More green shoots of optimism – and a few somber notes – defined key homebuilding industry webinars and podcasts for our seventh week of The Round-Up.
The tailwinds that support sales of new homes today despite the pandemic still look to out-weigh the headwinds that seek to hold us back. However, it is important to take a clear-eyed look at both – and not diminish, exaggerate or disregard headwinds or tailwinds.
As always, we encourage you to watch the webinar recordings below that most interest you. We also urge leaders in homebuilding to take part in future webinars that most impact your success.
Here’s your look back at the events that unfolded the week that ended on Friday, May 22 – as we headed into a very different kind of Memorial Day weekend.
Each week, the BDXtra podcast opens with a look at the latest online search trends for new homes. BDX founders Tim Costello and Melissa Morman share the latest insights – and offer practical and actionable advice and facts-on-the-ground analysis of home shopper behavior.
“For the eighth week in a row, the BDX Online Real Estate Search Index has risen again,” said Costello, the CEO of BDX. “We are beginning to see topping activity (a slowing rate of increase Y-o-Y), but the line is still up and to the right.”
“We have 24% more consumer interest in new homes now than we did last year at this time,” he added. “Not only has (the volume of search for new homes online) surpassed last year, it has also surpassed the very hot market in January and February this year.”
“We’ve also seen a resurgence in mortgage applications for the purchase of homes – not refinancing — in the last couple weeks,” Costello said. “It’s within about 1.5% of last year’s volume. It’s not just soaring online home search, we’re actually seeing people buying homes now.”
The pattern of increased home search in suburban and rural areas – vs. downtown and urban homes – continued last week. “Searches in small towns of 10,000 to 50,000 people are up 105%. Interest in rural areas peaked in late March, but was still up 80% over where it was the same time last year,” Costello said.
Costello referred to a news story that Twitter would allow many employees to work from home permanently. “There is no question that the ability for people to work remotely is starting to change people’s perception of where they can live,” he noted.
“Clearly, there is urban flight going on, to secondary and tertiary markets” Costello added. “Smaller markets are getting a lot of love right now from consumers,” Costello added. “It may change the industry as larger builders consider how to build in smaller markets.”
Melissa Morman, Client Experience Officer for BDX, introduced two guests on this week’s podcast, whom she referred to as “our front-line responders – Lisa Carolan, VP Operations for BDX sister company EX Squared – and Rebecca Coyne, who manages our retail products team, which provides websites, sales center kiosks, interactive site plans and more.”
Morman noted that EX Squared builds enterprise-class websites and powerful systems for large builders, while Coyne’s team typically provides websites and other services to small and mid-sized builders. She asked both guests how their teams were seeing builders shift the messages on their websites in response to COVID-19 and the economic slowdown.
“Initially, our large builders responded to consumers asking if and how they could visit a builder’s model homes,” Carolan said. “Now, they are shifting to well-rounded messages on how to interact with consumers and Realtors online.”
“Smaller builders may not have the budget to set up large marketing campaigns around this,” Coyne said. “For them, it’s about getting scrappier and using tools that are around them and easy to set up – such as Google Calendar to schedule appointments.”
“With the BDX Media team, we’ve put together awesome videos branded for these smaller builders that explain what a homebuyer will encounter in the New Normal,” Coyne said.
Morman noted it is exciting to see builders step up and just do. Coyne agreed and added that pivoting quickly – and using readily available tools – was the best way for small and mid-sized builders to win.
“Even with really large builders, you don’t have to be perfect,” Carolan added. “You try it, you measure it, you refine it, you expand it.”
“We’ve been reading about Agile Marketing for years,” Costello said. “Now we’re doing it. We need solutions – and we need them fast – in quick marketing sprints.”
Morman agreed and noted that the product team on NewHomeSource.com, the company’s flagship website for new home search, has quickly tested and refined many new CTA’s (Calls-to-Action). Each reflects how consumers are shopping for new homes – and connecting with builders – online.
Carolan agreed and noted that her larger builder clients were quickly adopting contact methods – including text and chat – that supplement email and phone as ways builders can connect with consumers – and generate qualified leads.
“The biggest win for our larger builders have been around online meetings,” Carolan said. “And not just for taking a tour of a home, but across the entire buyer journey.”
Examples that Carolan cited included online meetings with homebuyers with members of a builder’s sales, finance, design and construction team – meetings that in the past had taken place in person.
