New home sales and marketing leaders are out in full force right now sharing vital and actionable insights to shape your programs in this challenging time. But it’s hard to take it all in – so we’ve done that for you and each week will share our highlights from around the industry.
What did you miss last week? Here’s your personal summary of some of the most important learnings from some of the brightest minds in the new home industry. Scroll through to read them all or click a link below to go directly to that recap.
Fourth Week of Gains in Online Real Estate Search — The BDX Weekly Podcast
In welcome news for builders, online search for real estate continued to increase. The news was shared first on the BDXtra podcast with Tim Costello and Melissa Morman.
“This is the fourth week in a row that we’ve seen an increase week-over-week in the number of people searching for residential real estate online,” said Tim Costello, CEO of Builders Digital Experience (BDX).
Costello noted that the BDX Real Estate Search Index measures both new and used homes. The Index is calculated weekly. It’s a snapshot of the frequency of search for thousands of real estate search terms online in hundreds of key housing markets and sub-markets across the U.S.
To ensure quality and accuracy, Costello explained that the BDX data team has triangulated the data against activity on NewHomeSource.com and the hundreds of builder websites that BDX manages or assists, as well as online chat sessions and other indicators.
“This (increase in traffic and conversion) is a seemingly unbelievable story,” Costello said, “but we have checked, double-checked, and triple checked – and everything points to the same outcome.”
“We have an 11% increase week-over-week in people searching for new homes,” Costello said. “We now have 5% more traffic looking for new homes than we did last year,” he added, referring to an all-time record year for new home search. “The new home search market is larger now.”
“On NewHomeSource.com, we see similar trends,” Costello said. “This week, NewHomeSource saw (an even larger) 23% increase in traffic, week-over-week.”
“We looked at our partner, AtlasRTX, that runs Chatbots on NewHomeSource and builder websites,” Costello said. "Last week, they recorded a record number of chat sessions across all builders.”
All of these stats point to the same conclusion – builders have several opportunities to maintain – or even increase – their new home sales, revenues and profits – despite the pandemic and slowdown.
“There are some very powerful and important plays here for the builder,” Costello said. “We are seeing a flight to the suburbs – and Redfin is seeing this, too.” Costello and Morman both noted that this creates a great opportunity to gain market share for new homes.
Costello was careful to note that builders do face many headwinds – as well as some tailwinds – and their situation will vary by market, product type and price point. However, Costello noted that if he were CEO of a builder of single-family homes for first-time buyers – who don’t have a home to sell – in suburban locations, he’d be building a plan to increase sales.
The ways builders can maintain or even grow sales now start with a candid and strategic assessment of their market, their buyer, and their current traffic, leads, sales and conversion rates.
“Eight weeks in now, it’s time to assess the facts on the ground,” Costello said. Most builders are still building and selling homes, he said – and plan to continue to do so – and several factors will assist builders to do so.
Tailwinds helping builders include: Higher new home search than last year; serious shoppers, as seen in buyer surveys and higher conversion rates; consumers who want out of their current home and are seeking yards and outdoor space; buyers leaving urban areas for suburban single-family homes; used home inventory down 60% in the last four weeks; consumers who realize they have a once-in-a-lifetime opportunity to lock in historically low interest rates; new homes are easier and more comfortable to tour online or by private appointment; and the appeal of a brand-new, never-lived-in home has never been higher; and the glut of homes that defined the Great Recession is absent.
While the list of headwinds are shorter, they are real: They include higher unemployment; higher standards for credit scores and down payments; and the hesitancy of move-up buyers to list their existing home for sale. Both Costello and Morman made clear that the team at BDX is ready to help each builder understand their unique situation – and craft a customized plan based on that assessment.
Social Distancing in the New Normal: Reopening Strategies – AtlasRTX Webinar
Hosted by Melissa Garland, a vice-president at AtlasRTX, this webinar was the first to discuss how builders might re-open their model homes, when local government and health leaders deem that safe. AtlasRTX helps builder Online Sales Counselors partner with a Chatbot – powered by AI and speaks 100 languages – to better assist home shoppers 24/7 online.
