Chances are your agents are working with one or more of the following client groups: baby boomers, millennials, or Chinese buyers. These three demographics wield significant buying power in today’s market, but your agents might be underserving one of these buyer segments.
During the National Association of REALTORS® Broker Summit, RISmedia hosted a Power Broker Roundtable on Aug. 18 to discuss techniques for engaging with these key consumer groups. Brokers from four very different markets — northern New Jersey; Seattle; Tacoma, Wash.; and San Francisco — shared observations and insights on how they’re helping agents develop a better understanding of the needs within these demographics.
Millennials: Born between 1980 and 2004, the millennial generation’s eldest members turned 35 this year (the youngest are now 11). This group represents one-third of the U.S. population, with 44 percent identifying as nonwhite. They recently surpassed Generation X as the largest portion of the U.S. workforce. One-third of millennials aged 26 and older have a four-year college degree, which makes this generation the most educated in American history, according to the Pew Center Research.
Ed Krafchow, CEO of Better Homes and Gardens Mason-McDuffie Real Estate, oversees 36 offices with 1,200 agents in the San Francisco Bay area. He characterizes his area as a high-tech, high-growth marketplace with a strong resurgence in urban dwelling. His agents are constantly engaging with millennial buyers.
Krafchow describes millennials as data-driven consumers. “They have a belief in research,” he says. So he hired a 24-year-old data scientist named Tommy Wolf to conduct original research for his brokerage.
The first study, published this year, examines the correlation between coffee shops and real estate values. What Wolf found was that residential real estate within a walkable half-mile distance of a coffee shop can fetch, on average, $159 more per square foot than properties outside the half-mile radius — so a $971 per square-foot average price versus $812.
The main purpose of the study was to help agents engage with more millennials — and it worked. Agents shared the study with their clients and on their social media pages, and the study received more than 200,000 impressions. That’s a lot of eyeballs on their website and agent business pages from potential clients.
“[Millennials] want insight. They want you to be insightful in a way they cannot be,” Krafchow says. “If we can’t be insightful, then we are losing relevance.”
In addition to hyperlocal data, Krafchow says engagement is critically important to working with millennials. Dick Beeson, principal managing broker with RE/MAX Professionals in Tacoma, Wash., says his company has started using text messaging to communicate with both millennial clients and agents. They also put a mentorship program in place to support and retain younger agents.
When recruiting millennials, Krafchow has come to realize that they have no interest in plaques, could care less about a private office, and are turned off by mass marketing. Instead, Krafchow has invested in wine refrigerators for his offices so agents can gather for weekly wine and cheese nights where they talk shop.
“[Millennial agents] want something special — they expect it,” he says.
Chinese buyers: In the past year, China surpassed Canada as the top country of origin for foreign buyers of U.S. homes, according to NAR’s 2015 Profile of International Home Buying Activity. Chinese buyers spent $28.6 billion on U.S. real estate between March 2014 and March 2015, an increase from $22 billion the previous year. They are buying single-family homes (62 percent) in urban areas (86 percent). Nearly 70 percent are paying cash.
Lennox Scott, chairman and CEO of John L. Scott Real Estate, headquartered in Bellevue, Wash., calls Seattle a “new suburb of China.” His company, which has seen an influx of Chinese clients purchasing in the $800,000 to $900,000 range, now translates its materials and brochures into Chinese.
Charlie Oppler, CEO of Prominent Properties Sotheby’s International in Jersey City, N.J., says that 35 languages are represented at his company, including Chinese. In his market, Chinese buyers have been attracted to new developments, with 62 percent of new construction being scooped up by this group of clientele. Many are purchasing properties for their children who are attending college in the area, he says. Sales prices range from $300,000 to $500,000, but his company’s highest sale was $5.5 million.
Baby boomers: This generation was born between 1946 and 1964 but is often divided into older boomers (1946–1954) and younger boomers (1955–1964). Boomers are the second largest group of home buyers (31 percent) after millennials (32 percent), according to NAR’s 2015 Home Buyer and Seller Generational Trends report. Younger boomers most frequently cite job relocation as their reason for moving, while most older boomers say it’s to retire.
Oppler says he has noticed baby boomers staying in their homes longer. “What used to take five to seven years now takes 10 to 11 years [for boomers to make a move],” he says. So agents are trying to find ways to foster longer-term relationships with clients, which generally includes more touch points during the year and for longer periods of time.
“Our recovery didn’t start until 2013. The East Coast has lagged behind in job growth; it’s not as strong as it is in on the West Coast or in Texas,” Oppler says. “I believe the main reason baby boomers are staying [in their homes] is because they’re afraid their kids won’t be able to find a job after they graduate college.”
The Home Buyer and Seller Generational Trends report states that 21 percent of younger boomers nationwide who purchased in the past year bought a multigenerational home — a point that’s on par with Oppler’s regional findings. Many boomers are seeking homes with the flexibility to accommodate multiple generations, if necessary.
Reprinted from realtormag.realtor.org, August 2015, with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright August 2015. All rights reserved. realtormag.realtor.org