“It’s very clear that consumers have moved on – and it’s time for builders to catch up,” Costello said. “Buyers today use phone, text and chat. They expect immediate and personalized responses. Virtual appointments may be a permanent part of the process,” he added. “Why not take 15 minutes for that finance meeting online vs. driving two-hours round-trip for the same appointment?”
Morman asked both BDX leaders what silver lining each had found in responding to the changing needs of buyers and builders.
“Builders are spending the time to focus on their digital marketing efforts – and giving that buyer the journey they deserve,” Coyne said. “This has given us the chance to pivot and focus on the homebuyer.”
“The agility has been amazing,” Carolan said. “The marketing and IT teams have really dug in, not aimed at perfection, and compressed two years of digital advances into two months.”
Tim Sullivan, Senior Managing Principal of Meyers Research, kicked off this weekly webinar. Sullivan noted the analysis that he and Ali Wolf, Chief Economist for the firm, would present included a sizable dataset – 275 different metrics, across 18,000 actively selling new home communities, with 7 million lots – in their database.
Ali Wolf delivered her weekly look at where the market is now by skillfully weaving a number of separate data points into a robust national snapshot of where homebuilding stands this week:
- All fifty states have now re-opened in varying degree, with mixed results
- Texas had moved to Phase Two – allowing gyms, offices and 50% capacity at restaurants
- 8.2% of mortgages are now in forbearance – the rate of growth continues to slow, but is far above the .25 level pre-pandemic.
- Depending upon class of Property (A-B-C) 83.1% to 89.4% of renters were meeting their obligations
- One in four restaurants forecasted to go under
- 6,700 job cuts from Uber in the last month
- Retail sales plunged by 22% in April vs. last year, building materials the third-strongest segment
- In a positive sign, Wolf noted that mortgage applications for the purchase of homes – not re-financing – have climbed back within less than two percent of last year’s level.
- New home sales per community per month in April were off by 11% to 40% across 15 markets that Wolf shared. However, the number of sales per community per month improved during the month – especially in markets with high net migration.
Both Wolf and Sullivan forecast inevitable increases in taxes – property taxes, sales taxes, income taxes and fees levied on builders and developers – as local and state governments grapple with soaring spending to help alleviate economic pain and sharply declining revenues.
In one of the many interesting new looks that Wolf offers each week, she shared a list of the top metro areas with remote work – San Jose, Washington DC, Austin, San Francisco, Salt Lake City and Denver were the top five. Her analysis revealed that 70% of markets with the highest share of remote jobs fall in the bottom third of markets for unemployment.
In another fresh data point, Wolf and her team took a deep look at incentives by market. Wolf and Sullivan were quick to note that the mere presence of incentives does not indicate distress.
Some markets have a culture or traditional reliance on certain incentives in all climates for home sales, they noted. The data by market below are nonetheless illuminating:
Wolf provided a revised version of her now famed “Nike Swoosh” graph of the economic recovery – with a somewhat faster initial rebound for the economy:
Rounding out her commentary, Wolf provided an update on the continued importance of the Millennial homebuyer.
“We’re holding our breath to see which prevails – mortgage rates or fear,” Wolf said. “Right now, mortgage rates are winning. People are starting to wake up to the fact that 2.75% is a whole new kind of mortgage rate – and it’s Millennials and first-time buyers who need it and will benefit the most.”
Wolf handed the reins to Sullivan, who opened with his now-traditional Heard on the Street segment:
- Next 30-45 days will define the year
- Builders are hyper-focused on cancellations
- Affordable product still selling well, but choppiness in sales activity remains
- Some buyers are cancelling to-be-built contracts to buy spec homes
- 60% of builders report improved net contracts week-over-week
- Builders are having to work for every sale
- 74% of builders surveyed made 80% or more of their May sales goals – with 24% reporting they achieved 100% of their plan for the month
In an important look at land and lot supply, Sullivan noted that more builders were considering acquiring land or lots, but the supply of Vacant Developed Lots (VDL’s) was trending down nationally.
The five markets with the greatest monthly supply of VDL’s are: Sarasota/Bradenton, Chicago, Atlanta, Jacksonville and Tampa. The five markets with the lowest monthly supply for VDL’s are San Diego, Boise, Seattle, Suburban Maryland and Nashville. See the webinar recording for complete details.
In a theme echoed by Tim Costello in the BDX Podcast (see above) Sullivan also noted the trend to work from home in many cases is likely to become permanent.
