Today’s housing consumers are looking at shelter differently than their predecessors – in more ways than one -- a panel of builders, developers and marketers agreed at ULI’s Spring Meeting in Charlotte, North Carolina.
In a session before a standing-room-only crowd, George Casey, chief executive officer at Orleans Homebuilders, a Philadelphia-based company with divisions in other markets, said the notion of home ownership as the American dream can “no longer be taken as a grand truth.”
For many, added Kathleen Cecilian, president of Cecilian Worldwide, a branding and marketing firm for master-planned communities, ownership is linked to job and income stability. Consequently, it has a permanence that is problematic to some people. It used to be a “Hatfield or McCoy,” rent or own, proposition, she said. Now, the decision to buy or rent is much more “nuanced.”
Because renting seems to have more appeal these days, Casey has looked into building houses for rental with the idea of converting them to for-sale units when the market picks up. That’s the way Orleans moved hard-to-sell houses in the 1940s, he said, adding that “sometimes, the past is prologue. Things you never considered before are worth considering now.” The numbers haven’t worked out, at least not yet. But Casey said it may one day be that it is better to build rentals than to sell at a deep discount.
Robert Sharpe, managing partner at Rancho Sahuarita, a 10,000-home planned property in Tucson, Arizona, admitted that to limit competition, he and his partners considered buying up all the foreclosures in Tucson. That idea didn’t fly either; not because it didn’t make sense, but because Rancho Sahuartia was doing well on its own.
“We are still seeing demand,” Sharpe said, not just from first-time buyers who don’t have homes to sell but from repeat buyers who will rent out their current homes if they have to in order to move up.
Casey also noted that contrary to popular wisdom, Orleans’ houses aren’t getting any smaller. In fact, the company’s most expensive models are its biggest sellers. “The whole thing about houses getting smaller, we’re not seeing it,” he said. “But people are using space differently. And it’s not an age thing; it’s across all generations.”
Casey and Cecilian, the builder and the brander, agreed that research is key to closing sales these days. Orleans now does “core consumer research” on every piece of land the company considers before buying it. “Ten years ago, we never did that,” Casey told the session. And Cecilian pointed out that buyers are not homogeneous. “The money is in the niches,” she said.
In marketing communities and houses to buyers, Cecilian suggested talking to customers in a respectful way and making it easy for them to do business with you. “Think about the voice of your brand,” the marketer said. “In speaking to people on the Internet at 11 o’clock at night, you need to make them want to visit your project the next day and buy.”
She also warned that social media is a 24/7 dialogue. “You can never shut it down,” she said, “and you have to answer promptly.”
Casey said Orleans is building fewer models, and foot traffic is slower per community. But sales are greater. “It’s a different dynamic,” he said. “If you do well with social media, people will decide to buy or not before they show up. So your sales people are dealing with more solid prospects and their conversion rate is 53 percent greater.”