Selling Homes To A Generation of Perpetual Children

Over 32% of 18-34 year old’s in the largest generation our country has ever produced somehow cannot seem to move out of their parent’s house.  Let me repeat that for clarification, millennials are the largest generation America has ever produced.  They are not simply the largest now because baby boomers are on the decline, millennials are a larger group right now than baby boomers were at their peak.  If this massive group of people is waiting so long to branch out onto their own, what impact does this trend have on the housing market?

Is there anything you are doing right now to account for this shift?  Is marketing toward this age group even an effective way to manage your time and resources?  During my career with home sales I have found myself in a couple of different selling positions.  Position one, I am trying to convince a customer to buy my house instead of my competitor’s. Position two, I am trying to convince a customer to buy my house instead of rent an apartment.  Position three, I have already sunk the deal and am just trying to sell up and cross sell price driving options.  In all three of these positions I am selling to a customer who is actively shopping for a home, at no point am I trying to sell to someone who is uninterested or unable to buy my product.

Is this the key to the dilemma?  Should we just stop trying to pull 20 year olds out of the basement and focus on people 30 and above?  There is still a large portion of the 18-34 age group that are potential home buyers and they will come to us when they are ready to purchase a home, but maybe it is not in our best interest to try to find them.  Eventually 18 year olds will be 35 and enter the age group of home buying should we just hang tight and focus on them when they are ready?

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Selling to Millennials

The housing industry is now onto its next big wave of potential consumers, the Millennials.  The Millennial population (87 million) is the largest generation in America cruising over the Baby Boomers (78 million).  Currently 65% of Millennials are over the age of 25 and have become financially stable yet a very small percentage has purchased a home.  So why, why is it so difficult to sell a home to a Millennial?  Let’s avoid talking about how the economy isn’t phenomenal and how student debt is hurting the middle class and young Americans.  About 31 million Millennials are unfit for home buying because of financial instability, but what about the other 56 million, what are we missing?

One of the most distinct features of the Millennials is they are extremely cautions buyers.  Millennials have grown up during an economic crisis centered on housing and just about every one of them is connected to someone who felt the negative effects of home ownership.  The best approach to counteract this fear of mortgages is to stress that home prices and interest rates are at a low point, making now the safest time to buy.

Another feature of Millennials that separates them from generations before is that being a home owner just doesn’t carry the same significance as it did with their parents and grandparents.  Being a home owner no longer acts as a symbol of status, it is not a badge of accomplishment to Millennials and it generally is not viewed as the gateway to building a family and creating an identity.  If anything Millennials see home ownership as a burdensome commitment.  When selling a home to a Millennial, especially if it is a first home, help them keep in perspective that this does not have to be a forever home and that they do not have to be tied to this decision forever.

Having a quick turnaround on answering questions for Millennials is also incredibly important when making a sale.  Millennials have grown up in a world of instantaneousness.  Do not wait to give the customer gratification.  If a customer asks a question, do not keep them waiting, even if you don’t have an answer for them yet.  Always respond.  Saying, “Hello, I don’t have a solid update yet but I’m looking into this for you” is much better than leaving them waiting.  Also, if you are breaking into the world of Social Media marketing and correspondence with customers make sure you know how to use it.  If you are not an expert with Facebook, Twitter, or other Social Media platforms, either get some practice beforehand or stay away from it.

Most Millennials are eco-friendly and conscientious about their impact on the environment.  When selling new homes highlight the eco-friendly features they have.  If a home has energy efficient appliances, high insulation values, or specialized windows, make a big deal out of it.  Never underestimate the importance of such features to Millennials.  Highlighting these features could steer them away from the drafty existing home market altogether.  Along with energy efficiency, make sure the home has plenty of energy or rather, plenty of outlets.  Most Millennials are not looking for a ton of flair and extravagant designs in their homes, if you provide them with a simple, open concept floorplan that is loaded with outlets so that they can keep their devices charged up and mobile throughout the home, your customer will provide all the flair necessary.

With some practice and a bit of understanding of the Millennial mentality selling to Millennials will begin to feel like selling to all other consumers.  Recognize the need of the consumer, find the product that fits the need, and introduce the product.  The sales methods stay the same, the sales pitches need to change.

Baby Boomers, Millennials, Retirement and Student Debt

Looking at home ownership and the economy as a whole we can begin to see several key entities that are going to play major roles in the near future.  These entities are the Baby Boomers, Millennials, retirement, and student debt.  These four factors, if not prepared for could begin a major decline in housing and economic activity.  However, as with any obstacle, proper planning could make a potentially harmful situation beneficial.

