Home Builder Technology: Generate Leads and Meet Evolving Consumer Demand
The home building market is in the midst of a fundamental transformation. In the midst of a dire housing shortage, home buyers are looking to new construction as an option to get their dream home. At the same time, they’re looking to approach that process in ways unmatched by any previous experiences. With a move to online self-service, the days of home builders relying on their personal connections and personal selling skills are starting to appear in the rearview mirror. Home builder technology is taking center stage.
New technologies have emerged that are specifically designed for rising consumer expectations and preferences. Home sales are reaching their highest level since 2006. Accounting for these changing preferences is key to effectively reaching your audience. Ultimately, it means sustaining and growing your business. In this guide, we’ll cover this evolving market. What challenges do home builders face in that market? How can home builder technology solve those challenges. Let’s dig in.
The Evolving Home Buying Market in 2022
The stage has been set. The average American home increased almost 18 percent in price over the past year. That’s double the average rate over the past decade. Despite rising prices, the market also became intensely competitive. According to one survey, the average house on the market received almost five offers, a sharp increase from previous years.
As a result, individuals and families are increasingly turning to new construction. Or, as Business Insider puts it, “it’s a builder’s market”:
Contractors are key to solving the shortage, but they’re in no rush. Home construction and new home sales show “beautiful symmetry,” Logan Mohtashami, lead analyst at HousingWire, told Insider about how, when sales dip, housing starts follow, and when home demand ramps up, builders increase supply.
The result of that market dynamic is simple. According to the U.S. Census Bureau, building permits for new construction increased almost every month in 2021, leading to double-digit growth over the course of the entire year. That number is expected to slow a bit in 2022 as the market self-normalizes. But home building will continue to be in high demand moving forward.
Of course, it’s not all positive. Home building requires long-term materials and supply chain planning. And backlogs are already beginning to pile up. In this uncertain market, meeting changing consumer demands becomes an especially important part of the process.
Changing Consumer Preferences in a Technology-First World
Put simply, the way consumers want to shop for their potential next home is changing drastically. Gone are the days of a real estate agent or other trustworthy partner taking on the part of doing the research and getting the details on behalf of the buyer. In its place, the age of self-service has reached real estate.
A recent research report by the National Association of Realtors came with fascinating, though somewhat obvious, takeaways:
- 97 percent of potential home buyers use the internet at some point in their search.
- Contacting a real estate agent or property representative is moving to a later part of the process, with self-service research coming first.
- The average home buyer viewed five homes online only. And they excluded them from a search if they didn’t get basic answers about their needs.
- Among preferred communication methods for home buyers, text messaging, email, and instant messaging all outpaced phone calls.
Real Estate is Now an On-Demand Industry
In the home building industry, that shift to a self-service mindset is especially pronounced. The majority of shoppers now prefer a brand-new house, and they’re willing to skip the middle person. Instead, they’re willing to take their time and do their own research, even more than they would when shopping existing real estate.
Millennials and members of Gen Z are especially likely to consider new construction.And they also happen to be the demographic most likely to use virtual tools in the process. As detailed in a 2021 New York Times article on increased millennial home buying,
The increased pressure on the market has been coupled with widespread adoption of tech tools that allow buyers to not just browse real estate but also apply for loans, finalize deals and even have documents notarized, all while social distancing from their sofas. Sixty-three percent of buyers who used Redfin in November and December went on to make an offer on a home they hadn't seen in person, and monthly views of 3-D walk-throughs on the site are up more than 500 percent since February 2020.
Put differently, we now live in an on-demand world of real-estate. Home buyers want to do research on their own terms, on their own time. And they want to do it without the pressure of a salesperson at their side. Technology has caused a need for and expectation of independence that requires home builders to fundamentally shift their approach to gaining customers.
4 Key Challenges of Selling New Home Construction in an Evolving Market
The past two years have been a boon for anyone looking to sell real estate. But that trend is beginning to reverse itself. Mortgage interest rates, after dropping to a historic low, are expected to rise once again. With prices still on the rise, and demand excepted to slow, we are beginning to see a huge increase in competition for potential buyers. More and more builders are fighting for the same audience.
That audience is still there. But its shifting demand combines with the increasing competition to unearth a few key challenges in the coming year and beyond.
1. Quick and Efficient Lead Generation
First, builders need to be able to capture high-quality leads quickly, and convert them just as quickly. Taking control of an increasingly self-sufficient audience means having to compete with a multitude of independent sources and public listing databases. The ability to get a potential buyer into your database is worth its weight in gold.
Lead generation can be a unique challenge in the home building industry. Consumers may not be willing to provide their information to builders early in the process. The average lead cost up to $300 back in 2016. CPL has likely risen in the six years since, making the process of creating easier ways to generate leads vital when looking to build a sustainable marketing strategy in this evolving market.
2. Getting the Buyer's Journey Just Right
Second, changing demands call for new strategies to accommodate and serve the self-service crowd. That means meeting shoppers at the point in the buyer’s journey where they want to be contacted, not just where it was traditionally the case.
With studies suggesting that home buyers now go through up to 90 percent of the process completely on their own. That means one thing above all: the consumer dictates when, and how, they want to talk to a person. Waiting until they reach out, whether that be at the beginning of the end of their home shopping experience, might just be the best approach to adjust to their preference.
