Strategic Marketing, Sales & Customer Experience | Illumine8

2014 Real Estate Marketing Predictions | i8 Blog

Written by Christina May | Jan 6, 2014

The cork has popped on 2014 - Happy New Year! After taking a break for the holidays we are well rested and ready to run into into the new year. In this series we take a look at our own crystal ball to share our market predictions for each of Illumine8’s core markets: Real Estate, Professional Services, Marketing & Communications, Restaurant & Retail, and Healthcare. 


2013 Real Estate - Like a first date, 2013 Real Estate started out with a bang.. and left us wanting with the bill for the evening. A battered industry in need of a life line and a little optimism, the market did provide better news as compared to years pervious (but who really wants to look back too far without your therapist on speed dial?) 

Here is 2013 at a glance:

  • The most searched real estate zip codes according to realtor.com(2): 
    • Charlotte, NC
    • Hollywood, FL
    • West Palm Beach, FL
    • McKinney, TX
    • Chicago, IL
  • Remodeling continues - Remodeling sales were up 10% in 2013 with an industry expected rise of another 10% in 2014 according to HanleyWood(3)
  • Bidding wars returned to resale with limited quality supply and squeezed demand (Cue Realtors Rejoicing) 
  • Got an App for that? Real Estate joined the AppNation with 68% of homebuyers reporting using a mobile app during their home search and 89% using a mobile search engine. If you ignore this trend don’t blame the marketing department when they told you that bandit signs wouldn’t cut it.
  • First time homebuyer, beware - in the last 10 years renters vs homeowners have increased 15%, but as rents increase faster than home pricing those first time homebuyers are eyeing the market again.
  • CRE keeps on moving, unevenly - Vacancy rate generally tightened with modest rent growth. Retail, Industrial and Office space didn’t make much of impression nationally. Multifamily continues to pull its three siblings along the “Great CRE Way". Take heart though - transaction volume increased 27 percent over a year ago.
  • New Home? No way. We hate to say it but despite good sales reports for some areas of the country, overall Census reported as of November that New Construction spending showed only 1.2 percent growth year to date. Don’t get too mad at us - yes, sales are up over 17% for the year as reported by the Census Bureau in November. But keep this in mind, right now it looks like 2013 will be the sixth worst year for new home sales since 1963. (5) (7) Needless to say it isn’t news that Developers are about as nimble as the Titanic thanks in part to the nature of their business, capital availability and regulations. The good news? We think you already hit the iceberg and the ship already sank. Time to row your way back to a solid gains.
  • "Foreclosure" That word finally worked its way out of the headlines in 2013. We saw a 27 percent decrease in foreclosures in the market from a year ago. U.S. foreclosure starts in the third quarter were at a seven-year low. Yes, we said 7 year low…. (4)
What’s coming in 2014? Here are Illumine8’s Market Predictions for Real Estate:

Prices & Loan rates rise - at a steady pace 
We saw new home and resale home prices both jump significantly in 2013 across the country.  The rate of increase for pricing nation-wide in 2013 was 10.9 percent, pushing the median house price for existing homes $30,000 to $215,000 (1). With pricing getting back on track, we don’t expect to see the major price jumps this year, but rather steady price increases. What else do we expect to see - the rookie mistake of new home builders aggressively pushing prices in markets that can’t sustain them. 

2014 - The Year of the Horse House? 
Hate to disappoint you, but we don’t really see any signs of life in suburbia. Forget those large floor plans - Americans are ready to up and move, but to smaller digs. With credit repaired (give anything enough time, it does heal all) and lending easing a bit, we predict that families will be motivated finally make that move. Doesn’t hurt that prices and interest rates will help push fence-sitters to purchase. Builders and developers should consider smaller floor plan options, energy-trends and luxury amenities within the home for value-added up-sells (granite counter tops and stainless steel appliances are NOT luxury upgrades guys). With investors stepping out of the market, regular folks are going get the 7 year itch to move. Expect traffic to increase naturally for both resale and new construction. We anticipate that housing will finally get its footing in 2014, but not where we traditionally experience recovery growth. 

and that leads us to….

You are not your target market: City Family, Country Mouse.
The old idea that families move to the burbs once kids come along is as outdated as Snooki’s hairstyle. The target family persona has changed drastically. No longer driven by size, these connected family units are more concerned about their City’s amenities than the square footage of their yard. In fact, many don’t even consider a yard an amenity. Depending on your market your persona has swung a little or drastically, but the over arching theme is that Americans are flocking to less expensive hubs such as Portland, Denver, Austin, Richmond, Dallas, Houston, San Antonio, Atlanta, and Raleigh. 

