I’ve just put the finishing touches on our Quarterly Housing Stat Pack a compilation of government and association market reports and forecasts. The numbers tell the story of the pandemic’s impact on the new home market. Starts are projected to be down about 10% in 2020, but up about the same amount in 2021. The intrigue is in the longer-range data point of permitted value, which was up 4.4% in the first half, with 24 states growing at double that rate and 14 states in negative territory. The pandemic seems to have set off a new dynamism in the market and the early anecdotal evidence is of an urban outflow that is reversing the trends of the past several years. Multifamily starts which tend to be more urban will be off 16.5% this year and down another percentage point in 2021. So buyers are headed to the burbs, ex-urbs and tier 2 and 3 cities and towns, thanks to liberal work from home policies.
How can builders respond quickly to meet this surging demand?
One answer may be to move to a more fully-fledged online selling model. Put more lots and models on the market as digital inventory, build out your digital sales toolset from selling the community, lot and home models to comprehensively selling options and upgrades. Integrate inside selling and physical selling environments with these tools sets and sell a customized finished home to buyers before you even break ground.
We talked to our friend and Finished Home sales guru, Mike Moore, about the idea of seizing this moment in the market with digital finished home sales and here’s what he had to say….
“The most interesting thing about what’s happening today is that it has opened minds and started discussing like this one. For way too long the homebuilding industry has thought way too small and settled for way too little. What I am referring to is the reality that close to half of home shoppers want to buy a new home, but the industry has always settled for selling only 10%. This model has been profitable but fails to optimize potential.
If homebuilders really want to increase sales, they need to sell the home shopper they haven’t been selling. These are prospective homebuyers who don’t have to move and aren’t in a hurry. Think about the Tesla buyer who waits to get exactly what they want and is now the most avid raving supporter of their brand. If the new homes these home shoppers review aren’t a significant improvement to what they already own, they go home and redecorate or remodel.
These buyers state that the #1 reason they want a new home is to personalize it before they move in. They don’t want to buy a used home. Yes, I said used. The new home industry needs to start addressing ‘resale homes’ as ‘used houses’ and marketing and selling the significant advantages and benefits of a new home. We should be promoting, marketing and advertising that we build brand new personalized homes on a schedule. When it comes to their home, people want their ugly more than they want your beautiful. If we embrace today’s sales and marketing technology and update the buying and personalization process, it can enable us to sell 20-30% of the shopping market–two to three times more than the status quo. Yes, we could be sold out for 9-15 months in advance!”