Home builders looking for a new sales hook in 2014 don’t have to search beyond the Website homepage of their their favorite news source. U.S. interest rates are at a 50-year low but they won’t stay there forever. Market insiders predict that rates could start rising soon, although most federal officials are eyeing 2015, according to CNBC. Jay Brinkmann, chief economist of the Mortgage Bankers Association, said he expects mortgage rates to rise above 5% in 2014 and to increase further to 5.3% by the end of 2015.
With this in mind, the new year is the perfect time to craft your marketing message around the benefits of buying a new home while interest rates are at near-record lows. Don’t assume that your customers make that connection. Instead, educate them on how interest rates affect their buying power and why now is the time to buy. Use the threat of rising rates to create a sense of urgency.
One of my clients, Atlantic Builders, is having success with its “Planning for the Future” marketing campaign. Its flier shows a chart that solidifies the statements being made with facts. In this way, the company is positioning itself as a trusted source of information on the housing market as well as a partner through the home-buying process. The copy points out that buying a home is an investment and long-term financial planning device, and provides potential buyers questions to think about before taking the plunge.
Here are some points to strengthen your low-interest-rate argument:
-- A 1% change in the interest rate is equivalent to a 10.75% change in purchasing power.
-- Rising mortgage rates do more to influence home affordability than rising home prices.
-- Home affordability is about more than a home’s price. Buyers must also consider the monthly cost of owning, operating, and insuring a home. As mortgage rates increase, the monthly cost of homeownership jumps.
Also, remember that your stiffest competition is from existing houses (or "used houses" as us marketing pros like to say) and remodeling projects. I recommend marketing strategies to my clients that reinforce why and how new homes are better, with lower energy bills and upkeep. Show them that the quality of your construction and materials are superior in a way that’s interesting and easy for them to understand.
Mollie Elkman is the president of Group Two, a homebuilder advertising agency based in Philadelphia, and an international speaker.
Learn more about markets featured in this article: Philadelphia, PA.