Editor’s note: This is the second of a two-part series. Read Part 1.
What are the trends that will influence your business now and throughout the rest of 2012? More importantly, what steps can you take to capitalize on these trends to build increase your profitability?
Part 1 of this series outlined four key trends that are critical to the profitability of your business. If you want to get the jump on the competition, here are four more important trends to consider.
5. Foreign buyers binge on U.S. homes
The U.S. housing market appears to have hit bottom in most places. Part of what is driving the recovery is the number of foreign buyers. With the uncertainty of the euro, potential bankruptcies of large countries such as Greece, Spain and Italy, as well as the substantial tax increases in France, capital is looking for safe havens. As a result, international sales volume in the U.S. is predicted to be at $82.5 billion for 2012, representing a 24 percent increase from last year.
What’s interesting is where most buyers originate. According to Deborah Falcone, real estate director for the Wall Street Journal, 55 percent of all foreign buyers are from Canada, China, Mexico, India and the United Kingdom. In fact, Canadians account for 25 percent of all foreign sales.
More importantly, there is also a distinct pattern to where most of these buyers purchase. Five states account for 55 percent of the sales. Those states are Florida (down from 31 percent in 2011 to 26 percent of all sales in 2012), California, Texas, Arizona and New York.
Opportunity: Depending upon your location, determine what types of global buyers are purchasing in your area. For example, if you are in Florida, they have a large contingent of Hispanics and German nationals. If you are fluent in Spanish or German, consider target marketing to these two groups by translating the key pages of your website into these languages.
The great thing about expanding your business to work with global buyers is that they have a closing rate of 50 percent compared with 33 percent for domestic clients. Furthermore, agents who work with global clients, as per the National Association of Realtors, make 50 percent more on average as compared to agents who work exclusively with domestic clients.
6. Vacation homes beckon
From 2006 to 2010, sales of vacation homes fell by 56 percent. In 2011, second/vacation home purchases jumped 7 percent to 502,000. This accounted for 11 percent of all sales in 2011 (a 10 percent increase.) Forty-two percent of these sales were all cash.
Falcone reports an interesting pattern. Rising travel costs are keeping buyers closer to home. Moreover, many people are trying out a "vacation home" that may become their retirement home at a later date. In the long run, their prediction is that vacation homes will do well in the long run as an investment.
Opportunity: If you live in an area (most notably in the Sun Belt) or some other location that has a fair number of vacation rentals, this could be a very lucrative niche. The demographics actually support the Wall Street Journal’s conclusion that vacation home sales will continue to be strong going into 2020. The reason is that the height of the baby boom births was in 1960. Additional research has shown that the peak time for people to buy a second/vacation home is between the ages of 50 and 60. As a result, the peak of the baby boom generation will be at their prime buying time for this type of property through 2020.
7. Shift to larger homes
While the Journal concludes that McMansions aren’t coming back, the Census Bureau report did show a 3.7 percent increase in the size of properties purchased in 2011 compared to 2010. An additional trend is that outdoor space is also more sought after than in the past.
Opportunity: The low interest rates allow many homeowners to move to a larger, nicer property with virtually no increase in their payments. Rather than having to go through a remodel, it’s much easier to move into a property that has the features that the buyers want. To take advantage of this trend, prospect for high-probability buyers who may be in a two-bedroom house or condo and who have two or more children.
8. Use different touch points at different times of day
The Journal’s user patterns throughout the course of the day provide some interesting insights in terms of how today’s consumer searches for real estate data. Specifically, mobile app views (phones, iPads, etc.) peak at between 7 a.m. and 8 a.m. There is a second peak around 7 p.m., although it’s only about half the usage as compared to the morning.
Mobile browsers (those accessing the Journal online) peak during the middle of the day. The lowest amount of use seems to be around 6 p.m. when people may be commuting home or having dinner.
Opportunity: No matter where you are marketing your properties, it’s important to note when you will get the most return on your efforts. For example, if you are using a mobile app to market your listings, then you will want to post fresh content in the early morning and after dinner to get the best response. In contrast, your website traffic will probably be highest during business hours, so adjusting your schedule to fit this pattern is a great way to improve the results of your efforts.
How will these key trend play out in your market? Real estate is always local. Look at the national trends and then observe whether the same things are happening in your market. By constantly being aware of market shifts, you position yourself where you can achieve maximum success.