recall why.

Here, from The Builder's Daily on December 8, 2021, under the title "The Contrarian: How To Adapt To A Capacity-Constrained Future," a forward-looking insight from Scott Cox.

It’s time we rethink how our businesses are managed and organized. We’re at a juncture. Before us stretches a long-run future of tighter land markets due to growing entitlement constraints and long-term skilled worker shortages. Land shortages in our active housing markets will likely lead to higher-priced, and at the same time, more standardized products.

Fewer communities to choose from for the buyer will mean less direct competition. In turn that probably means less need for highly-customized options if the overall value proposition is fair. Maybe like car dealers, we will have some very simple option packages and color schemes, and more often than not you’ll buy what is available “on the lot” (no pun intended). We already see more builders adopt this lower-variability model.

But I believe our thinking may have to go well beyond this to all aspects of our business – accounting, purchasing, sales and marketing, land acquisition, etc. The question will be, how do we do more with fewer people, either through technology, or process change/simplification?" – Scott Cox, The Builder's Daily

The stars that align in Cox's narrative suggest leaning into an untapped power and potential in financial, political, labor, land, and materials constraint, to cause housing's future to come.

And what better time than in the middle of the Millennial juggernaut to reset what "having the home of your dreams" means. That's the future of housing, and it's the future of producing it affordably, sustainably, and profitably.

Standardized, simplified – even to the point of sameness – doesn't necessarily equate in the minds of digital natives as of less value. Instead, what it may mean is that, in their minds and hearts, they're getting what they do value, and not paying for what they don't.

McGibney speaks of each of the 250 or so KB Home selling communities as a real-time, real-world discovery and learning node:

As far as the product, we've got laboratories out there in each of our communities that kind of tell us which plans, which product, which price point with what features are most in demand. And when we do start inventory, that's going to be our focus is to align with that."

It may be that builders' response to the present throes of constraint set up not only to solve for meeting today's market where it is, but place in motion a more holistic pivot among homebuilding operators and their partners toward a lower-variability, high-enough value home that buyers and renters "make" the home of their dreams.

Lower-variability means more sameness. Sameness, however, has lost some of its stigma. Younger consumers actually embrace it in some of its forms.

Look at build-to-rent neighborhoods, many of which are horizontal high-end apartment communities. Standardization grows on us, especially in the context of constraint.

Thank you, Scott Cox, for putting the deja in deja vu.