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Wednesday, Oct 4, 2023

SALES–New-Home Sales Predicted to Be Marketing Driven

During the past decade, America enjoyed an economic boom that led to an explosion in new-home building. In this new decade, I’m predicting a continuation of the building boom.

The U.S. Commerce Department estimates that every $1 spent on residential construction generates $1.45 of additional economic activity. That includes everything from lumber for house frames to hinges on kitchen cabinets to energy needed to run sawmills.

For San Diego County, I’m expecting America’s Finest City will continue to participate in America’s building boom to a certain extent, thanks to low interest rates and rising consumer confidence.

Local government regulations will still limit some activity of local builders. In the late 1990s, Southern California builders put up less than half of the houses needed to accommodate our fast-growing population. Many builders are strangled by high building fees and a permit paperwork jungle in a tightly regulated environment which frequently tells them where to build, how to build, with what materials and sometimes in what price range.

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– The Best Of Times Or Worst Of Times

So, what does all this mean for sales and marketing?

It means selling a newly built home in this decade will be either fun and a pure joy or a daunting, challenging task. The year will shapeup to be the best of times or the worst of times, depending on who’s telling the tale.

The most successful builders today are listening to home shoppers and responding accordingly.

These builders are vigilant in customer service. Far too often in today’s hectic business environment, the requirements of the customer slip through the cracks.

Home building is so competitive and consumers are so sophisticated that the margin for error for today’s builders is slim. The new home has to match what the market wants, or shoppers will purchase elsewhere.

– Small Developers

Become Competitive

Big developers have an edge because they own chunks of developable land, but smaller firms with strong reputations are closing the gap as banks and thrifts are more willing to loan the money needed to buy land and build houses.

Home builders, by nature, are an optimistic collection of entrepreneurs.

They are enthusiastic, can-do thinkers who are thrilled at deal-making as much as money-making. They can remain upbeat despite downbeat economic signs. Builders build because they like the rewards , not only monetary rewards but also tangible rewards from creating something enduring and helping people share in the American dream.

Historically speaking, until the real estate depression of the 1990s, some builders acted like their customers were still the GIs coming home from World War II , everyone wants a house and you just have to sit and wait.

There was a time when living was easier for California’s home builders; their only pressure was to build faster.

But not any more. Just because you build it does not mean they will come and buy it.

– Home Buyers Have

Higher Expectations

Today’s home buyers are choosier and better educated about buying a house. They expect to live in their house for nearly 16 years, according to Professional Builder magazine.

On average, prospective buyers will closely evaluate 13 different models from five different builders before making a decision.

So, what makes home owners buy a newly built home? The reasons run the gambit: more space, a more elaborate master retreat, better energy efficiency, and a more open, more flexible floor plan.

A recent survey said 15 percent of home shoppers are seeking a bigger garage and 8 percent a romantic master bath. (Does this mean home buyers pay more attention to the needs of their car than of their spouse?)

Strangely, many buyers who are financially able to move up to a new home will often select an older existing home for a variety of reasons, according to recent research from National Family Opinion. Nearly half of the buyers surveyed say the top reason for moving into a new home is because their present home is too small for their needs. Another 14 percent cited a change in employment or marital status as their primary motivation to buy a new home.

– Buyers Look For

Particular Features

To no one’s surprise, one of the major reasons for avoiding a new home is that some builders have ignored features that buyers frequently want.

Buyers of new homes deserve no less than the best in architectural design, layout and amenities. Yet, sometimes they receive something far less.

Many new-home shoppers are frustrated with low advertised prices and models that showcase gorgeous, decorator-quality upgraded features, which , if selected , would greatly change the final sales price.

Many of today’s house hunters face a common dilemma. With so many activities going on, buyers need more space than they can afford. As a result, the buying process becomes a series of design trade-offs, such as a smaller living room in exchange for a larger family room.

Indeed, a National Association of Home Builders survey said nearly half of new-home buyers will accept a home without a formal living room in exchange for more space elsewhere.

– Builders May React

To Consumer Trends

Here’s a list of consumer trends and how today’s new-home builders should be reacting to these trends.

o Consumers enjoy cocooning at home. Computers, fax machines and interactive-TV mean we have to venture out less and less.

Hence, builders should provide homes with multiple leisure areas and ample electric and phone lines, as well as extra storage shelving in the garage. Another frequent request from buyers: a family room or great room and a media entertainment center with big-screen TV adjacent to a fireplace as the home’s focal point.

o Consumers are into safe fun, like virtual reality and eating spicy salsa.

Hence, builders should offer bedroom fireplaces, big bathtubs and large showers with multiple shower heads and seats. A large master bath featuring an oversize shower with several shower heads is more practical than sexy because it allows two people to get ready for work in the morning at the same time.

o Consumers are all stressed out. We’re fried by work and frazzled by the lack of time. No wonder we need to chill out before he hit the breaking point. So, we reward ourselves with affordable little luxuries. Hence, builders should pack the options list with extras like built-ins, fireplaces, maybe a portable spa and upgraded finishes so buyers can pamper themselves. Customization is a key. Consumers want their homes to be a solace, a place for relaxation and rejuvenation.

– Home Offices Help

Slow Down The Pace

o Consumers are slowing down, seeking a saner quality and pace of life.

Hence, builders should include home office space.

o Consumers, especially in San Diego, are on a quest for good health and long life.

Hence, builders should provide exercise areas into communities, whether you sell to first-timers or retirees.

o Consumers are growing nostalgic for pastimes and the “good old days.”

Hence, builders should incorporate front porches, window seats and other nooks and crannies that remind buyers of Grandma’s house.

o Consumers are growing less trustful of big corporate entities and receptive to small, personal companies.

Hence, small-volume builders should stress the personal touch they provide and play it up in marketing materials.

o Consumers are adding to their social and environmental conscience.

Hence, builders should extol being “green,” which is good both for business and the environment.

Hoiseth is president of Home Builders Marketing Services, Inc., an Encinitas-based consulting firm specializing in subdivision sales and marketing. Since 1972, Hoiseth has acted as sales manager and marketing director for more than 5,000 condominiums and homes at more than 65 different subdivisions in California.


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