Garland’s guests were Kim Ross, VP Marketing of Woodside Homes and Paul Titus, Director of Sales for Cretin Townsend Homes. Woodside Homes, a 40-year old builder in four western states, was acquired by Sekisui House, a leading Japanese builder, in 2017. Cretin Townsend Homes is a leading On-Your-Lot builder in southeast Louisiana, an area hit hard by COVID-19.
“We haven’t stopped any construction,” Titus said, “but we are distancing crews, causing a bit of a slowdown in construction." Titus said the firm closed its sales Center, which had 20 people on a typical day, and he checks in on with each of his sales team on daily 9:00 am conference calls and personal, one-on-one online meetings and calls.
“We had a two-year plan to convert to a digital and online-first business model, that we amped up to a two-week plan,” Titus noted with a chuckle. In the last eight months, the firm had averaged 20 homes per month pre-sold. In the last 30 days, the firm has taken 15 new pre-sold contracts based on virtual sales tools, he stated.
“We’re starting to figure out what those trigger points are so buyers feel confident and comfortable…that we can build the home they have seen virtually with quality,” Ross said.
As Kevin Oakley and Tim Costello also discussed on the Market Proof Marketing podcast this week, Ross stressed that Woodside Homes is going to where the customer is, in part based on best practices seen in retailers online on in the physical world.
Ross noted that her team is using the most current game engine technology to deliver an immersive virtual tour experience on a buyer’s smartphone. Woodside Homes is also using the Envision Online Design Center from BDX throughout the buyer’s journey, as well.
Asked what Woodside’s core strategy is now, Ross said, “Focus on the two to three strategic things we can do to differentiate ourselves from the competition. We’ve also made a concerted effort to provide a great customer experience – and to shift our focus to the buyer,” she added.
“We’re optimistic we’ll come out stronger,” Titus said. “We’re a rural builder and think we may see more people leaving urban for rural areas. A lot of our younger buyers are experiential. As we come out of this we may see people trying to get into their ideal home,” he said.
Both builders agreed that physically reopening their model homes would be done in concert with local government and health guidelines, and would be gradual, measured and totally focused on the health and safety of employees and buyers. Both building leaders said their firms planned to follow recommended guidelines from the CDC in place when they do re-open.
Kevin Oakley & Tim Costello Discussed Messages Resonating with Today’s Serious Home Shoppers, What Types of Marketing to Eliminate or Increase, and How Quick Move-In Homes Can Solve the Severe Shortage of Used Homes – and Gain Market Share for New Homes
In a lively conversation with Kevin Oakley from DoYouConvert.com on his widely followed Market Proof Marketing weekly podcast, Tim Costello of BDX and Kevin provided many vital and immediately actionable tips.
This week’s podcast hosted by Kevin Oakley was loaded with simple, practical ways for builders who are serious about pivoting their business, thriving in The New Normal, and helping shoppers conduct their new home journey online.
Both speakers shared insights based upon their unique ability to measure the pulse of current online real estate search in real time. Costello shared that search for residential real estate – for new and used homes – was up to more than 90% of last year’s record levels. He also reported that conversion actions by home shoppers on NewHomeSource.com were up nearly 40%
Oakley said their analysis of traffic across dozens of their client’s websites showed a similar rebound. Like BDX, his team saw the downturn hit the third week of February – with the same strengthening in recent weeks that BDX is seeing.
Both Costello and Oakley agreed builders should focus all of their marketing on those serious shoppers who remain in the market – and both leaders believe that new homes have an opportunity to gain market share vs. used homes.
“Market to people who have overcome fear and are still in the markets,” Costello said.
“Double down on Envision (the online design center from BDX) or other tools that are facilitating the transaction,” Oakley said. He suggested builders could fund this “since ads on Google, Facebook and Instagram are on sale for more than 50% to 60% off.”
Costello also urged builders to zero in on real estate agents. “Given the precipitous decline in listings of used homes for sale across the nation, we should be changing our messaging to agents that we have new homes available for immediate occupancy, and stressing that showing a new home is safer, it’s more comfortable – and (with some model homes open by appointment only) it’s more private,” Costello said.
Oakley again stressed his strong belief that compelling visual content – multiple photos, renderings, virtual tours, interactive floor plans, community videos – and great, detailed copy are essential to success.