3. Lack of Resources to Meet Personalization Demands
That, in turn, brings up a new challenge: lack of resources. No home builder likely has the budget to have salespeople on call 24/7. And yet, the current age of digitization means that consumers are looking for personalized service along with customized answers.
McKinsey research found that 71 percent of consumers expect companies to deliver instant personalized interactions. At the same time, companies that grow faster drive 40 percent more of their revenue from personalization than their slower-growing counterparts.
And an in-depth website isn’t enough to satisfy that need. If your audience doesn’t get the answers relevant to them from you, they’ll move on to your competition. In fact, according to one survey, 75 percent of home buyers would be more likely to consider buying a home through a company that helps them control more of the process on their own.
4. Ongoing Communication After the Conversion
Especially in the real estate development industry, a conversion isn’t the end of the buyer’s journey. In most cases, buyers may have reserved their spot, but still have to wait for the building to be complete before they move in.
In this in-between time, plenty of things can still go wrong. COVID-19 has certainly exacerbated existing problems such as materials shortages, and construction staffing issues. In fact, volatile delivery time frames of raw materials like lumber have caused sometimes significant shortages. This has led to underbuilding, increasing competition on existing properties.
All of these issues, unpredictable as they are, can lead to sometimes significant delays in construction. Unhappy buyers flock to social media, damaging the developer’s reputation through scathing reviews in lieu of getting their new home on their promised time frame.
How to Use Home Builder Technology to Tackle Modern Challenges
Fortunately, just as the challenges of this market are beginning to evolve, solutions are appearing that can manage changing consumer preferences as well as the need to account for increasing competition. It starts, above all, with automation.
With the real estate market still hot, home builders don’t necessarily need more leads. They need better leads. The need the ability to process them and meet increasing consumer demand as well as expectations. The right automation processes can go a long way to accomplish that goal. Enter home builder technology.
Digital Assistants and the Potential To Transform the Real Estate Market
Digital assistants, for instance, have made a significant impact on meeting consumer demands at scale. One survey found that 89 percent of consumers now want to interact with brands via instant messaging. This trend sets the stage for the interactive capability of digital assistants.
The benefits of leveraging home builder technology is significant. Conversational AI chatbots, and automation in general, engage with prospective home buyers and create the following perks:
- Automated communications can increase consistency, providing easy communication and quick answers to simple problems. The process of redirecting more complex issues to humans can also be automated.
- Consumers have access to key information and answers to key questions when it most suits them, not limited to business hours.
- When provided with the right data, digital assistants can answer basic questions. These include questions about the community, construction time frames, home warranties, move-in dates, etc. without any need for human involvement.
- Developers can save staff time without sacrificing their customer service, especially outside of regular business hours.
- After the conversion, intelligent chatbots can help to notify buyers of potential delays, preventing frustrations that would cause potential social media grievances.
In addition, research shows that consumers are more likely to provide sensitive and potentially embarrassing information, ranging from race to credit score, to a chatbot instead of a human being. Scientific studies are beginning to concur, citing significantly rising trust levels especially when talking about personal financial information.
Other Home Builder Technology Opportunities
Of course, digital assistants aren’t the only potential opportunity to leverage home builder technology in this market. Virtual and augmented reality have especially become vital tools in the new age of self-guided online real estate research.
Imagine the possibilities of showcasing your space in immersive ways, before it’s even finished. Now, imagine using that same home builder technology as a lead generation tool. Studies suggest that the VR market in real estate alone could be worth $2.6 billion in 2025. This could result in it becoming the standard for home tours by that same year.
Finally, it pays to keep an eye on developing new channels, as well. We already know, for example, that a static website is no longer enough to communicate with potential home buyers. Tools like voice search, already on the rise, will only increase in importance as smart speakers and voice assistants become more dominant in the average household.
Technology Integration for the Modern Buying Experience
None of the above home builder technologies exists in isolation. In fact, our integration of conversational AI digital assistant tech with the self-guided home tour technology UTour is a perfect example of how integration can benefit both the home builder and the buyer on multiple levels.
A hypothetical scenario in this integration might see a home buyer shopping online, and finding a newly constructed home they like. Through UTour, the buyer receives an entrance code automatically via text, delivered by an AtlasRTX digital assistant. This allows them to enter at a time convenient for them. While there, the buyer can ask Alexa questions about the home and get instant answers, without sales pressure.
Once the tour is complete, the AtlasRTX AI-enabled chatbot can send a follow-up to learn about the results of the tour, and the buyer’s feelings towards the home. That feedback from this home buyer technology becomes valuable data for the developer to build a lead profile. By the time a salesperson finally reaches out, the developer has a full picture of the lead’s likes, wants, budget, and timeframe.
Scenarios like this are no longer hypothetical. Thanks to automated, AI-powered digital assistants, coupled with other innovative home builder technology solutions, they are a reality in today’s market. And, most crucially, they help to solve some of the most central challenges developers and rental management companies alike face today.
We’re in a new age of real estate, brought about by both external forces like the COVID-19 pandemic and rapidly changing consumer preferences. Developers who are able to predict and account for these changes can take a step ahead of their competition. That’s made possible with home builder technology. The result is a home builder that is positioned as a leader in this competitive market.