Like Costello, he noted consumer interest in moving to second and third-tier markets is lighting up. This will create opportunities for builders in those markets to increase production and sales – and for new builders to enter these smaller markets.
As he does each week, Sullivan looks for bright spots and signs of life. TSA said 200,000 airline passengers went through checkpoints last week, for the first time in eight weeks. To put it in perspective, he noted TSA screened 2.6 million passengers in the comparable week last year. Hotel occupancy also climbed to 30% last week, up from 21% the prior week.
Each week, Sullivan closes this webinar each week with a compelling quote from a figure in history that speaks to the week that was. “You can never beat someone who does not give up,” said legendary slugger Babe Ruth. That seemed a fitting cap to another important, fact-filled webinar.
Drew Leakey, VP of Digital Operations for BDX, and an expert on Google Analytics, tracking and online conversion opened this webinar by noting that he and his team are focused on week-over-week changes in key metrics on NewHomeSource.com.
Leakey also underscored the importance of making sure your website is properly optimized for Google Map display.
“Google is going deeper and deeper into local map searches. It’s become critical for consumers to discover your new homes and communities,” Leakey said. “Google Map search results include directions, your phone number and a link to your website.”
He noted that consumers are increasingly searching on smartphones – and they are far more likely to call your community than email you when doing so, making it vital that calls be answered quickly during business hours and returned promptly the next morning.
Each week, Leakey and his team ask themselves these questions as they analyze the performance of new home listings on NewHomeSource.com, nationally and by market, versus the prior week:
- How is Traffic by Channel tending in volume – organic, referral, direct, PPC (pay-per-click) and organic and paid social media?
- How are visits converting into lead forms (Email Leads) or phone calls (Phone Leads) or newer Calls-to-Action (CTA’s) that include Virtual Tour Requests, Requests for Private Model Home Tours and other key indicators of consumer interest?
- How long are shoppers staying on the site (Time-on-Site)?
- How many pages are shoppers clicking through on the site (Pages per Session)?
Leakey recommended builders focus on the same metrics to measure and improve the performance of their website. These indicators should be used to objectively compare the performance of all digital marketing channels a builder invests in, he added. To truly evaluate performance for any metric, Leakey also stressed the need to do so for periods of time that are directly comparable.
“The digital marketing week is Sunday to Saturday,” Leakey noted. “It’s important to start there – as Google and leading online marketers do – because traffic and conversion vary significantly by day of week.”
Leakey also urged builders to compare the same day of the week – for example, to compare traffic and conversion on Monday this week to Monday last week. He also recommended comparing the first Monday of a given month this year to the first Monday of that same month last year.
He recommended builders also select a 28 day-period in Google Analytics this year and compare it to the prior 28-day period this year – or to the comparable 28-day period last year.
“This gives you four complete weeks that start on Sunday and end on Saturday,” Leakey said. “I highly recommend comparing these 28-day periods rather than comparing by month.” He noted that the number of days varies by month and the days of the week don’t align properly when looking at one month vs. another.
Leakey also stressed the importance of understanding – and allowing for – the impact of seasonality throughout the year when analyzing traffic and conversion.
“January through March is typically the peak for new home searches online,” he said. “There is a spike again in summer months and then traffic dwindles from September to December.”
With these key principals established, Leakey noted that builders were ready to start drawing important conclusions about the effectiveness of their website – and each of the channels or tools they use to drive traffic to it.
As important as conversion rate and the other metrics above are – including Bounce Rate, Time-on-Site and Pages per Visits or Session, Leakey encouraged builders to drill down to Cost-per-Lead to truly understand which digital marketing tools and sources of traffic for their website are producing the greatest return on investment.
“Cost-Per-Lead and Return on Ad Spend are the exact same formula,” Leakey noted. He urged builders to track this for each desired action. “Measure Cost-per-Lead for email leads, phone leads, texts, chats, and requests for Virtual Tours online and private model home visits,” he advised.
If a builder is not seeing the results they desire, Leakey advised them to check the following, in this order:
- Page Load Speed – often the number-one problem he sees is slow page load, and Google will reduce the rank of your website for this problem in search results.
- Review Landing Page Content – is it robust, relevant, and compelling?
- Are Calls-to-Actions above the fold – visible on desktop without scrolling down? Are the buttons for sending an email lead or calling you easy to find and easy to see and use – especially on a smaller smartphone screen?