Hungry Resale Games
The supply of quality resells was an issue in 2013, driving active bidding wars between buyers (We think even a few realtors checked into the ER because they thought they were seeing visions). We believe that this condition is going to continue in 2014 as supply and demand has yet to shake out. Quality resells will come available as some buyers will consider new construction options that they previously put on hold. Some resells have undergone renovations making them more desirable as well. 

CRE
As with the residential market, the commercial market should finally find solid footing in 2014. Businesses have been sitting on cash reserves and the economic condition is right for real growth in the business sector this year. With consumer spending and confidence driving the US economy back in business, business are gearing up to meet the demand. Expect it to be a busy 2014! What does this mean to CRE? It means growth. The Urban Land Institute (6) is naming warehousing as a stand out sector for 2014 with businesses shorting supply chains, increased data demand and R&D sector growth. We believe Multi-family will still rule the day in 2014 in line with the changing market persona trend of “less is more”. 

Washington DC Market
As an active participant in the fringe DC Market, we take special interest in what’s happening in our hood. DC has seen amazing growth in all sectors, but especially multi-family units. We are a little concerned that the DC bubble is getting ready to burst. As recently as 2011, DC was named the number 1 investment city for CRE. This year it has slipped from 8th place to 22nd place for 2014. Experts and common sense tell us that sequestration, budget cuts and federal shut-down antics don’t bode well for a market that is very dependent on government spending and government contractors. 

We expect the market to continue to improve closer in to metro DC with multi-family continuing it’s rise. We don’t expect to see too much improvement in the fringe markets. While fringe developers and builders continue to rely on the prophecy of “pent up demand” and chase price brackets, what they have not adjusted is their product offerings and pricing structures to meet current the market persona. Expect condo products, town homes and small single families to move in this market to all age personas. Expect over-priced large single family units to sit. We also fear that price increases and rising interest rates will not be enough to drive demand beyond the beltway based on price alone. 


Our Advice: 

Now or Never 
Never say never, but the conditions that exist for affordable house pricing and low interest rates are quickly coming to an end. We anticipate lots of communications spinning this theme ad nausea during the spring market this year. Our advice? Get a jump on the traditional spring market with fresher spins on the broken record of price driven strategies. Think February for your spring market roll out.

It's about the place, not the appliance
Go back to old school values on this one - location, location, location. With families changing the qualifier from “planned community” to “greater community”, more than ever it is important to play up the strengths of your location - and we don’t mean the pool. Purchasers are just as interested in what other living experiences surround their new home. Play up shopping, dining and other destination amenities to your location. Make sure your strategy is geo-targeted - as this is usually the first round qualifier for buyers. 

Luxury is not affordable, don’t position it that way
Stop chasing the price in 2014. As consumer confidence improves so does a consumer’s attitude toward price. There will always be “that persona” - lets call him Charlie Cheap - who is going to come to the table prepared with a cross referenced spreadsheet automated to update listings on his iPad to the minute. Don’t chase this guy. Don’t insult him either with “affordable luxury” statements. Focus on a quality product instead. In an environment of $600 household blenders, it is truly about delivering the quality message and you will get paid for it.

Build it and they will visit your website...
Or your app, or you Facebook page, or your Twitter feed, or your landing page, or your Pinterest board, or your ebook, or your video tour…. Content is still king in the marketing world, and more so now than ever to real estate. Consumers expect to make real estate decisions from the comfort of their touch screen device. If you only put out a sign, they will not come. We really do mean it. Based on our research real estate companies who engage in inbound marketing realize 15% more onsite traffic and 75% more online traffic. If you haven’t integrated an inbound communications plan into your overall marketing playbook for 2014 you can expect to see your quality traffic decrease.



Christina L. May is the managing partner, CMO of Illumine8 Marketing & PR located in Frederick, Maryland. Illumine8 specializes in an Individualized Integrated Inbound marketing approach utilizing all aspects of customer communications.  Learn more at Illumine8.com
References:
1 - http://realestate.msn.com/2014-housing-outlook-home-prices-head-higher
2 - http://www.realtor.com/news/the-years-most-searched-zip-codes/?iid=mktng_2013-YIR_home_hoods#.UssMamRDtQM
3 - http://www.remodeling.hw.net/2013/costvsvalue/national.aspx 
4 - http://www.realtytrac.com/content/foreclosure-market-report/september-and-q3-2013-us-foreclosure-market-report-7899 
5 - http://www.census.gov/const/C30/release.pdf
6 - http://www.uli.org/press-release/2014-emerging-trends-in-real-estate/ 
7 - http://www.calculatedriskblog.com/2013/12/comments-on-new-home-sales.html#vKOStjcHbcx8AtGw.99