“If you do everything Tim just said,” Oakley stated, “and you’ve got virtual processes (in place) but buyers come to your website and you have two black-and-white line drawings, you will not succeed.”
“The digital customer experience is a step-by-step journey,” Costello added. “When one of those touch points disappears, or I don’t have any content for you to see, the journey’s over.”
Both industry leaders agreed that the need to move the homebuyer’s journey online is irreversible and based on far more than the current pandemic. Each agreed this sea change has been years in the making – and is driven by consumer expectations and best practices in other industries.
“We don’t have to re-train consumers on how to shop for homes online,” Costello said. “We have to catch up to how they already want to buy homes online.”
Oakley agreed and added, “Tools like Envision and visualization have uses beyond the sale – to keep customers engaged through a long construction period.”
When Oakley referred to “skating to where the puck will be” to create the future intentfully, Costello laughed. “After three to four weeks of fast and furious skating, the homebuilding industry now has the puck in sight,” he said, enabling builders to confidently skate to meet homebuyers where they already are – digital, virtual and online.
Kelly Ann Zuccarelli, senior vice-president for the builder market with Wells Fargo Mortgage kicked off this weekly webinar by asking panelists if the changes many builders are making – to a digital and online sales and business model – would persist after COVID-19.
“Some of the things we’re doing will be permanent changes in how buyers shop for a home,” said Leah Kaiz Fellows of Blue Gypsy, a leading trainer of builder Online Sales Counselors (OSC’s).
“We’ve been going down this road to virtual and online selling for some time,” Fellows said. “This is not going to go away.” Fellows noted that when the recovery comes, builders would be wise to continue to provide the ability for buyers to tour model homes in person or online. “They (buyers) are going to want all these tools…to choose their adventure,” she added.
Carol Morgan of Denim Marketing shared a quick look at TikTok, the red-hot social media platform for creating and sharing short smartphone videos. Morgan also summarized important enhancements LinkedIn has made to increase the value and ROI of company pages on their platform.
Morgan noted that she found two or three builders she thinks are really getting TikTok right. She urged attendees to check out Summit Homes (and their too-funny video of toilet paper stolen from a Porta Potty) and Kadilak Homes of Burlington, Massachusetts.
Morgan said her search of TikTok for the hashtag #homebuilders showed 10.1 million views, with many builders active on the platform being smaller or custom firms. While TikTok is dominated by users ages 13-24 – and thus too young to be core buyers of new homes – Morgan pointed out that 31% of users were age 24 or older – and nearing or even in the age groups that typify homebuyers.
Regarding LinkedIn, Morgan reported that the popular site is for far more than just job hunting – and the platform has made many enhancements to improve the value of a business profile page on LinkedIn.
“Start with the Admin Tools button in the top right corner of your company LinkedIn page,” Morgan advised. “Invite your personal LinkedIn connections to follow your brand page,” she said, “and let key people you trust on your team do the same.” Morgan also noted LinkedIn is piloting the ability for companies to use live video on their brand page with registration needed.
In a lively discussion of so-called Discovery Questions to surface homebuyer needs, Fellows noted that it is the responsibility of both Online Sales Counselors and On-Site Salespeople to find out what each buyer’s unique needs and pain points are. She also stressed the need to ask early on if a buyer is working with a real estate agent – and recommended OSC’s develop a checklist of questions to ask before they hand-off a prospect to an on-site or community salesperson.
Melissa Morman, co-founder and Client Experience Officer of BDX, was the special guest on this webinar and she tackled an array of important opportunities for builders.
“We have tracked our BDX Online Real Estate Search Index for ten years,” Morman said. She noted the Index has expanded greatly in recent years to cover thousands of key search terms for used and new homes, across several hundred major markets and sub-markets.
“Online search for homes has been climbing back up every week,” Morman said. “It’s up 11% week-over-week – and, more importantly, it’s up 5% year-over-year.”
When asked if these were serious shoppers, Morman’s answer was two-fold. Conversion actions – including clicks to a builder’s website, email leads, and phone calls – are up as much as 40% to 70% on NewHomeSource.com and sites that BDX manages or assists.
Morman also noted that the BDX Concierge team calls a sampling of phone leads every week. The team does so to see if shoppers are finding what they need, have questions, and to ask if they have heard back from a builder they had sent a lead or question.
