Archive for the ‘Real Estate Trends’ Category
How New Homes Can Overcome The Foreclosure Market
Posted by Sibet B Freides in Real Estate Economics, Real Estate Trends, Sales on August 26th, 2010
In a market flooded with REO homes it is hard to convince a first time home buyer that buying a new home is the right choice. With so many discounts, it’s hard for buyers to really consider newly built homes. The good news for builders is that new homes can offer things that older ones just can’t.
I recently read an article titled “9 Reason to Choose a New Home Over a Resale” and it pointed out the distinct advantages of buying a new home. For builders and developers, these 9 points are the things that can win you the first time homebuyer who might be on the fence about buying new or getting a good deal on a foreclosure.
Most of the 9 points are nothing we haven’t seen before but its good to be reminded especially during this tough time. They include a reference to energy efficiency in regards to building envelopes and appliances that promote energy savings. It also mentions the customization options that most builders are giving buyers in today’s market. All of this added with better financing options make buying a new, energy efficient home pretty desirable.
Even though this article was written for buyers, as builders and marketers, we can use this information to understand what buyers will be looking for. Most of us understand what benefits buyers are looking for without reading this article but it’s important that these benefits are strongly communicated. We in the industry “get it” but does your consumer? Incorporating all of these incentives means nothing if buyers aren’t aware of them. There is little doubt that most developers know that energy efficiency and customization are big selling points in the new home market. Where everyone is coming up short is with his or her messages. All 9 points from this article can be incorporated into a cohesive marketing plan. Building these homes is not enough. We must be able to communicate these features in order to convince buyers that buying new in a troubled market is a solid investment.
What Do Social Media Users Really Want?
Posted by Sibet B Freides in Marketing, Real Estate Trends on August 19th, 2010
If Internet addiction is real then I think it’s safe to say that social media addiction is too. After all, most of the Internet is heading towards being more collaborative and this is largely in part due to the rise of social networking.
The argument of whether or not social media is addictive is irrelevant in the end. Those looking for ways to advertise on such platforms care more about what social media users desire.
A Social Media Explorer article discusses social media addiction and includes some stats along with it. The better part of the article is the second question they attempt to answer, “What do social media users really want?”
The answer to this question is not a broad one but it’s actually specific to your product. Think about your consumers. Hopefully you have a pretty firm grasp on who and where they are. The “where” being social media. What social networks are they on? This is key in finding out what they truly want out of a social experience.
According to the article, the majority of social media users participate in order to obtain news. It’s hard to translate that into any sort of marketing strategy. It’s too broad. It does tell us that the majority of social media users create profiles in order to discover things. This of course includes housing.
The key is finding the right way to communicate with social media users. You have to act like them in a sense. You have to care about what they care about. If they care about community then you must show them community to get their attention. We are advertising on their turf and it’s important to remember that when we start planning.
Finding The Sweet Spot In The Luxury Market
Posted by Sibet B Freides in Green, Marketing, Real Estate Trends, Sales on August 18th, 2010
Builders everywhere are trying to design new homes with the latest in sustainable technology while trying to maintain a high profit margin. There are several experts that see unstoppable reduction in profits for new homes. Most of them think that this is a change that builders need to start accepting for the future.
Builderonline.com has a great article featuring a builder, Bill Freeman. Freeman built a 3,000-square-foot house in Essex, Conn. with complete dedication to energy efficiency and savings. What he found out was that it’s difficult to build a large and luxurious home with a high HERS rating. He then called in a consultant who helped make a few minor tweaks to increase its rating. Tweaks along with his initial plans cost him more than usual, which will ultimately result in a lower profit margin.
The reality of the market is that striking a balance between profit and sustainability is a challenging task. In Freeman’s words, “A lot of builders don’t like hearing that, but it’s the reality now.” The challenge, especially in the luxury real estate market, is continuing to provide consumers with what they want while also obtaining high-energy efficiency scores and sustainability certifications.
All of this will certainly dictate how we market these types of homes. Just like new home designs, we must also strike a balance between luxury and sustainability in our messages. It is also important that sales agents are able to strike that balance when dealing with potential buyers.
As home building starts to pick up, everyone involved in the building and selling process needs to be on the same page when it comes to finding the sweet spot in the luxury market.
Are You Wasting Money On Your Developments?
Posted by Sibet B Freides in Green, Marketing, Real Estate Trends, Sales on August 17th, 2010
Builderonline.com has a great article titled “50 Ways To Waste Your Money.” It’s on their website and in this month’s issue of builder magazine. If you haven’t read it yet, I suggest you do so here.
It’s a lengthy article but it’s worth a read in its entirety. I naturally enjoyed some of the more marketing and advertising focused tips. Here are a few of the ones that I really liked.
