Industry Analysis: Single-Family Custom Homebuilders

Mumford Tarbuckle

MGT 330

Dr. Snozberry

March 9, 2009 Industry Analysis: Single-Family Custom Homebuilders

In some of the worst economic and housing market conditions in over 25 years, small, single-family custom homebuilders must weather the storm or die. In this paper, I will analyze how forces will affect and impact the general environment and the task environment from the perspective of a small custom home builder.
The housing industry contains many types of builders. Highly capitalized, high production builders construct multiple dwelling units, such as skyscrapers hundreds of feet high, containing tens of thousands of square feet of living area; they build in densely populated, highly regulated urban areas. At the small business end of the housing industry, “mom and pop” contractors construct one-at-a-time, one-of-a-kind single-family homes in rural settings. The industry has a wide range of skills, techniques, environments, and budgets. Despite the gaping differences amongst such diverse builders, there is an interrelation and common influences.
The most acutely felt force affecting all builders in the general environment is the decline in the broader economy. Some analysts believe the political environment, particularly the actions and approach of the new Presidential administration, are also critical. The 66-year old National Association of Home Builders (NAHB) has over 200,000 housing-industry related members who “construct about 80 percent of the new homes built each year in the United States” (NAHB, 2009, www.nahb.org, p. Our organization). Their Chief Economist David Crowe, sums up a prevailing view: “Clearly, the downward pressures that have been exerting themselves on the housing market remain in place, including the weakened economy, ongoing job losses and very low