“Home shoppers now are extremely serious,” Morman said. “They just need confidence they can do it.”
When asked about the plummeting supply of used home inventory – a frequent topic on many industry webinars and podcasts this week – Morman urged builders to stress that they have spec and Quick Move-In inventory available now and next week or next month, and to remind buyers that mortgage interest rates are at historic lows.
“Before the Great Recession, new homes historically had 15% market share,” Morman said. “It’s never recovered to that level…and has been hovering around 8% to 10%.” With few used homes, builders have a major opportunity to gain back market share for new vs. used, she noted.
Speaking from the heart, Morman said, “I call them used homes – not resale – because that’s what they are,” Morman said. “Used homes are someone else’s discarded dreams,” she added. An attendee at the webinar used the chat box to share how much that wording resonated with them.
Builder Magazine Meyers Research Webinar with Tim Sullivan and Ali Wolf
The team of Ali Wolf and Tim Sullivan continue to delve into a number of key indicators, some conflicting. Each week, these leaders of Meyers Research shed light on where the homebuilding industry is in our collective response to COVID-19 and the severe economic disruption it has caused.
Ali Wolf, Chief Economist of Meyers Research, kicked off the webinar with a rapid-fire sequence of key indicators that included the fascinating data point that up to 5.6% of Los Angeles-area residents tested positive for traces of the virus – causing Wolf to wonder if we were closer to “herd immunity” than previously thought.
Mortgages in forbearance have risen to 6% – compared 0.2% on March 2. Wolf noted that Fannie Mae and Freddie Mac are rolling out programs to buy loans within one month for a fee. This aids mortgage servicers, she noted, but essentially hands the problem to the Federal government – and, eventually, to all of us as taxpayers.
Key housing stats that Wolf shared included single-family housing starts down 18% and the New Home Pending Sales Index down 33%, both Month-over-Month. With retail sales down 8.7%, Wolf also cited Neiman Marcus and 24 Hour Fitness as firms possibly facing bankruptcy.
A new chart this week showed the states that proportionately have received the most Payroll Protection Program (PPP) funds. Nebraska, North Dakota, and Kansas were the leaders – while California, New York, New Jersey and Washington were among the bottom five states as a percentage of eligible payroll.
Wolf noted that construction – residential and non-residential – was the number-one industry sector for forgivable PPP. Wolf also cited the appointment of NAHB CEO Jerry Howard to the presidential taskforce on reopening the construction labor workforce as a positive for the industry.
Building on her remarks last week that the bulk of job losses to date have been concentrated in the leisure and hospitality industry, Wolf and the team at Meyers Research delved into the percentage of new homes closed in Orlando – a market with a heavy concentration of leisure and hospitality jobs – in October 2019, before the pandemic.
“Fourteen percent of new homes closed in October 2019 were buyers with income of $50,000 to $60,000” Wolf said, “which could be attained with one or two typical incomes in this industry sector.”
Looking at other key trends for builders, Wolf said 89% of renters paid their April rent on time and 55% of developers reported construction delays.
In another new data point this week, the Meyers team produced two heat maps, that showed that stimulus checks could cover “most or all” of monthly mortgage and utility payments in many markets across the U.S., with the clear exception of high housing-cost markets on the east and west costs.
In major news for builders that Tim Costello of BDX and other industry leaders have trumpeted, listings of used homes for sale have plummeted by up to 50%.
Owners of existing homes for sale are removing them from the market – and homeowners who might have listed are delaying doing so. This creates an important opportunity for spec and quick move-in new homes to dominate the MLS – and for new homes to gain market share vs. used.
Wolf closed her segment of the webinar by debuting a new metaphor for the shape of the eventual economic recovery. After weekly updates focused on whether the economic rebound would be quick or V-shaped, or longer in duration and thus U-shaped, Wolf invoked a well-known sports brand. She now predicts a “Nike-swoosh shaped” recovery lasting 16-20 months. Time to buy Nike stock?
Tim Sullivan, Senior Managing Principal of Meyers Research, ticked off markets he described as "Pretty Good, All Things Considered Markets” that included the Republic of Texas, public builders in the Mid-Atlantic and Midwest, Raleigh, Charlotte, Colorado (based on reopening).