- Are all lead types being properly tracked – in addition to email leads, these can include phone calls, texts, online chats, requests for virtual and private tours, and requests for an online chat with a salesperson.
- Are you responding to all consumer outreach – immediately and well?
In closing, Leakey reminded builders that their BDX Digital Marketing Consultant would be happy to provide advice – as well as a no-cost evaluation of a builder’s website and digital marketing tools and plan. Leakey noted that the BDX team is happy to provide benchmarks, expert analysis, and specific recommendations to help builders better attract, engage and convert homebuyers.
Three words summarize this compelling look at virtual sales coaching, especially if your sales team is working remotely from a home office: Watch This Webinar!
There is simply no way to do justice to the many vital, urgent, and immediately actionable ideas from this trio of nationally known sales training experts and authors. If you care about improving your sales team – and putting more points on the scoreboard – watch the entire recording. It’s that good.
Jeff Shore kicked off the session by asking, “How do we get better at what…we do as sales leaders? This webinar is for sales leaders who are facing a very different world than they faced just a short time ago.”
“There is a future normal that is coming and we’re going to have the power to define exactly what that is…for the sales executive and, specifically, the sales coach,” Shore said. “Coaching is a non-negotiable imperative.”
To ground the webinar – and underscore that point – Shores asked the many sales professionals taking part to use the chat button to indicate what percentage of their original sales goals for 2020 they now expected to deliver at year’s-end.
Responses ranged from 60% to 160%. Shore noted that the sales executives on the call still felt confident they could deliver 80% to 85% of their original revenue commit – despite the pandemic.
To help sales coaches make each person on their team the best they can be, Shore said the webinar would focus on two core areas:
- Lead Conversion Coaching – with Jeb Blount
- Skills Development Coaching – with Anthony Iannarino
As he introduced the two guest experts, Shore had words of advice for sales leaders. “Don’t let a good crisis go to waste,” he said. “There are lessons that can be learned in times of adversity that you cannot learn in times of prosperity. (Ask yourself), how are you going to revamp your coaching model?”
To frame his portion of the webinar, Jeb Blount – author, sales trainer and CEO of SalesGravy.com – advised sales leaders to start by understanding the overall dynamic of their market.
“Look at your market. Understand how much it may be down. As a leader, your job is to beat the curve,” Iannarino said. “Take market share from others who are waiting for something to happen – vs. what you’re doing, which is making something happen.”
Blount said sales messaging was the biggest miss most sales leaders made early in the pandemic – and the ensuing economic downturn.
“In January and February, we went from the hottest economy I have seen in my lifetime – and then the wheels fell off the bus in a week,” he said. “And, yet, salesperson messaging did not change.”
To help coaches assist their team in getting critical sales messaging right, Blount laid out a five-step process. It included review, planning and course-correction:
- What messages are your salespeople delivering? Are the messages relevant now?
- Change your approach. Your mindset, tone and approach must also be relevant.
- Help salespeople fish in the right pond. Iannarino shared an example – a previously successful sales professional on his team who needed to be re-directed. “She sold sales training to major sports teams. I suggested she pursue another vertical, since sporting events have ceased. We agreed she’d shift her focus to companies that help people work from home.”
- Help your team use the tools available to them. This includes digital tools like Zoom, but he urged salespeople to use all options – phone calls, texts, direct messages and video messages. “The telephone is the oldest virtual selling tool we have other than smoke signals,” he said.
- Help your team sequence their prospecting touches in a meaningful way – so salespeople have a higher probability of having productive conversations with prospects – and then turning those leads into pipeline opportunities.
Both Shore and Blount underscored the need to keep calling – and selling – during the pandemic. They drove home the need to do so with laser-focus on helping your prospects.
“You have to change your mindset from, ‘I want to sell you something’ to ‘I want to help you,’” Blount said. “If you can’t enrich the lives of your customers,” Shore said, “and solve their problems and add value, then why are you there?”
Shore handed the floor to Anthony Iannarino, an author and rock-star sales trainer who originally aspired to be…a rock-star.
“As a sales manager, you have the hardest job in business,” Iannarino said. “You’ve got to serve your sales force. You’ve got to serve your company. There’s a forecast meeting every 17 or 18 minutes. It starts to take the sales manager from the role of coach to more of an administrative role.”
