Making News

(Mar. 19, 2008)

A DESOLATE HOUSING MARKET DEMANDS A NEW OUTLOOK

 

The housing market is cyclical. It always has been, and always will. You can’t stick your head in the sand and avoid the downturns. Housing industry professionals showcasing optimism and opportunity, drafting and adjusting their business plans while employing enhanced sales and marketing tactics will be the ones best weathering the housing storm.

Michael Sivage of Sivage Community Development gave similar advice during a panel held during the 2008 International Builders’ Show. “Today's housing market is obviously not the same housing market that existed a couple of years ago, and that means you can't afford to run your company the same way you did then,”he said, as reported by the Nation’s Building News-the weekly online newspaper of the NAHB. The industry faces “another challenging year” following a “tough” 2007, he warned, and the burden is on builders to persuade consumers to consider the home-buying opportunities in today’s market despite the daily barrage of negative reports in the news media.

Showcase opportunities

One prime example is the way declining home prices are enticing younger buyers. With larger government backed loans, rise of foreclosures and an expected interest rate cut, homes today are becoming increasingly affordable, especially for those priced out of the previous housing boom. In the San Francisco Bay Area, a youthful couple (26) found their 1,400-sqaure-foot, three bedroom, two and a half bathroom dream home for an estimated $385,000 with five percent down, as reported by the Mercury News. Just a short time ago, $400,000 would only secure a one-bedroom, 900-square-foot condo.

And Generation X isn’t the only younger generation influencing the housing market. About 74 million strong (second in population only to the Boomers), Generation Y will hit housing and remodeling peaks within the next five years. A recent study conducted by Harvard’s Joint Center for Housing Studies shows that upwards of 20 percent of recent homebuyers (owners of five years or less) are looking to upgrade or change their kitchens and baths along with making structural changes and adding rooms. Capitalizing on the chance to connect with this group of optimistic, independent, driven, diverse and technologically savvy individuals will equate to elevated opportunity. This demographic should be a primary focus among housing industry professionals.

What’s more, the Baby Boomer generation continues to uphold its invaluable presence in the housing and remodeling markets. As the older generations’ (those who have been in their home for 30 years or more) space tends to be already established, this demographic focuses on plumbing and heating upgrades and maintenance while seeking to maintain their home’s overall condition.  Remodelers will continue to drive opportunities with this group by helping to make their existing primary and second homes more comfortable and accessible …often incorporating universal design and accessible living options.

 

Remodeling remains steady

Overall, reports show that the remodeling industry continues to experience growth. And for good reason. As a direct result of the bleak state of the market, home sellers seeking to lure prospective buyers are turning to designers, remodelers and contractors to aid with upgrades. What’s more, with fewer homes being built, contractors, designers and remodelers are now available for work they may have otherwise turned down. Homeowners will be staying in their homes longer, resulting in remodeling projects consistent with aging housing stock.

Approach your business with a new attitude

Manufactures and distributors who uphold an optimistic view of the future of the housing industry will experience success. The key to buoyancy in this dismal state? A formidable business plan and enhanced marketing and selling tactics.

Below is a brief summary of first-hand insight and business strategies that make a big impact:

  • Take advantage of best practices in marketing from similar channels for relevant insight

  • Implement a properly trained sales staff

  • Know your market. Every region is different. Find out how you compete in each sub market. Conduct focus groups with buyers and prospects to find out what resonates

  • While it may sound counterintuitive to some, it is vitally important to allocate sufficient resources to marketing in down periods. When the market does come back you want to be top- of- mind to your most valuable targets.

  • Maintain brand presence. Highlight your company’s longevity, reputation and trustworthiness.

  • Actively seek opportunities for co-op advertising for high potential momentum in local markets. Align with other affiliates that can complement your messaging statements and brand presence.

  • Increase public relations efforts and paid media placements

One final thought as put best by Kevin Estes of Estes Building: “Most of the competition will mostly whine and cut prices. That will be the extent of their plan. Keep looking at your plan and working on it.”

More info…

K&A is about to release its five-year forecast of the housing market. Stay tuned for more information regarding the release date or click here to sign-up to be one of the first to receive your FREE copy.

Newer >>                                                                                                                           Older >>