The Current Landscape
The Covid-19 pandemic is significantly different from the 2008 housing crisis where millions of homeowners found themselves in homes they could no longer afford. Credit availability evaporated as hedge fund engineered mortgage-backed securities filled with dogs*t mortgages that were designed to fail did just that, causing immense downward pressure on home values. So, not only couldn’t homeowners afford to stay in their homes as mortgage carrying costs ballooned, but they also couldn’t afford to sell them because they owed more than they were worth. This was devastating to both the real estate industry and the consumer who owned property.
The pandemic, specifically the locally mandated shelter in place (SIP) orders, has caused unprecedented amounts of buyers and sellers to simultaneously retreat from residential real estate markets across the nation due to general uncertainty and safety concerns. As a result, inventory levels and transactions have plummeted to relatively recent historic lows in almost every major market across the nation.
While inventory and transactions have recoiled, underlying home values have remained solid due to the guardrails that have been built around the housing industry, i.e. foreclosure moratoriums, relatively available forbearance (the ability to defer mortgage payments to a later time), and continued historically low mortgage rates.
The most impacted segments of the greater housing market appear to be limited to the businesses of real estate that rely on transactions, not the real estate itself or the underlying consumers who own such. Brokerage and many 3rd party service providers that rely on the volume of transactions have been hit hard.
Because social distancing mandates are likely to remain in some form for the foreseeable future the very bullish trajectory that the early spring market was showing has (also) been flattened. However, data indicates a desire by both buyers and sellers to continue to transact as inventory has begun to rise and price reductions fall. As SIP mandates are relaxed and communities are allowed to return to work and earn, each market appears poised to positively uncoil, albeit at a slower rate and possibly over a longer time frame, depending on other market factors like unemployment, and more stringent mortgage underwriting criteria.
With the above in mind, how do you resonate with your audience during wickedly uncertain times while the requirements to conduct business are changing underneath you?
Some Armchair Psychology
Using Maslow’s hierarchy of needs to assign some context to how people tend to react psychologically during ‘good’ and ‘bad’ times, very specific to real estate marketing. At the risk of over-generalizing a bit, during ‘good’ times marketing that is aspirational and creative tends to resonate very well with people, while during ‘bad’ times, marketing that is rooted in safety and security around basic decisions is what resonates most with people. I encourage you to dive deeper into Maslow’s theories if psychology is your thing, but for the purpose of this article, I’m going to limit the dissertation. (h/t to Mike Simonsen at Altos Research for appealing to my inner armchair psychologist)
I think everyone would agree we’re in relatively ‘bad’ times. The ramifications of this pandemic have altered how we’re allowed to go about our daily lives or risk dying or infecting and killing others. Our generation has never experienced anything like this and as a result, we’ve all experienced that need to feel safe in fundamental aspects of life including health, employment, and that we have a stable roof over our heads. A couple of examples of marketing and messaging strategies that work during times like these include 1) Fact driven marketing based on very recent and highly relevant data points and 2) Sentiment driven marketing that demonstrates relevant capabilities to address your audience’s basic need to feel safe and confident before moving forward.
Fact Driven Marketing
Sounds funny to say ‘fact-driven marketing’ as if most marketing isn’t based in fact. Except it isn’t. Marketing is typically very aspirational, creative to the point it obfuscates the truth. Facts based on data, specifically, housing market statistics relative to recent history and past ‘bad’ times can build the confidence of consumers who are wondering if now is still a good time to buy or sell. Let me show you using three data points from the greater Atlanta, GA market:
The red circle calls attention to the fact that the amount of on-market listings bottomed out around the second week of March and are still near recent historical lows, but have since begun to rise again, showing there are willing sellers returning to the market where supply is still critically low.
The average % of active listings that receive a price reduction is ~33%, represented by the red line. While many buyers and sellers pulled back from the market, active buyers are willing to pay competitive prices. This is a signal that there is relatively strong demand to buy at prevailing prices.
