How will marketers that rely on the housing market fare in 2009 and beyond? That we are in a housing slump is an oversimplification of the severe consequences the economic tsunami we are attempting to ride out will have on the fortunes of many companies.
Home Depot, Lowes, appliance manufactures (Sears, Whirlpool, etc.), lumber producers, home furnishings (Bed, Bath and Beyond, Pier 1), construction aggregate companies producing concrete, asphalt, etc., and construction tool makers (Black & Decker) all face a pull-back in marketing and advertising dollars as housing permits take a nose-dive.
Those companies that, conversely, benefit from the downturn will likely be the real estate investment trusts. These companies own and operate apartment communities, which offer consumers an alternative to home ownership. If the number of new homes built decreases, demand for apartments and other rentals could increase as a result. Equity Residential, Archer-Smith Trust and Avalonbay Communities are a few REITs that play in that arena.
There are no wrong or right directions to take until the crisis ends. Many suggest inaction is the best action.
This headline today: “New home construction falls to annual rate of 466,000 units in January, record low” is not good news.
The chart that follows tracks housing permits before and after recession peaks (current and July 1981) for an eighteen month period. What is significant is the dramatic downward and opposite shift in housing permits for the current recession. While current indicators such as employment behave in similar patterns to other recessions, housing permits show a precipitous movement in the opposite direction.
What this anomaly suggests for the aforementioned marketers is anyone’s guess. With a certain degree of certainty, we can acknowledge a downturn in ad spending.
Home Depot, Lowes, appliance manufactures (Sears, Whirlpool, etc.), lumber producers, home furnishings (Bed, Bath and Beyond, Pier 1), construction aggregate companies producing concrete, asphalt, etc., and construction tool makers (Black & Decker) all face a pull-back in marketing and advertising dollars as housing permits take a nose-dive.
Those companies that, conversely, benefit from the downturn will likely be the real estate investment trusts. These companies own and operate apartment communities, which offer consumers an alternative to home ownership. If the number of new homes built decreases, demand for apartments and other rentals could increase as a result. Equity Residential, Archer-Smith Trust and Avalonbay Communities are a few REITs that play in that arena.
There are no wrong or right directions to take until the crisis ends. Many suggest inaction is the best action.
This headline today: “New home construction falls to annual rate of 466,000 units in January, record low” is not good news.
The chart that follows tracks housing permits before and after recession peaks (current and July 1981) for an eighteen month period. What is significant is the dramatic downward and opposite shift in housing permits for the current recession. While current indicators such as employment behave in similar patterns to other recessions, housing permits show a precipitous movement in the opposite direction.
What this anomaly suggests for the aforementioned marketers is anyone’s guess. With a certain degree of certainty, we can acknowledge a downturn in ad spending.
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