Archive for December, 2009
The “Micro-Condo” and Why It Sells
Posted by Sibet B Freides in Marketing, Real Estate Trends, Sales on December 30th, 2009
As we continue to see the desire for luxury living spaces shrink, some existing condominium markets are starting to segment their spaces in order to sell. This smaller space also matches the new trend for smaller homes.
Many are calling it the “micro-condo” trend. Others see it as an extension of the already powerful “sustainable” trend. I think it is a combination of the two which makes it powerful as a selling point.
The micro-condo trend is based on not only constructing smaller spaces in development but also sub-dividing existing luxury space into smaller, more affordable units. The emphasis and benefit lies in customization of the small space. An increasing number of reports are showing a shift to smaller living spaces, but also a desire to maintain luxury finishes and appliances. Those moving from the suburbs are willing to skimp on space but not on finishes like gas stove tops, subzero refrigerators, and high-end cabinetry.
The Desire for Customization
A big draw for such a small space is the option for customization. Most of these units can be divided as desired. The walls are removable so buyers can manage the square footage to their liking. Other options include a choice of flooring and fixtures. Buyers are getting exactly what they want out of the unit which is good for the seller as happy buyers will refer friends.
Location Is Everything
Another fantastic selling point for most of these “micro-condo” spaces is their locations. Many are located in urban settings which are more appealing to someone looking to buy a smaller space. Think Generation Y or an executive looking for a second home for business. These sorts of spaces give Generation Y their luxurious needs without the huge costs. The business executives can buy a second home without sacrificing the luxuries they’re use to.
Most of these “micro-condo” spaces occupy only 500 – 700 sq ft, which means location plays the largest role in a buyer’s decision. Someone will buy this space because it is close to work or because it is in a location they like. The luxury amenities and finishes are a perk. If you are thinking about re-purposing your condo building, I would suggest that you think about your location before you make a decision. Why would someone buy a home in this building and this location? We are finding many great options for existing product. You just have to think outside the box.
A Lurking Shadow for 2010
Posted by Sibet B Freides in Real Estate Economics, Real Estate Trends, Sales on December 29th, 2009
As we count down the final days of 2009, we are hoping for a better year than the last two and a decade that tops 2000.
A slowly recovering housing market is something we should be cautiously optimistic about among many things. I encourage caution for many reasons but the one thing we often overlook in the housing recovery is the dreaded “Shadow” market.
It is amazing how many articles are written about a recovering housing market without a mention of this lurking problem. My economist friends have pointed out to me that my optimism is encouraging but we all have to be aware of the homes not on the market “yet”. One of the economist I follow, GU Krueger at Housing Econ is one of the leading experts on this subject. I highly recommend you check out his forecasts.
The backlog of foreclosures are sitting and waiting to be listed. Once the estimated 1.7 million homes are listed and claimed by lenders, the market will be flooded and property values will naturally take a downward spiral.
One can understand why lenders may be holding off on these foreclosure listings, but I am not sure what they hope to gain in the end. Holding them will only delay the recovery of the market. I do understand that lenders are holding inventory in hopes of selling at optimal times, but what if the time never comes? The longer inventory is held on to, the longer it will take to sort through.
A great fear of many is that the government’s Home Affordable Modification Program will fail in 2010 causing a spike in foreclosures. This would then flood the market with the rest of the “Shadow” inventory.
The housing market looks to have its fair share of speed bumps next year. I remain optimistic that we have turned a corner, but I think it’s important that we enter the new decade with a level head. A combination of failing housing programs and lurking foreclosure inventories leads us to cautious optimism.
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The Death of E-Mail Marketing?
Is E-mail marketing dead? With the emergence of social networking services, many would argue that it is dead indeed, but is it really? This makes me wonder if this forum was ever useful for sending direct mail messages.
The truth is that e-mail marketing has always provided a positive ROI when used properly. The problem begins when you start crafting e-mails with little or no useful information for your recipients. Before you write an e-mail marketing piece, you should ask yourself a few questions.