Don’t Train Your Salespeople To Explain The Value Of Energy Efficiency
I have talked about this before but when you build a sustainable home and obtain a certification for it, it might not matter if you don’t have the proper people selling it. How can an untrained sales person sell something they don’t know anything about? You better believe that buyers who are attracted to your product because of its Earthcraft certification are going to have some serious sustainability questions. Salespeople need to be able to talk the talk when it comes to selling sustainable homes.
Neglect Your Website
According to the article, a third of home buyers rely on the internet as their first step when searching for a new home and 94 percent of buyers use it as a tool to search refine their choices during the buying process. Knowing this, I am not sure why anyone would neglect their website to save money. A lot of developers also make the mistake of not updating their websites regularly. Webmasters may be expensive but I would avoid the temptation of cutting costs in this department.
View Technology As A Cure-All
A lot of us are excited about the advancements of the web and mobile devices. The article issues a sound warning to those who may be relying on technology to do old things more efficiently. Experts believe that these new technologies, especially mobile ones, should be used in new, effective ways to create sales and leads. If you rely on these new technologies to execute old strategies, we are selling ourselves short.
These of course, are just a few of the ones that I really like. There are 47 more that touch on building, marketing, consumer research, and design. It is a read that is well worth your time.
The New American Dream
Posted by Sibet B Freides in Demographics, Marketing, Real Estate Economics, Real Estate Trends on August 12th, 2010
Past government policies have always promoted home ownership. In fact, Herbert Hoover believed that owning a home in America could help combat the spell of Communism during the Red Scare. Owning a home has always been the American way of life or at the least the desirable way of life.
It seems that our financial turmoil and the still slumping housing market is drastically altering the American dream. According to government officials and real estate experts, renting is the logical answer for housing and economic recovery.
Not only is this considered the answer to our country’s real estate woes but it also seems to be the logical choice for Americans. Attitudes have changed over the past three years when it comes to owning a home and we are going to see a drastic increase in demand for rental properties. We have learned a valuable lesson in that not everyone needs to own a home. While some may consider this idea harsh, the truth is that the attitude of ownership for all is what got us in this mess in the first place.
It’s comforting to know that the market will eventually fix itself or at least it appears it will. Those homeowners who shouldn’t have owned in the first place are the ones who have more than likely been foreclosed on. This puts them into the rental market where they probably should have been to begin with.
I know this all sounds a little harsh but there is a lot of truth here. Everyone is entitled to own a home but that doesn’t mean everyone should unless it makes financial sense. There is a big difference in the two. When buyers take on mortgages that they can’t handle they’re hurting more than just themselves. The housing market crash has definitely taught us that. The good news is that these hard times have taught buyers, lenders, and government officials a valuable lesson in home ownership.
Prepare for the rise of the rental market.
Look Beyond Square Footage
Posted by Sibet B Freides in Green, Marketing, Real Estate Trends on August 6th, 2010
A reduction in square footage in new homes shouldn’t be viewed as a bad thing. In fact, consumers are actually looking for homes that are smaller, include sustainable features, and are high customizable.
This doesn’t mean that builder should down scale their current floorplans, add Energy Star appliances, and give buyers a choice of finishes. Creating a smaller yet attractive floorplan is somewhat of an art. Lucky for us there is an article on Builderonline.com that hits on a few strategies when it comes to successfully downsizing floorplans. It turns out that it involves more than just removing a bedroom or a closet.
According to the article, creating an attractive floorplan less than 2,000 square feet involves strategically placing windows and adding character wherever possible. Buyers are still looking for a nice space to call home and a reduction in size makes the need for character more important than ever. Ideas include varying the heights of ceilings in different rooms which adds depth to the home’s design; placing windows at the end of hallways and including natural light are key aspects in design.
We can’t forget about the importance of high-end and customizable features within the home. Just because buyers are looking for smaller floorplans doesn’t mean they are skimping on the overall living experience. A compromise in space will surely mean an expectancy of nicer fixtures and details. This is especially true with Generation Y buyers.
Smaller homes are definitely in demand, which will continue to grow. Be sure to strategically plan your new homes by looking beyond a reduction in space and focus on an increase in character and customizable options.
How The Recession Is Shaping The Future Of Real Estate
Posted by Sibet B Freides in Green, Real Estate Economics, Real Estate Trends on August 5th, 2010
Many experts believe that the developing demographic trends we are currently seeing will drastically affect the demand for future rental properties. After reading a report on James Chung’s webinar its is hard to argue otherwise.
In his presentation, Chung reviewed several factors that will directly shape the market. Included is the expansive growth of the US population. In Chung’s words, the positive growth of a fully industrialized country is very positive for the real estate market outlook. The point is that market demand and its marketing will completely rely on this growth. As preferences shift so does the market.
While it’s a challenging task, it is a positive one. According to Chung, the economic climate that the boomers and Gen-Y face will directly shape the majority of demand for tomorrow’s market. This makes complete sense when you consider the shear numbers of these two generations. . Whatever economic hardships these generations face now will determine what builders will be focusing on in the future.