While the median list price in Atlanta is down a bit year over year (red line), they are well above recent historical lows (green line) and have ticked up over the most recent 7 days. You can see that Atlanta had a strong start to the year and the spring market was taking off until SIP orders were mandated resulting in a short yet sharp decline as consumers pulled back from the market (yellow circle). The point is, home values are holding which is the one number most folks pay attention to.
Outlining these facts based on current data will go a long way towards instilling confidence in buyers and sellers that the market isn’t caving, in fact, it’s holding remarkably well. Many other markets show very similar trends, too.
Sentiment Driven Marketing
Real estate is a commodity in the sense that everyone is essentially selling the same product as their competitor. Having looked over literally thousands of real estate websites over the years, core service offerings, or brand promise, or value proposition, are too often described along the lines of:
- Providing information to make informed decisions
- Professionally marketing your home (on the MLS, social media, on our amazing website, Zillow, flyers around the neighborhood, etc.)
- Professional representation and negotiation
- Great service, guaranteed
… and maybe there are some ‘value-added services’ marketed such as:
- Custom home and local market analysis
- Virtual tours
- Free home staging
- One-stop-shop for real estate, mortgage, insurance, and title services.
During times like these, it’s not just having certain capabilities to offer, it’s how you position them relative to the current sentiment of your consumer audience and adjusting the right dials to tune them in accordingly. The first list of items is an example of tired, no sh*t, unremarkable messaging. Every consumer expects great service and for you to do your job ‘professionally’. Right now your audience isn’t interested in the new business that opened in the neighborhood(!?), what the most expensive listing is, or that it’s a generally a seller’s market. You’re not going to instill confidence in anyone by stating you’re the status quo and tone-deaf. The second list begins to set some differentiation between you and a competitor but until you juxtapose that messaging in a way that resonates with your audience’s basic needs (safety, certainty etc) it doesn’t differentiate you at all.
Rather than creating fictitious examples of how sentiment-driven marketing should look and feel, there are already some fantastic examples out there to share.
The first is 8Z Real Estate out of Denver-Boulder Colorado. Starting with their updated home page:
Simple, supportive, and speaks to the fact they understand how a lot people are feeling right now. Clicking through the Learn More CTA:
First, a message from the CEO talking about the prevailing sentiment that everyone needs to be/feel/stay safe and stay healthy. Then a CTA to fact-driven marketing backed up by data. Followed by differentiating their services relative to their audience’s environment, not just advertising ‘We have virtual tours (too)!’
Clicking through the Learn More CTA under 8Z Virtual Agent Services…
Positioned as “A full suite of tools that enable buyers and sellers to move forward in a changing world.” 8Z continues to build confidence for their audience by showing how prepared they are to help them navigate the landscape even as the requirements to conduct business are changing.
Next is Metrobrokers out of Atlanta, GA, starting with their home page:
The first thing to note is the ‘Updates Regarding Covid-19’ link that sits above everything else. At the bare minimum, every real estate website should have this type of a CTA on their sites because that is what consumers want and need to know. The second thing is the offering of a service that allows consumers to buy before they sell, a huge differentiator whose value is further amplified by the current landscape of shifting uncertainty.
Clicking into the Covid-19 update CTA:
A common theme with 8Z in that Metrobrokers not only markets their capabilities but does so in the context of addressing the sentiment of their audience, the need to feel safe, and that Metrobrokers understands how to navigate this market.
Living through a pandemic is scary, period. The idea of transacting real estate during a pandemic is rife with uncertainty through the eyes of your audience. Market to your audience that:
- A pandemic affects their local real estate market much differently than past crisis’
- You understand their market in great detail and the facts show while things have slowed down, the fundamentals remain solid.
- You understand their need to feel safe and you’re competitively positioned to navigate these uncertain times.
… and win consumers’ business as well as their continued loyalty.