Using the highly technical research term one would expect from a leader at Meyers Research, Sullivan proclaimed the states of California and Colorado (based on the feeling there) as “Meh Markets,” while he ranked Orlando, the east coast of Florida and active adult markets nationally as “Not So Good.”
Key industry drivers that Sullivan cited included these: 93% of builders kept base prices flat week-over-week – and 5% actually raised them. In a move to be expected, 39% of builders increased incentives week-over-week and 28% of builders reported an increase in cancellations week-over-week.
Seventy percent of builders have not changed their staffing levels, Sullivan reported. Ten percent have laid off staff, 8% have furloughed team members and 4% have cut any benefits for a portion or all of their staff.
In another key indicator, the percentage of builders who report they are actively moving forward with planned land or lot acquisitions rose to 71% — compared to 50% the prior week.
As he has every week, Sullivan shared the latest BDX Google Real Estate Search Index, which showed online search for residential real estate up 11% week-over-week.
In comments on tools that home shoppers expect today, the Meyers team cited Virtual Tours and Unattended Secure and Interactive Home Tours (from companies like UTour) as vital resources that many home shoppers need – and expect.
Sullivan closed with an inspiring story about his late, 91-year old mother. He urged industry members to “Control What You Can” and “Walk, Think, Do.”
Utz Baldwin, VP Innovation of BDX, opened his webinar by urging builders to reach out to him. Baldwin cited his goals as identifying and bringing innovations to the industry that help builders reduce friction, send them more customers, and reduce unnecessary use of third-party real estate agents.
Baldwin kicked off his session with a simple, yet powerful, message he urged all builders to unite behind: “The homebuilding industry is open for business – and we have inventory,” he said.
To tee up his look at the three main categories of virtual tours, Baldwin presented his thoughts – and some compelling stats.
”Consumers expect rich content in listings of new homes for sale online,” Baldwin said. He noted that today’s home shoppers demand full immersion, interactivity, visualization, photo-real or gaming engine production values – and they want it on their terms, increasingly on a smartphone, on demand.
Eighty-five percent of Millennials – and 88% of Gen X – expect 3D interactive tours, Baldwin reported. Listings on Realtor.com with virtual tours get 87% more views, he added, and 3-6x more Time-on-Site. In another critical KPI, he cited Apartment.com research that shows apartment listings with Virtual Tours generated 49% more leads, compared to listings without these tours.
Baldwin divided Virtual Tours into three major categories – and he cited the key strengths, use-cases, advantages and relative cost for each category of Virtual Tours:
- Built Home – Matterport photo-based Virtual Tours
- Unbuilt Plan – Rendering-based Virtual Tours
- Unbuilt Plan – Game-Engine-based Virtual Tours
Baldwin noted that all three types of Virtual Tours offer a 360-degree experience. Matterport Tours include hot spots a viewer can select and Mattertags, which provide key details on a feature or option in the home. Rendered tours can include similar features.
Game-Engine-based tours offer the user the freedom to walk through the home in any path they wish – and they provide the most realistic tour – and an experience most similar to actually visiting the home.
In a Game-engine-based Virtual Tour, Baldwin said, “The consumer can literally walk through the home in any pattern. It’s as real a virtual experience as you can possibly get.”
In this level of tour, Baldwin noted that builders can apply surfaces to any part of the house and incorporate visualizers – to allow the consumer to change cabinets, countertops, appliances, light fixtures and more as they virtually walk through a home.
The heart of Baldwin’s webinar were compelling examples of best-in-class virtual tours across all three categories above. He also shared visuals of Day-to-Night exterior renderings, 3D floor plans, and many other visual assets that attract, engage and convert home shoppers. Since there truly is no substitute for seeing these vital tours in action, BDX has provide a link to the webinar recording here.
As a leader in the industry, BDX provides more than 25,000 computer-generated visual assets and Matterport Tours per year. Builder demand for all three types of Virtual Tours is soaring, Baldwin said. He noted that the BDX Media Team has been able to maintain normal delivery times despite increased orders, but he also urged builders who need these vital assets to contact BDX soon.
About the AuthorMore Content by Jay McKenzie