First, let’s look at the housing market and see how these factors will play their separate but intertwining roles.  Baby Boomers make up the largest portion of home owners in America and as they are growing older the side effects of aging are leaving the Baby Boomers looking to downsize.  Some will stay in their homes but the trend has been showing that most wont.  So what is happening to these large empty homes?  At first glance it would seem likely that Millennials would swoop in and buy these recently vacated homes, but this is not the case.  Millennials are a very spending concise generation, mostly because of student debt.  Student debt is now at 1.3 Trillion and is the largest source of personal debt in this country.  Since 1989, also the year home ownership began its decline in America, the tuition for a four-year degree has risen 1200% while the purchasing power of the minimum wage dollar has dropped 25%.  Carrying this type of debt and trying to also juggle a median price home mortgage leaves the dream of home ownership in the dust for most Millennials.

How do millennials offset this issue?  What we’ve seen is that most millennials choose urban living and renting over homeownership and being land owners.  This trend has freed millennials from putting themselves into greater long-term debt, but lacking homeownership is hurting net worth potential and killing the middle class.  Affordable housing has been a hot topic issue in our nation, but affordable housing will not save us.  We need affordable home ownership.  Manufactured housing has proven to be an affordable alternative to site-built homes while having the equity building power that renters will never be able to take advantage of.

Moving on to the economy, Baby Boomers are retiring at a ferocious rate and as they do their disposable income is in decline.  We’ve already seen the Millennials are a spending conscious generation and as baby boomers hold 80% of the American wealth, they are also the largest portion of our consumer spending.  As they retire, and their disposable income declines, so will their propensity to spend.  Interest rates, supply, demand, trade tariffs, domestic policy, foreign policy, all of these have effects on the economy and how it performs, however 70% of economic function is based on the consumers desire to spend.  With one generation retiring and losing disposable income and another generation too burdened with debt to spend there needs to be some form of relief to keep people borrowing and keep people spending.  Affordable home ownership is a viable solution, and manufactured housing is affordable home ownership’s saving grace.

2014 posts in review

I think that 2014 was a year of adjustment for us in our industry.   In review, here are the articles that I have written this year.

-Google Analytics- A program through Google that can help track the traffic on your site

-December HUD-code Home Shipments- December 2013 shipments were up 14% from December 2012

-National Congress & Expo for Manufactured & Modular Housing

-2014 National Industry Awards

-February HUD-code Home Shipments- February 2014 shipments were up 5.9% from February 2013

-Baby Boomers- There are 76 million baby boomers to date and how they will affect our industry

-Marketing Funnel & Social Media- A funnel approach to capturing customers and keep them engaged longer

-Manufacturedhomes.com- A site that allows potential homebuyers to get information about financing, purchasing, construction and where to find dealerships in their area.

-Tiny House/Park Model Trend- Stats about how this new trend is affecting the housing industry

-Mortgage Discrimination- Mortgage Denial for women on maternity leave

-2015 Louisville Manufactured Housing Show

Baby Boomers

A Baby Boomer is someone who was born between 1946 to 1964.  To date, there are roughly 76 million boomers which is equivalent to 1 in 4 Americans. Boomers have very strong buying power and could really sway the housing market, because of their large buying power.  Kathleen Howley wrote an article for the Bloomberg (click here for the full story) discussing the record sales the housing industry is seeing.  Although this article features stick built homes in Oregon & Utah, this could directly affect our industry.   A majority of these boomers bought homes during the 80’s and 90’s, and with the price of real estate constantly growing, this has left them with a great return on their investment.  Boomers would rather pay cash for a home then be bogged down by a mortgage.

The Manufactured & Modular industry would be ideal for Baby boomers who are looking for custom homes at an affordable price.  We offer a way for them to uniquely design the floor plan and features that they want in their home.  I refer back to the presentation that Chris Nicely discussed with us at our last meeting.  Our industry can offer wide hallways, 360 degree bathrooms, smooth transition flooring, no step showers, grab bars, 36″ doors and no low or high appliances.  Even if boomers are up to date with all the technology today, they still want to touch and feel the product they are going to buy. It’s important to show these features in some of your display homes.  Don’t forget to display brand names!  Boomers still want luxurious products and rely on known brands; this also includes “Made in America.”  Here are four points to consider attracting baby boomers – capitalizing on nostalgia, avoiding stereotypes, emphasizing the product’s benefits, and considering product features that will make Manufactured & Modular homes the smart choice!