Volume Buyers

Keeping you informed and updated!

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?

June 4, 2016 Posted by | General Information | , , , , , , , , | Leave a comment

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.

March 10, 2016 Posted by | General Information | , , , , , , , , , , | Leave a comment

Will there be a rate hike? How will that affect us?

Growth in the housing market is an indication that the future is bright for our industry but as people whose lively hood is consumed by market performance we need to be prepared not for just growth, but any market movements.  In the past two decades, through two major market implosions we’ve seen how a trend in growth can indicate and in fact cause a market downturn.  Growth is great but over heating of any market creates volatility and usually a painful correction.

Currently statistics from the Multi-Indicator Market-Index (MiMi) reveals that the housing market has grown 6% from 2010 and is seeing its best year since 2007.  This growth has been spurred from both sustained low interest rates and employment growth.  This growth in the market is expected to continue through year end but employment growth will not be enough to sustain the market moving into 2016.  For growth to stay steady in 2016, wages will have to increase.  Home appreciation rates have outgrown wage growth and the Federal Reserve is concerned that, similar to our last two housing market crashes, homeowners and potential buyers are experiencing false equity.  One measure creating this concern is that construction and replacement costs have risen 3% over the last year while resale and purchase prices have risen 13%.  This 10% gap is potentially caused by inflated appraisals where homes are being sold for more than they are worth simply because there are enough buyers out there who are willing to pay the price.

Inflated appraisals and false equity in the resale value of an existing home may seem far removed from any concerns that we have in the Modular and HUD home industry, but this problem doesn’t take too long to become relevant to us.  If the market continues to grow at an increasing rate and the Federal Reserve finds that false equity is occurring as a mechanism to keep up with housing demands then the Fed will enact an interest rate hike.  The safest way to keep an overheated housing market in check is not in the costs of the home, but in the costs of borrowing money.  The Federal Reserve understands this, and this is where we will be affected.  We are already dealing with a demographic that has restricted credit options and an interest rate hike would restrict our demographic further.  This rate hike could cause a decrease in sales, which is its intention, and could be harmful if unprepared for.  This is still better than the alternative of an overheated market running out of flame.

To see the graphs better, please click on them

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To demonstrate this I’ve provided two graphs and a couple statistics to illustrate what happens when a housing market’s overheating simply becomes too hot.  In the 90’s the manufactured housing industry was on an incredible rise, sales and prices were steadily increasing and the demand seemed just as steady.  In the mid-late 90’s, specifically 1996 and 1997, because of apparently unending demand home prices rose and in 1997 the average home price was $20,290 more than in 1996.  This is equivalent to an overnight increase of more than $30,000 in today’s dollars.  With a constant interest rate on a 30 year mortgage and adjusted for inflation this price increase would make monthly payments for a 1997 buyer increase by $143.61 over a 1996 buyer.  Home sales in numbers fell 2%, the first decrease in five years, while home sales in dollars rose 54%.  This rapid increase in price to curb demand led to a five year slide in home sales that averaged a 16% loss in sales for five straight years.  This same practice of inflated pricing happened in a more openly fraudulent way in the late 2000’s and as long as people are willing to take major risks to earn money we will always have to watch out for markets crashing.  So, by all means ride the wave, just hold onto your life vest.

November 7, 2015 Posted by | General Information | , , , , , , , , , , , , , | Leave a comment

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!

June 5, 2014 Posted by | General Information | , , , , , , | Leave a comment