1. The Rise of Millenials and Gen Z
Millennials are already a potent market force, but their projected spending in the United States will grow to $1.4 trillion annually and represent 30 percent of total retail sales by 2020, according to research by Accenture. But as they focus more on experiences above ownership of things, home buying among this demographic is down.
Only 48 percent of millennials (ages 21 to 36) believe that buying a home is a good investment, according to the latest ValueInsured Modern Homebuyer Survey. That’s a record low, according to the report, and a sharp contrast to the previous high of 77 percent just two years ago.
Additionally, Generation Z (ages 18 to 24) would be the next demographic to move into the home ownership realm, but according to a new survey by Apartment Guide, 54 percent of Generation Z respondents planned to live with their parents after graduating from college, while 44.8 percent planned to pursue rental housing and only 1.2 percent were focused on buying a home.
What this means: Attracting these slightly overlapping demographics will require focused strategies that resonate with them and explicitly illustrate the value proposition of home ownership for them in a very personal way.
2. The Now Economy
With everything at our fingertips – data, information, the ability to make a purchase with a single click, etc. – people expect things to happen in nearly real-time. Of course, most consumers understand that making the biggest purchase of their lives isn’t going to be an immediate process. Still, the 30-day or more time frame to complete a home purchase is often frustrating, cumbersome and tedious to today’s consumers. For some it’s a deterrent to buying.
What this means: Deploying technology (on the back-end and front-end) is critical for mortgage professionals. Automating steps in the process that eliminate time and ease frustration for consumers (online signing and pre-approval, for example) as well as providing additional resources will be the key to attracting more customers.
3. Immediate Access to Information
Most people own a smartphone or at the very least have a computer at home or work. This means access to a plethora of information. Consumers can now do an abundance of up-front research before buying a home. This includes vetting mortgage companies, looking up reviews, comparing interest rates, and everything in between. Buyers are often now more informed and come to the table armed with a lot of knowledge and higher expectations.
What this means: Mortgage companies need to differentiate themselves to consumers. They need to convey their unique value proposition to win new customers and provide value beyond just the basics.
4. Marketing Really Matters
Today’s consumers are savvy. They recognize that everyone is marketing to them. They are constantly being pitched. That said, they’re looking to deal with companies that connect with them on another level – whether it’s common goals, personalization, understanding their needs, or on recommendations from friends and family.
And while being found online is important. It’s no longer adequate to simply have a website. You need a social media presence. You need to connect and engage with your target audience through relevant messaging that resonates with each potential group of buyers (whether those refinancing or first-time home buyers). You need an abundance of reviews. And your must manage your overall online presence.
What this means: This all means having a good grasp on the intricacies of search (organic and paid), social media (including buying ads, and engagement with potential customers), along with understanding how to manage your own reputation online.