I had lunch at a Five Guys last week; coincidentally on the same day I had read this excellent post; like ketchup and vinegar, I made the connection – housing’s commoditization through poor quality product may be over.
Up until 2006 mediocrity was OK and sellable at least at a mediocre rate. … A mediocre product will return a mediocre profit when the market is good. When the market turns south and it’s time to go into survival mode…mediocrity will lose every time, as has been evidenced time and time again.
Five Guys have built their business by offering a commonly-available product that is better than the competition, but is not priced so much more than the competition as to be out of reach for the “common man.” There is a reason their growth and success rate is so remarkable – they do a few things – burgers and fries, and do them very well.
Buyers seem to want smaller, smarter space that is put together with a high degree of quality – better flooring, cabinets, countertops, smoothly mitred corners – and this new market allows them to demand this quality. Notably, many are also ready, willing and able to pay for said quality, and they are willing and able to wait for this whatever it is that they want.
Mediocrity had its place when the market was smoking hot – builders could vomit up hundreds of homes, demand (and get) premiums and move on to the next landscape demanding to be decimated. No longer.
Which one do you want to be – McDonald’s (not that there’s anything wrong with that) or Five Guys?