By Cheryl Weber. Americans are people on the move. Every year in the decade between 1990 and 2000, roughly 43 million people pulled up stakes and headed to a new place to live. That amounted to 16 million households in the 12 months ending March 2000, the latest figures available. Of those: 40 percent moved to a new county, state, or region. For expansion-minded home builders, the mass migration of the 1990s was at times like fishing in a stocked stream.
But just as the banks have swollen with multi-market builders elbowing for position, the stream of relocating customers has slowed significantly. In particular, the percentage of people who see the whole country as their job market and opt for a one-way ticket has been decreasing. "The number of corporate movers has gone way down," says Dennis Taylor, senior consultant for Runzheimer International, based in Rochester, Wis. Nationally, "moving companies that actually relocate employees say their business is down about 40 percent over the last year and a half."
In Chicago, Baird & Warner, which handles incoming employees for a large number of corporate relocation firms around the country, has experienced the same trend. "The 'relo' industry is a mature industry," says Richard Mundt, vice president of business development. "It's not in growth mode. We're seeing a 25 percent decline in the number of companies willing to pay the dollars required to relocate an employee."
Still, there's good news. From well-educated 30- and 40-somethings filling urban fringes, to affluent retirees moving to active adult communities, to recent immigrants seeking out multifamily housing, the people making regional shifts are some of the nation's most desirable consumer groups. The latest census data show that the percentage of people who moved for work-related reasons increased in tandem with their educational level, from 14 percent for high school graduates to 28 percent for those with a master's degree or higher. "They're coming in much more educated than they have in the past," Mundt says. "The ones we see continue to be very interested in new construction. And they have access to the Internet. A lot will have identified the areas and communities they want to live in. It's wise to be visible on the Internet."
Relationships -- Real and Virtual
Indeed, the Internet, with its easy accessibility, generates huge efficiencies for builders seeking to reach prospects long-distance. Dominion Homes, in Dublin, Ohio, which closes about 2,000 homes a year, dedicates a substantial portion of its Internet site to relocation issues. Prospective buyers or Realtors taking a spin through the site are encouraged to check out the large inventory of homes and to contact the HomeStore, where they can gather information on central Ohio's communities and schools, plus the builder's products, pricing, and financing options. Dominion maintains a selection of inventory homes -- about 10 percent of its active sales -- for buyers on an accelerated timetable. "We find that there are more relocating buyers toward the end of the year and late spring, for summer move-in prior to school starting," says Lori Steiner, executive vice president of communications and strategy for Dominion.
Relocating buyers represent only about 15 percent of the 3,500 homes that Kimball Hill Homes sells each year. However, David Hill, CEO of the Rolling Meadows, Ill., company, says that more than 50 home sales a month are attributable to Internet contacts. "There's no doubt that the Internet is great for relo sales," he says.
In addition to the Internet, Steiner says that relationships with Realtors in the region are critical. The company's 60 sales reps in Ohio constantly make the rounds at real estate offices, resulting in more than 50 percent of its total home sales through brokers. "It's truly a relationship business," Steiner says. "While we target Realtors with direct mail so they know what's going on at Dominion Homes, the true business we get from Realtors is because of one-on-one relationships with sales reps."
Dallas-based Meritage Homes is also engaged in ongoing efforts to nurture relationships with local Realtors. "Over a period of time, we've identified certain agents who are high producers and serious about their business," says Jane Hayes, vice president of corporate communications. "We're always in contact with those, but we don't ignore other agents who might not be quite as committed to doing a high volume in a year's time. We target real estate offices within a five-mile radius of our communities, and do a lot of follow-up with agents who have sold or shown our houses." Meritage CEO John Landon estimates that, as is the case with Dominion Homes, Realtors drive more than 50 percent of his company's overall sales.
In the upper-echelon price points -- averaging $650,000 -- Kimball Hill Homes helps buyers, whether they're from a distance or close by, sell their existing home through an informal program that includes counseling on how to sell the house and monitoring whether they're doing the right things. "We'll be quite active if the broker is known to us, even in a different region," Hill says.