According to Chung, the direction we are heading leads to an increased demand in rental property. Reduced incomes will cause this increased demand for rental property.
The change in consumer attitudes towards health change is driving more than just healthcare but also where people want to live. Consumers will want sustainable and healthy homes. We all understand that people want sustainable homes for energy savings but we also need to remember that they will want them for health reasons.
On a positive note, Chung assured participants of the webinar that the change in the market will be a positive one as long as developers recognize the changes and differences. In his words, “As bad as the recession was, it has corrected the market and has presented a window for reinvention.”
Generational Housing Desires
Posted by Sibet B Freides in Demographics, Marketing, Real Estate Economics, Real Estate Trends on August 2nd, 2010
A recent study asked 1,000 Americans to list the features of their dream home. All ages were polled including Gen-y, Gen-X, and Boomers. You can read about it here.
The article talks about each generation and what they desire in a dream home. It also offers an explanation as to why they chose these in relation to their stereotypical personality traits. Instead of focusing on the stereotypes, I think the more useful information comes from each generation’s life stage. For example, Gen-Y is young and mostly single. This is the major contributor to their desire for a home to be a social hub.
Then you have Gen-X who wants more family-focused features in their homes. I think saying their lack of desire for luxury or formality is because of their generation traits is a stretch. As the article notes many Generation-X are child bearing at the moment. They are looking for organization and means to control the chaos.
The Baby Boomers are described as the patient group finally getting their private home retreat as they become empty nesters. The problem with this outlook is that most baby boomers will not be retiring in this manner. I understand that the poll asked respondents about their dream homes and not their reality homes. It makes me wonder how accurate some of this information is. No where in the article do they talk about the hurting economy, a damaged housing market, or the toned down retirement life ahead. It would be hard for me to take this information and design a product for baby boomers as it doesn’t seem to take current economics into consideration.
This study is very interesting but I am not sure if we need to be using it to plan our next development like it suggests. I would take a lot of advice into consideration along with this input.
Striking A Balance Of Classical Architecture And Sustainable Design
Posted by Sibet B Freides in Green, Real Estate Trends, Sales on July 30th, 2010
It might surprise you that there are a lot of LEED and Earthcraft certified homes out there that manage to encompass traditional architectural elements. In fact, experts say that the classical architecture of some Southern homes is as green as it gets. Where most would consider the big wrap-around porches and tall shutters of classic Southern architecture to be aesthetically pleasing, the truth is that these features were designed to enable passive heating and cooling without mechanical help.
Developers, architects, and builders are building homes that are not only sustainable environmentally but also with floorplans that provide comfort and utility suiting consumers in multiple life stages.
A recent Builderonline.com article talks about a project in Washington, D.C. that has successfully designed and built a product that has earned a LEED for homes certification and has also established a strong architectural similarity with the historic Capitol Hill district nearby.
The goal of homebuilders now is to strike a successful balance between energy efficiency and classical design, resulting in a more sustainable product. Up until recently we have seen LEED and Earthcraft certified homes incorporating very contemporary designs. These home designs also aggressively showcase the sustainable features incorporated. These new homes in Washington, D.C. do the opposite. They tastefully mask their sustainable features allowing more classical and sustainable aesthetics to shine.
If builders are able to successfully strike the balance of sustainability and age-proof design we are going to see a lot of meaningful and efficient communities in the future. It’s going to be interesting to see how far the modern designs can go in comparison to the more traditional ones that still successfully incorporate energy efficient features.
Conflicting Opinions On A Future House Shortage
Posted by Sibet B Freides in Real Estate Economics, Real Estate Trends, Sales on July 28th, 2010
There are many opinions on the topic of a possible housing shortage in America. One side thinks that with so many foreclosures sitting right under the surface we are about to have a major increase of REO homes coming to light. Others, mostly economists, think that a major lack of construction activity over the last two years will ultimately lead to a housing shortage. While both of these perspectives are probably right in some way, I think it all depends on how you look at it.
Is the market going to be flooded with older home including REO ones? It probably will be according to recent reports. On the other hand, the market for newly built homes will probably experience a shortage so those buyers wanting to buy new may have a harder time finding what they want. All of this of course depends on the market itself. According to a Smartmoney.com article, certain regions or cities will experience a shortage of flooding differently than others. Cities like Las Vegas, Phoenix, and Miami are overbuilt so a home shortage in those areas is not likely. States like Washington, Oregon, and Utah will probably experience a shortage sometime in 2012. These locations actually have a balanced supply and demand, which makes experts think that these markets may become under supplied.
In the end, I think it really depends on what regions you are analyzing. We are going to see recovery vary in different locations based on conditions before the crash and current ones. There will however be a noticeable shortage of newly built homes throughout the country. Builders have certainly been on hiatus the last two years and I would think we would definitely see a shortage there may be a boom in new home construction.
