Guest Blog: Morgan Donohue, Erdman Automation

May 18th, 2020 by Drew Vass

[In a message sent Friday, May 8, 2020, from Morgan Donohue, vice president of Erdman Automation Corp., to the company’s customers:]

Dear Valued Partner,

It is fast approaching two months since I wrote my first correspondence regarding our COVID plan. While at the time I did have certainty that we would make it through, I must admit the days were literally and figuratively darker. Since then a clearer vision has presented itself to me and I would like to share it with you.

What I am going to share with you is not a fix to the economy, but rather why I believe housing will lead us out of this downturn and continue strong for some time. I must confess prior to revealing my revelations that I am not trained in any manner in making predictions of future events but I am never wrong, just ask my wife.

1. There will be a significant migration from high population density areas to single family homes and/or rural areas in the coming months and years. Percentage is tougher to predict, but let’s be honest, living closer together is less attractive than it once was, especially when you can’t take advantage of the social diversions that proximity has to offer. Furthermore, taking the subway or bus is not only perceived to be less safe, it is less necessary. Tele-commuting is going to be significantly more common as millions of Americans are doing so presently. We will settle on a 3-5% migration from densely populated areas. 40 million people live in the 10 most densely populated cities of the US alone. So, the number is 1.2 to 2 million people for just those 10 cities. That is a lot of new demand for just 10 cities.

2. Tele-commuting not only makes moving out of the city more attractive, it also means all the people who already have a home may need to find an area away from the rest of the family to conduct business. Matter of fact, two offices may be needed. McMansions are going to come back in style (so are mullets and jean jackets). And adding on or relocating, will be a necessity instead of a desire. With that demand for windows goes up.

3. 60 to 90 days of “stay at home” orders, leaves a lot of time for home projects. This leads to not only more replacement windows, but in 9 to 10 months’ time, lots of little blessings from heaven will arrive. “I’ll have a Corona baby!” takes on a very different meaning. More babies mean more bedrooms needed, etc. Additions, remodels, and moves to bigger houses with more rooms are in order. Percentages and numbers are tough to guess, of course, but it will affect the demand.

4. Grandma Maria would prefer to stay in her house than to go live in a group home of any sort. This was a prevailing sentiment before the pandemic, but now, Maria has another reason not to go. She doesn’t want COVID 1, 2, or 3. The baby boomers will be staying in their houses longer. Less houses turning over means more houses need to be built.

5. Low interest rates make borrowing for the addition, move, or building of a house more likely than ever. Although it is uncertain how long the low rates will last, it is certain that for the short term it is a positive for us.

6. There is a tremendous amount of cash available for filling this housing demand. We didn’t take our spring trips. No one is spending on dinners, drinks, entertainment, nor travel. People are not planning summer trips as a rule, and who is going to make plans for the fall or a year out until we have more certainty? So what will they say? “Let’s buy a house and a case of Corona, baby.”

There are regions of the country and business owners that I have spoken to recently who have not seen an appreciable reduction in new orders. This points to the fact that the demand was up before the pandemic and slowing things down for a few weeks or months has not changed that. New orders to home builders continue to be strong, and the real estate market is tight on demand.

Pretty sure Abe was talking about the housing market as an elephant when he said.

“When you have got an elephant by the hind leg, and he is trying to run away, it’s best to let him run.” –Abraham Lincoln

Sincere Respect and Well Wishes.

Morgan Donohue, Vice President

Erdman Automation Corp.

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4 comments
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  1. Nailed it!

  2. It is nice to hear something on the positive side. Well done Morgan.

  3. Excellent!!!!!

  4. Morgan, you may not be an economic expert but these factors you mention are absolutely going to favorably influence the growth of the housing market. That elephant is going to be tough to tackle!

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