New Homes and New Cars

June 16, 2014 - By

6.16.14 New Car New HomeNew homes and new cars … what do they have in common?

Believe it or not – plenty.

They follow each other on the economic scale. When new homes are selling, so are new cars and vice versa.

They are marketed and sold similarly. Show rooms attractively display the latest shiny models. Builders have tricked-out models for the public to tour. Car dealers have slick brochures and interactive websites displaying their line; builders have opulent brochures and websites that showcase floor plans, features and community amenities. Both the automotive and building industry have annual shows where the public can go to one location and see a variety of products on display.

But that’s where the similarities end, at least for now.

The most glaring difference between the two is that while the auto industry is totally recovered and back to pre-recession revenue numbers, new homes sales (although strong) are not back where they need to be.

Why is that so? Both new homes and cars totally depend on the financial markets to keep the skids greased. The auto industry has not only been propped by the Federal Government; it is given all the money it needs in the financial markets to keep it going. Alternatively, housing still struggles to secure financing for new developments and home construction loans.

In the past decade, the auto industry committed the same sins as housing: putting people in cars who could not afford them. Lenders lost billions on cars, just as they did in the housing markets. The auto industry, however, has been given back favorable financial programs by the Federal Government – while the new home business is patiently awaiting their turn.

In the coming months, we expect to see some easing with Federal financial reforms. The reorganization of the secondary loan market should also have a positive impact on the building industry and help it return to its pre-recession glory days.

We look forward to the time once again when the consumer can ride comfortably in the driver’s seat when it comes to buying both a new car – and a new home.

Mike LaRuffa
President, Builder Services Inc.


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Category  Buying, Home Building