- Who do I want to read this?
- Why do I want them to read it and will they care about the information presented?
- Am I providing anything of use to the reader or am I merely ranting about my product or community?
- Is there a call to action within the e-mail?
You would be surprised at how many e-mail marketers fail to consider these questions.
It is important to remember how most individuals regard their e-mail inbox. Do you like junk mail? Do you like solicitors calling you? Odds are you don’t and neither does your e-mail recipient. Most of us hate junk mail and can’t stand a cluttered inbox full of spam.
I would base my e-mail marketing strategy around the idea of utility. What do you have to offer your e-mail recipients? If you have nothing to offer, then you cant expect your audience to open or read your e-mail. If your messages become consistently useless, you might find your subscriber numbers dwindling or your messages might be flagged as spam and recipients may never lay there eyes on it.
What about social media?
Is social media killing e-mail marketing and its every day use? It is hard to say right now, but I would say no. From my observations, social media isn’t as personable as e-mail yet. That’s not to say that it wont be one day, but that for right now, e-mail still has its place. I don’t buy Twitter as an e-mail replacement. You can’t really do much with only 140 characters.
I think e-mail still has its place and that means that e-mail marketing does as well. A carefully crafted piece with photography and a message that shows how the buyer will live in the community will be successful. A piece touted the attributes of your community will not. The message needs to engage the reader and speak to them about their interest. Remember to always think of who you are communicating with when developing a marketing plan of any sorts, not just e-mailing.
The Mansion Hasn’t Returned Yet…….
Posted by Sibet B Freides in Real Estate Economics, Sales on December 18th, 2009
There have been several articles published lately talking about the return of luxury consumption. I believe it was the Wall Street Journal touting how Louis Vuitton stock has rebounded from the recession.
The article makes it seem like everything “luxury” is on the way up. The biggest mistake real estate professionals could make right now is to assume that this applies across the board for luxury consumption. Luxury real estate is no where near positive sales. In fact, I would say that until the consumer portfolios are back to what they were in 2006, we won’t see a serious turn around in the high-end market.
A real estate investment is a totally different buying decision than clothing or even an automobile. I hope that decision makers won’t allow wishful thinking to cloud their judgment.
The only high-end property moving right now is for investment purposes. If you have the cash to invest in a piece of property, you are primed for a great return. This kind of real estate purchasing cannot bring back the luxury market. The truth is that most of us don’t have those kinds of assets so the idea of a returning market in the immediate future is just not cutting it.
The high-end affluent market will come back one day- just like our economy. Unfortunately, I think it will be later than sooner. Don’t be fooled by consumer spending on unrelated products. I would consider these feel good items for the wealthy. Expensive handbags and fine art don’t belong in the same category as mansions.
Value Is 100% perception
Posted by Sibet B Freides in Marketing, Real Estate Trends on December 17th, 2009
In the eyes of the real estate consumer, luxury is whatever they want it to be. I talked about this in a previous blog post relating to some of next year’s trends. Even though some are predicting the consumer’s desire for value as a trend for 2010, I think it is more of a realization instead of a new consumer behavior.
What about perceived value?
Every potential buyer or renter that visits your property will have a different set of values. Further more, that value will evolve over time. My values today are not the same as they were 2 years ago. Consumer values are influenced by lots of things including social trends.
It makes sense when you think about it but you would be surprised at how many businesses market their products without ever thinking of an evolving perceived value. This doesn’t just apply to real estate. The consumer will determine the value of any product.
How do you Market Value Right Now?
If I were starting a new project, I would focus on the value of sustainable architecture and construction. The perceived value in green products is extremely high right now. People don’t value the ozone layer. They value their wallet. The value of energy efficient features is not related to environmentalism. It is related to dollar signs. The benefits of marketing green products are numerous. It allows the consumer to save money, which is consistently valuable, and it allows them to boast a green lifestyle, which plays into current social trends.
