Housing Giants - July 10, 2008 - (Page 25)

Executives shouldn’t leave numbers for their staffs to worry about. We examine the critical data and reports upper management need to watch. From local job data and MLS listings to traffic conversion rates and production costs, information is critical to the management teams of the nation’s largest home builders. Whether it’s a standard balance sheet produced by a financial software package or a customized chart generated in Microsoft Excel or Access, the reports and data that home builders create and analyze can often help steer the direction of a company. Industry experts say that knowing just when and what data to look at and how to analyze it is critical in sustaining operations. In this threepart series, Housing Giants explores the data and reports that help upper management, sales managers and production managers measure performance and productivity. First, we tackle what should be on upper management’s minds. 2006, many home builders are taking a second look at data and their reporting methods. Colorado-based home building consultant Chuck Shinn of Shinn Consulting says that the housing bubble overextended itself because many home builders simply didn’t watch the economic data and reports around them. Key indicators, he says, surfaced between 2000 and 2007, when the cost of housing grew sharply but most wages remained stagnant. During the beginning of that period, the median price of a home was $139,000, but by June 2007, prices peaked at a whopping $229,200. And although home prices had risen 64.8 percent during that time, median incomes had only risen 16.6 percent from $50,732 to $59,157. “I think you should have this [economic] information and data constantly posted in the war room,” says Shinn. “Everybody should have seen the bubble on pricing and there was actually no economic base whatsoever for what we were doing.” rEports and data lEad thE Way With housing prices dramatically falling from their peaks in 2005 and WWW.housinggiants.com 7.10.08.housing giants 25 http://www.housinggiants.com

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Housing Giants - July 10, 2008 Contents Viewpoint News & Moves Tech M&A Critical Management Series Part 1

Housing Giants - July 10, 2008

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