(This is Part 2 of a six-part series. Read Part 1, Part 3, Part 4, Part 5 and Part 6.)
The number of “traditional” buyers and sellers is rapidly shrinking. Have you made the necessary shifts to meet the needs of the 21st century consumer?
Last week’s article looked at three key economic trends that will affect your business in 2007. Today’s article examines important demographic influences on your business.
#4: The changing face of the 21st century real estate consumer
In 2007, 60 percent of all transactions will be with immigrants and minorities. This demographic is more likely to be composed of first-time buyers. A challenge many of these first-time buyers face is lack of a U.S. credit history. Few lenders have programs to address this problem. Consequently, closing these transactions can be difficult unless the purchase is all cash. On the other hand, we are also experiencing a major surge of foreign buyers for our most luxurious properties. Our industry continues to lag behind in providing both real estate and mortgage services in other languages to both of these groups.
Opportunity: Capitalize on this trend by creating a niche that serves first-time buyers as well as those more affluent purchasers who lack a U.S. credit history. Identify lenders who will work with past rent history or other types of creative financing. Actively solicit immigrant and minority clientele by advertising in other languages. For example, consider having the property descriptions on each of your listings translated into the primary languages spoken in your service area. Offer this translated information in both print and Web formats. Along the same lines, supply your sellers with a Web site that uses the property address as the URL and make it available in multiple languages. Also, consider advertising on foreign-language radio and television stations. If you are not fluent in a foreign language, partner with an agent who is fluent.
#5: The boomer effect: boon or boomerang?
According to NAR, the number of sellers who were at least 45 years old or older in 2006 was 54 percent. This is the same percentage as for 2005. This means that baby boomer activity has remained consistent. Furthermore, the age at which people reach their peak spending is 46.5. The largest proportion of boomers was born in 1960; 2006 was the year this group should have hit its spending peak. This may partially account for why the market has been so strong for the last seven years, as the bulk of the boomers moved through their peak spending years. The current statistics also demonstrate that the prime time to purchase a second home is when the buyer is between the ages of 50 and 60. Currently, many boomers are purchasing second homes in the Sunbelt with the idea of trying out the lifestyle while they are still working. When they retire, they will sell their big family home and make their second home their primary residence.
Opportunity: According to NAR, approximately 17 percent of the boomers plan to purchase real estate in the near term. In 2007, look for the boomer market to continue to be strong, as those born in the late 1950s and the early 1960s purchase second homes in anticipation of retirement. Expect to see more of them selling their large family homes and trading for a property with better amenities and less maintenance. Golf course communities should continue to be popular as well as senior communities that cater to affluent and active seniors who want minimal property maintenance. If you are a boomer, moving to one of these communities and becoming the local real estate expert can provide you with listings and sales for many years to come.
#6: The Great Divide: the Generational Communication Gap
A major challenge that we face as an industry is that the median age of Realtors in the United States is over 50. While there are more than 79 million boomers and traditionalists (those born before 1964), our industry has been somewhat myopic in terms of meeting the needs of Gen X and Gen Y. The Gen X generation was born between 1965 and 1976, and makes up roughly 17 percent of the population, or 40 million. Gen Y, born between 1977 and 1994, makes up about 25 percent of the population, or 60 million people.
Opportunity: Boomers and traditionalists did not grow up with computers. They prefer face-to-face, telephone or e-mail communication. In contrast, Gen X and Gen Y have had computers since elementary school. Mobile access is a way of life. “E-mail is the new snail mail.” When you contact members of Gen X and Gen Y, you had better text message. When they contact you, they also expect instantaneous response. While boomers and traditionalists respond well to brand marketing, the Gen X and Gen Y crowd prefers lifestyle marketing. According to a study from California State University at Chico, “It’s more important to be interactive and to show people having fun. Gen X and Gen Y want to be marketed with a strong dose of the truth coupled with irony and humor. For them, it’s not about reaching the masses; it’s about building a community.” This is evidenced by the stellar growth experienced by such sites as SecondLife.com, YouTube.com and MySpace.com. Gen X and Gen Y want interactivity, and these sites provide it. We are already seeing brick-and-mortar stores showing up on SecondLife.com. Both agents and brokerages may want to consider moving some of their advertising dollars from traditional print advertising to these new venues. Also, since blogs are interactive, they provide the ideal way to reach Gen X and Gen Y.
Want to know more about how to capitalize on the trends for 2007? If so, see next week’s article.
Bernice Ross, national speaker and CEO of Realestatecoach.com, is the author of “Waging War on Real Estate’s Discounters” and “Who’s the Best Person to Sell My House?” Both are available online. She can be reached at bernice@realestatecoach.com or visit her blog at www.LuxuryClues.com.
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