The number one tip for homeowners trying to sell their house right now is to incorporate money saving green features especially energy efficiency features. “Green” is a consumer buzzword. It is what home buyers perceive as value.
This value will change over time. Green products will either lose their hype or become a standard in real estate. Regardless of how it passes, realize that it will. I am hoping it will become a standard.
We need to always be looking for the next perceived luxury or value. I would suggest monitoring consumer behavior if you aren’t already. Those who get in early can differentiate themselves from competitors which is always a good thing when it comes to marketing.
Break Free From Price-Point Marketing
Posted by Sibet B Freides in Marketing, Real Estate Trends on December 16th, 2009
I wanted to share a link to one my favorite blog posts as of late.
What I love about this blog is the idea of creating a marketing focus based on what makes your product unique instead of just price point. What is the most common focus of most real estate marketing strategies? Unfortunately it tends to be a low price especially with all the foreclosures. I think we can all agree that this is not sustainable over the long term and does very little to brand your product. What do you think most of your competitors are selling ? Odds are they are boasting a low price point.
Right now there is no better way to blend into the real estate crowd then by shouting low prices. So many real estate developers and sales agents are turning to the low price game. Why is this?
What we need to do is focus on why people should want to own or rent our properties. What makes your product different? Why should someone buy or rent from you instead of your competition?
This doesn’t mean that you shouldn’t lower your prices according to the market. It means that you should promote other features too besides price reduction. Besides, a big banner outside of your property or on your website stating “Reduced Prices!” or “Recession Specials!” gives off such a negative vibes. Try to focus on the good. You would be surprised
So, What Makes Your Product Better?
Figure out what your edge is and capitalize on it. Try and attract potential buyers with something positive about your product. What makes you different than your competition? A low price point does not make you any different.
A Home Is A Home, Not A Commodity
Treat your product like a home, not a commodity. If we treat our communities like a commodity, then we have no choice but to sell on price. Look at your community as a home and convey that to your potential buyer. Studies and reports are coming out everyday detailing a shift in consumer attitude. Homes are becoming less of an investment and more like a home again. Take note of this and plan your marketing accordingly.
Senior Citizen Internet Use Is On The Rise
Posted by Sibet B Freides in Demographics, Marketing on December 14th, 2009
A recent article at Mahable.com discusses a Nielsen report showing that a significantly larger number of people 65+ are spending their time on the Internet. The numbers for 2009 are staggering when compared to those of 2008.
In a recent study conducted by Nielsen, the number of active web users over the age of 65 has increased to 6 million over the last 5 years. That is an amazing number. This means that seniors are actively engaging with Internet services such as e-mail, websites and social networks. Their participation has increased 55% in only 5 years.
Of all the data Nielsen collected, the most intriguing was the information about how these seniors were using their time on the Internet. Google search was number 1 with little surprise, followed by Windows Media Player. Both of these should come at little or no surprise, but the next two should grab our attention.
Coming in at 3 and 4 are Facebook and Youtube. Many times real estate marketers and developers are afraid that a social media strategy can’t appeal to an older generation. Well, here is some hard evidence that seniors might be a little more web savvy than you think.
Here is a crazy little fact. In last year’s survey of senior Internet use, Facebook was number 45 on the list of online destinations. This year it was number 4. Pretty big jump don’t you think? Do you still think that the 55+ crowds can’t be reached on social networking sites?
The article over at Mashable.com puts a great perspective on it.
“This is just what happens when new technologies become more accessible and more mainstream.”
There is so much truth in that statement. Think about how easy it’s becoming for people to access Facebook, Twitter or any other social networking site. The easier it becomes, the more relevant it becomes in marketing.
What do you think? If you were developing a product for the 55+ crowds, would you consider using the Internet as a main component of your marketing plan? What about implementing social media now that you have read the above? Let us know.