Goods and Services
Builders are letting out-of-state prospects know that they can expect a streamlined home selection process. Dominion Homes' Internet site advertises an all-in-a-day shopping excursion through which prospects can take a quick virtual tour of its communities in the sales office, before being swept off to visit models of the homes they've selected.
Meritage's sales managers provide buyers who are new to the area with a package outlining the features and benefits of living in that city, whether it's highly accredited schools or access to natural areas and entertainment. They also frequently send buyers photos of the homes under construction, via the Internet or regular mail. And the design centers provide VIP service. In Dallas, Hayes recalls meeting with the mother of a buyer who was still living in South Florida. The mother made selections with her daughter over the phone. "After she picked things out, I had the vendors give me duplicate samples to send down to her so she could see them," Hayes says. "We also sent stuff to India once. If I need to do something like that, I will."
During the past 18 months, Kimball Hill's relocation market has been declining steadily in some markets while dying sharply in others. In Dallas, the builder's relo buyers fell from 25 percent to 5 percent or less. The Cleveland relo market -- never more than 20 percent -- has been cut in half, as it has in Austin, Texas. Only Sacramento is holding its own at 30 percent. Hill notes: "We count relos as people coming out of the pricier San Jose and San Francisco market," moving from $500,000 for a 22,000-square-foot-home to $300,000 for the same home in Sacramento's central valley. Hill predicts the relo market will continue to shrink into early 2003 and then stabilize lower.
Corporate economies are outside a builder's control, and at the end of the day, marketing efforts only go so far. What's left -- after builders have done everything they can to service long-distance buyers -- is the strength of the product. "We very much pay attention to our homes being considerably more efficient and exciting living spaces," Hill says. "So many moves are motivated by sheer desire, not need. There's an interesting swing toward smaller families going for a lot more space."
Sunny Side of the Street
That trend is also true of retirees headed for Sun Belt states. Freshly retired baby boomers are becoming a greater portion of Scottsdale, Ariz.-based Shea Homes' active adult buyers, though they're still not the majority. Boomers are more focused on the home itself, compared to buyers in the past who were concerned about lifestyle. "Eighty percent of the buying decision used to be about a community's amenities. Now, it's almost 50-50," giving equal weight to the physical home they're buying, says Eric Snider, vice president of sales and marketing for Shea's active adult communities. Flexible spaces are in demand, such as an extra room that can be used as a work-at-home space or as a guest room for visitors.
Shea Homes says it reaches out-of-market active adults through its Web site, by advertising in popular national magazines geared toward retirees, and by advertising locally on billboards and in tourist magazines. That three-pronged strategy makes sense, given the age group's tendency to stay in motion. According to Charles Longino, a demographer of aging at Wake Forest University in Winston-Salem, N.C., a quarter of the older population is on the move every year between warm and cold climates. "People move from cold to warm weather, then vacation back in the north during the heat of summer," he says.
Snider says the most important aspect of selling to relocating retirees is being able to sustain a long-term relationship. "Out of market active adult buyers tend to take a little longer to make a decision," he says. The sales reps use customer relationship management software that provides them with a means of sending out routine letters and marketing materials and prompts them about when to make phone call. All the contacts, whether through the Internet or a national call center, are captured in one location, so there's a record of when the last contact was made, what the conversation was about, and where they are in the buying process.
Movers and Shakers
Landon defines Meritage Homes' relocation market -- which runs the spectrum from individual to corporate to retirement -- more broadly than some builders. He says that while less than 5 percent of out-of-towners purchase a Meritage home on their first house-hunting trips, an additional 20 percent of the company's buyers are relos who've been renting. "People are taking more time to get the lay of the land," he says. "A lot of builders make the mistake of not following up with potential buyers when they can't get them in house-hunting trips. If they go rent a house, they're lost."
Although foreign immigration accounted for only 4 percent of people who changed residences between 1999 and 2000, immigrants make up a large portion of population growth in cities in the South and West. "Many times people from Mexico, Asia, and the Middle East take as long as seven or eight years to purchase a home," Landon says. He's optimistic about the business that long-distance buyers bring. "Our relo buyers are all over the board," he says. "What they buy depends on where they're coming from. But people are continuing to buy as much home as they can afford."