“You can only change the score on the scorecard by playing the game better,” he added. “Tom Brady didn’t have one coach, he had several – a quarterback coach, a strength coach, a diet advisor, an anti-aging expert – because for years he was the most valuable player in football.”
“Every single human being on your team has the ability to improve. I don’t believe a single human being in the history of the planet has ever achieved their full potential – not Da Vinci, not Einstein,” Iannarino said.
“Selling is something you do with and for someone, not something you do to them,” Iannarino told listeners. “To succeed, you need nine competencies and six skills,” he added. The Six Skills are: Closing, Prospecting, Storytelling/Presenting, Negotiating, Diagnosis and Business Acumen.
He added an additional skill for those who coach sales professionals. “If you care about people, then you need to engage them in the conversation they need to have – not the conversation they want to have.”
Iannarino noted that such conversations – and all acts of coaching – require intimacy and really knowing and understanding each salesperson as an individual. He recommends asking their permission to share what he called awareness – insights and advice to help a salesperson – before engaging in coaching.
In addition to the weekly webinar from Meyers Research covered above, Chief Economist Ali Wolf also provided a separate Q2 Housing Forecast.
Some of the content was similar to points that Wolf presented in the weekly webinar above – and they are not summarized again here. Please see that summary for a complete picture from the experts at Meyers Research.
Wolf reported that Initial Jobless Claims had now climbed to 38.9 million and she cited the short-term unemployment rate as approaching 30%. She noted that capturing a true snapshot of long-term unemployment due to COVID-19 was difficult, since up to 80% of workers currently unemployed consider themselves furloughed – and hope to be recalled to work as the economy improves.
Wolf and her team noted that some parts of the country are coming back alive – as measured by greater mobility as previously homebound consumers venture out. Geo-tagging of smartphone users allows us to see that consumers in three states with large economies are venturing out more, a possible harbinger of increased economic activity there.
“Texas has the #2 GDP (Gross Domestic Product) of any state and mobility is rising there,” Wolf said, “as it is in Florida with the #4 GDP and Illinois with the #5 GDP among states.”
New Homes are also a vital part of the economy. Unlike the Great Recession, which was caused in part by weak demand and an over-supply of new homes, Wolf noted that new home sales are likely to drive the economic recovery. Online searches for homes are rising and above last year’s record level. Mortgage applications to purchase a home are nearly back to pre-pandemic levels. The supply of existing homes for sale is also down 30% to 60% across many MLS’s, but Wolf noted that more resale homes are coming on the market.
In addition to these fundamental drivers of demand for new homes, Wolf also noted the following positive economic impact of newly built homes:
- Buyers of new homes spend 10% more than buyers of resale homes on appliances, furnishings and upgrades
- For every 1,000 new homes sold, 2,975 jobs are created – vs. 500 jobs for every 1,000 existing homes sold.
Because of the fundamental drivers above, housing has been out-performing the broader economy in the rebound to date, Wolf said, and showing more of a V-shaped recovery than the overall economy.
With the inventory of homes low – and demand still high – the forces of supply and demand are also supporting housing prices, Wolf said. The team at Meyers sees this clearly in their survey of 300 division presidents each week – as well as in government, NAHB and NAR housing data.
Taken together, this is allowing builders in many markets to increase market share for new homes vs. existing homes – a point that BDX has been championing – as seen in the chart below:
As strong as selected markets are, with the overall pressure of unemployment and economic uncertainty, Wolf reported that the April Pending Home Sales Index was down 33% in April on a national basis, but four markets – Portland, Seattle, Tampa and Jacksonville – saw the Pending Home Sales Index fall by a much smaller 11% to 15%.
As May unfolds, the division presidents that Meyers Research surveys each week are also reporting increased optimism. Thirty-six percent expect to meet or exceed their sales goals for May—and an additional 38% expect to achieve 80% to 90% of their new home sales goal.
Wolf noted that the impact of record-low mortgage rates was a key driver. She shared how today’s rates could literally “turn back time” to effectively re-set the true price of a new home today to levels not seen in years. She noted that the largest segment of homebuyers today, Millennials and first-time buyers, are clear beneficiaries of improved affordability.
Given all of the key drivers that she explored in her webinar, Wolf listed 10 housing markets with the most resilience – and thus the lowest short-term risk for builders. They included Salt Lake City, Minneapolis, Columbus, Portland, Dallas, Austin, Denver, Tampa, Raleigh and Phoenix.
About the AuthorMore Content by Jay McKenzie