We're reporting live during the 2015 International Builders' Show the next few days. Here were the highlights from Tuesday:
The state of the housing market
When David Crowe, chief economist at the National Association of Home Builders, took to the stage to present his forecast for the housing market, his message was simple: 2015 is going to be a better year for the housing market than 2014 was. But why?
"Well, because 2014 wasn't that great, and our economy is only getting better," he said.
Here are the nine other reasons Crowe thinks 2015 is the year to watch for the housing market:
- Consumer confidence is back to pre-recession levels
- The pent-up demand for new homes is growing
- Total residential equity is recovering
- Household balance sheets are returning to normal
- Median household income is growing
- Mortgage credit access, though tight, is pointing to a continued easing of standards
- Mortgage rates are extremely low. He concedes there will be some ramping up this year, but the rates will still be low compared to pre-recession levels.
- Housing inventory is rising, though he acknowledges that it is still well below peak levels.
Crowe also pointed to the multifamily sector, which has been the breakout star of the housing recovery. However, this has ultimately hurt single family starts, which is still only halfway back to normal levels. Crowe predicts that single family starts will continue to recover, with a prediction of 160,000 more starts in 2015.
“That’s my story and I’m sticking to it," he said.
Millennials do want to buy homes, builders just need to rebrand
Contrary to what some housing reports would have you believe, millennials very much want to create households and buy property, said Jeff Fromm, president of FutureCast, a marketing firm with an expertise in the millennial market. Instead, what has changed, according to Fromm, is the order in which millennials are achieving those basic life "milestones."
"Go to school, get a job, get married, buy a house, start a family—this is the schema that many people grew up with," Fromm said. Nowadays, those touch points within the millennial generation are still there, but the order is not the same. Some are deciding to have kids before they get married, and some are getting married but then going back to school. All of those decisions impact when they decide to become homeowners.
When you break down the numbers, about one in four millennials is a parent, thus blowing the idea that they are a bunch of single basement dwellers.
So, in order for builders to effectively market to—and reach—that coveted market, Fromm offers three pieces of advice:
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Useful is the new cool, so use technology to your advantage. Fromm used Nike as an example of a brand that has harnessed its technology to reshape its message. "They decided they don't just sell running shoes. They help people live better lives with products like the Fitbit."
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Treat content as brand fuel. If the content you present is good, that will build relationships with your audience, and that will in turn build loyalty.
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Create opportunities for personalization. To that point, Fromm points to Ikea, a homebuilding brand that is also a darling with millennials. Not only are most of Ikea’s products easy-to-build and customizable, but the company even will let you see the furniture in your home before you purchase it. Ikea’s easy and no-fuss marketing tactics are hands down the reason that a company selling home goods is popular with a generation thought to be terrified of ‘nesting.’
The big takeaways of the 50+ market
It's undeniable how important the 50+ population has been in the housing recovery. Currently, they make up 52% of the current homeowners and make up over half of new home shoppers. So while millennial continues to be a buzzword at IBS and beyond, catering to the 50+ market is critical to builders' needs. To lend a hand, Paul Emrath, an economist at NAHB, laid out the 10 biggest trends he's seen in the 50+ homebuyer market.
- Design matters, and it is one of the top motivating factors in whether they buy a home.
- They are working because they have to, but also because they want to. Retirement isn't necessarily the dream.
- Big is not important. Instead, function, form, and price are much bigger motivators.
- As the children move away, social connectivity is important to her, and health and wellness is important to him.
- One out of five people in the 50+ homebuying market is a single woman.
- They have more pets than children and are likely to "treat them like royalty," Emrath said.
- Financial security is number one.
- More than a third of 50+ homebuyers don't want to move away from their current home, but would rather make changes to their existing home.
- They are the least likely out of any age group to risk high fees that they cannot control.
- They want energy efficiency and are willing to pay for it.