My New Kentucky Home
Bill Jagoe’s grandfather built and sold two homes during the painful latter years of the Great Depression in the late 1930s. Bill Jagoe and his brother Scott have been building and selling new homes in Kentucky and southern Indiana through the Great Recession. Bill Jagoe’s son, William Rush Jagoe V, is 21, and may–as it turns out–pick another profession altogether.
“I worked on job sites from the time I was 12,” Bill Jagoe tells us. “I didn’t raise home builders. I want my kids to think about other things to do. But we’ll see.”
click image to access Jagoe Homes site.
Bill and brother Scott qualify as a “how-the-hell-are-they-doing-it?” story right now, starting more specs and scoping out new lots from other builders and developers to keep up with demand that will probably take them to 440 homes and beyond this year. That would equal their best year ever.
“We’ve been going after a buyer we’ve seen in the market who wants a spec,” Jagoe says. “We’re seeing people who, once they’ve made their decision, they don’t want to wait.”
While other private home builders struggle to keep the lights on and the doors open, Jagoe’s outperforming its own expectations. “In traffice we’re 149% of budget, and we’re 148% of budget in sales. We’re finding that, even with foreclosures around, we can still talk to our customers about value. They’re still payment-driven and they still act on emotion when it comes to saying yes. You just have to get to that emotion, and they’ll suddenly want it now.”
The Jagoe family name backs up the relationship the company has with home buyers, trades, lenders, and suppliers, but the personal touch and the entrepreneurial fire-in-the-belly hasn’t stopped the firm from constant process improvement efforts. Over the past few years, the Jagoes have pulled in sales and marketing guru Bob Shultz, operations and lean construction specialist Scott Sedam, and management/technology advisor Noelle Tarabulski to remake every way the company operates and does business with its various stakeholders.
Other builders are reefing their sales and exiting markets, but not Jagoe. They’re new to the Bowling Green, KY, market thanks to a deal they picked up from a builder who wanted out. “They wouldn’t let me into Bowling Green when I tried to get in three years ago.” They, being municipal officials, planning board members, trades, and other builders. “Now,” says Jagoe, “they’re asking me if I want to buy their land.” Jagoe has his sights set on 20% of Bowling Green marketshare by next year. “That could be 100 homes or 200 homes for us alone, depending,” he says.
“I get to work each week, and I think, ‘what can I change about the way we do things today?,’” Jagoe muses. He’s taken 90% of marketing and sales dollars out of newspaper advertising and plowed in into relationships with Realtors and an improved Web effectiveness. “We used to sell one in four traffic customers, and now we’re at one in three. If you give me a go today, I can get you into a new home in 77 days, give or take on entitlements and permits.”
Building cycle time is huge these days. “Your not making profit on the land appreciation, so it’s going to be process management and speed that gets you your margin,” he says.
Bill’s son Rush may not go into home building, but he knows cycle time by heart. As of Sunday, he’ll set out pedalling with two of his friends from San Francisco to Charleston, S.C. Just another way to ride out the downturn.
Who’s Not Moving Why?
Source: William Frey, Brookings Institute, via NY Times. Click to access article
Some trends become evident before they become clear. When it comes to American households’ patterned behavior and what it means, few get it as quickly and clearly as former American Demographics editor Cheryl Russell, who runs New Strategist Publications out of Ithaca, NY.
When an astonishing data point comes out from the U.S. Census Bureau — which is almost never — you can count on Cheryl, who eats, sleeps, and breathes Census data, to help decipher how it compares and what it really says.
Her latest American Consumers newsletter takes on the latest Census shocker on household mobility trends. Here’s a direct excerpt, complete with a dollop of business wisdom at the bottom of the passage.
If you really want to know how the priorities of Americans are changing, then take a look at their reasons for moving and how those have changed over the past few years.
- Not buying: The number of people who moved because they wanted to buy a home fell by 48 percent, from 3.9 million in 2000-01 to just 2.0 million in 2007-08–the largest decline among all reasons for moving. While there probably is some pent up demand for buying a home, it is possible that many Americans are reconsidering the importance of ownership now that they know the risks.
- Moving closer to work: The number of people who moved to shorten their commute increased by 80 percent between 2000-01 and 2007-08, rising from 1.2 to 2.2 million–an 80 percent rise and the largest increase among all reasons for moving. This is bad news for the far-flung suburbs, which will be last in line for any economic recovery.
- Delaying retirement: The sharp drop in the mobility of 60-to-61-year-olds is reflected in the 38 percent decline in the percentage of people who moved because of retirement between 2000-01 and 2007-08. Retirement savings have been decimated and the age of retirement is rising, which is why state-to-state migration has plunged. This trend could gut destination retirement areas.
- Staying closer to home: The data show an ominous decline in the number of young adults who moved to attend or leave college, with the figure falling by 26 percent between 2000-01 and 2007-08. This decline is occurring as a growing proportion of students opt for less-expensive in-state public schools and is yet another warning sign for the nation’s overpriced private colleges.
- Downscaling expectations: The percentage of people who moved because they wanted cheaper housing climbed by 35 percent between 2000-01 and 2007-08. At the same time, the percentage who moved because they wanted a better home or apartment fell by 29 percent.
Americans are dropping out of the housing market, delaying retirement, and downscaling their expectations for college and home. These trends may be temporary, but the best way to survive them is to assume they are permanent.
A Call We’ve been Waiting for: Recession’s Nearing an End
You just have to hand it to the resilience of the U.S. consumer. We’re 6% of the world’s population, but acccount for 40% of the world’s consumption. And, right now, that’s a good thing.
Personal consumer expenditures in the first quarter swung 6.5% from fourth quarter 2008 to first quarter 2009, to a 2.2% increase.
With all that is fouled up in business investment right now, the consumer is the X Factor of recovery. Will the 80% of the nation’s workforce that will manage to steer well clear of the sinkhole of income loss manage to bouy the economy?
To listen to one housing player working the trenches in heartland, rustbelt markets, the answer may be a louder and louder affirmative. “You couldn’t even get through Lowe’s the other Saturday,” said this residential construction executive. “People want to put up their fences around their yards, and they want to get going with projects. And if the wife says she wants to move now on that new house, then now’s the time it’s going to happen. These are Americans. Lots of them don’t want to wait to get through the anxiety and delays of a foreclosure purchase. They want it now.”
Questions about the strength of the recovery and the persistence of after-effects of the downturn will continue to arise, but per the Economic Cycle Research Institute’s Lakshman Achuthan, the steeper the economic decline, the faster and stronger the snap-back. Achuthan’s correctly called the last several recessions and recoveries based on his basket of long and short-term indexes, and he’s saying now that early Summer 2009 will wind up marking the end of this recession.
Here’s his call this a.m. on CNBC.