Millennial Buyers Will Control the Market
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Every time we have had a housing cycle, the industry has had to change. I have always said, the buyer coming out of a downturn is different from the buyer going in, and this is definitely the case this time. The housing product that was in demand prior to the collapse of the market is not what the new customer wants during the recovery. The longer and deeper the housing cycle is, the greater the change in customer preferences.
For the last 40 years, we have been following the baby boomers through their life cycle changes with our housing products. Coming out of this cycle, the baby boomers are moving into the downsizing stage of their lives. However, they will not return to the market in any significant number until the housing prices at least stabilize. They are over housed and can postpone the buying decision.
The next population group, the Generation X, now in the prime home buying age of 28 to 44 years old, is only two-thirds the size of the baby boomer generation. The generational gap will contribute to a significant decrease in demand of the most popular housing product that was available prior to the recession.
With this recovery, the industry will experience a complete generational change as the millennial generation enters the housing market and becomes the new driving force for housing. This generation is different from their parents, having grown up in the digital world and are, in fact, larger than the baby boomer generation. They will control the housing market for the next 40 to 50 years.
New Market Realities and the Need to Refocus
Today the industry faces increasing challenges in every area, including but not limited to: sales and marketing, construction, customer satisfaction, technology, a new buyer. As the Baby Boomers begin to retire and downsize their homes -- some even exiting the market -- focus needs to be directed to the "Millennium buyers." The impact this generation will have on the industry will drive builders to rethink everything.
The "Millennium buyers" will demand a different type of house to exemplify their life style, which is typically informal and very active, thus requiring a low maintenance environment. In the buying process, they will use the internet and expect to see plans and 3D walkthroughs online. They will use social media to find the builder and evaluate his/her reputation. They will want to see pricing online. Builders will have to drive more data and intelligence from their CAD files than ever before to accommodate the technology-savvy buyers that demand instant gratification. Furthermore, the Millennium buyer won't deal with builders who can't deliver. Are we as an industry, and the builder, ready for this?
The internet will be all-important in dealing with this buyer. Internet marketing will be a must since the Millennials don't read newspapers or relate to the standard marketing vehicles. They want 24/7 access to information and expect to be able to get what they want, the way they want it, when they want it. They expect instant gratification. They will buy over the internet, so the complete buying process needs to be available on the internet.
This buyer is used to high technology and expects it. Builders need to present an innovative image using technology in their marketing, sales presentation, selections, house plans, and back office systems. Any touch point with this generation needs to be high tech and cutting edge to get their attention. This is going to be a big challenge for many builders.
For more information or assistance with any of these new technologies, contact info@builderpartnerships.com.