Let Twitter Be Your New Focus Group
Posted by Sibet B Freides in Marketing on December 11th, 2009
I am often asked questions pertaining to the utility and usefulness of Twitter. The answers to these questions vary based on who asked the question. In my opinion, Twitter’s usefulness will be based on how you want to use it. This varies from company to company which is why everyone’s Twitter strategy should not look the same.
One great way I am seeing company’s use Twitter is for brand monitoring. I recently posted a blog about real-time reviews and what it means for your brand’s on-line reputation. This is exactly what I was talking about.
Image taken from WSJ.com
Everyone Has a Platform
Social media is giving everyone a microphone if you will. Everyone has a voice now and that voice is easily searchable thanks to the latest addition of real time results to Google. Brands that are choosing to ignore social media or fail to monitor their brand are not only missing out on communication opportunities, but also possibly letting unhappy customers run your company’s good name through the mud. Don’t you want to know what is being said about you?
An Experiment by WSJ.com
A recent experiment by the Wall Street Journal talks about the strong correlation of sales with positive Tweets relating to brands.(In this case movies) You can read about the experiment here.
Big brands can use Twitter as unbiased focus groups for their products. That’s great, but how can real estate use this? By monitoring your brand on Twitter, you can check on what current residents might be saying as well as gaining useful feedback from previous property visitors. There are numerous opportunities that can make positive use of Twitter.
Don’t Forget……
We need to also be reminded that any social media strategy should start with an objective and then what social media tools will be used should be based on that strategy. Not everyone’s social media plan may involve Twitter. It is about the message, not the tools.
Generation Y’s Hard Lesson and What We can Learn From It
Posted by Sibet B Freides in Real Estate Economics on December 9th, 2009
Generation Y has long been regarded as the “I want it all, and I want it now” generation by its elders. For the most part they have done nothing short of proving these stereotypes predominately true. Maybe it’s because they watched their parents continue to trade up for the next best. Maybe it’s because they became accustomed to granite counter tops and hardwood floors. Whatever the reason for the labels, Generation Y is now snapping out of it and learning that waiting can be your best friend.
While the stereotypes ring true for the most part, there are Gen Y home buyers out there that are learning the hard lessons about mortgages and lending. It’s causing them to pull back on their “the sky is the limit” attitude. How can they not? They got burned just like everyone else did when the market crashed.
A cyberhomes.com article paints the perfect picture:
“When Kealoha Yoshioka was 27 and buying his first home – a fully renovated condo in Campbell, Calif. – he was dazzled by the extras: the dual bathroom sinks, the crown molding, the granite counter tops.”
“Now, three years after his first home buying experience, the shine is off the extras, and he’s upside down in his mortgage. The allowance his wife and his accountant mother-in-law put him on for his Xbox games is all but gone, and the big expense is the couple’s 10-month-old puppy, Shiba. Yoshioka still wants all the bells and whistles in his next home – and he wants that new home to come soon, as the couple considers starting a family. But for the first time in his life, Yoshioka is doing something new: waiting.”
The article does however shine a little light on the maturation of Generation Y, which is good for everyone involved in the home buying and building process.
“Today, DeBord sees a shift in the thought process of the Millennials he works with that’s affecting home buying trends. Like everyone else since the economic slowdown, Millennials assume they’ll own their first home longer and don’t assume it will function as an ATM. Most importantly, they have to be careful about how much they borrow.”
“They’ve learned caution,” says Susan Seal, associate broker at Houlihan Lawrence in New York City. “They no longer let themselves fall in love with a home, but agonize about the potential rise and fall of the future market.”
Perhaps the Millennials will do it right and teach us Baby Boomers a good lesson. Making the biggest buying decision of your life using your brain instead of your ego will work out better for the buyer. Does this change the way we sell homes? Absolutely. This buyer will be armed with volumes of information (both accurate and not) from the web and will be less likely to make an impulse buy. Are you ready?
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