Hey everybody, it's Ron Williams and welcome to my second blog in this little mini-series about the seven big reasons why we feel like home-building is really fundamentally broken, at least from a buyer standpoint.
A lot of people don't realize it. It's something that we've discovered over the last several years. We've dived deep into the intersection between the home buyer's journey, where the home buyers are today, the home builders, Realtors, land developers, and how that whole thing fits together.
For every one person who buys a new construction home, there are five more that say that they want to. Those are documented numbers, not my numbers. These are numbers based on what we're finding from the US Census Bureau, NAR, NAHB, and a few others. It's pretty interesting and kind of shocking when you find that for every one person that builds or buys a new home, there are five more that want to, and they don't. We got really curious about this. We wanted to find out why because most of the time it has very little to do with "are they financially qualified? "
Many of them are financially qualified to build a new construction home and they don't. And that's where it gets interesting. We began to do a lot of research and over the last several years we've commissioned teams, and we've drilled down into this. If they wanted to build and didn't, why didn’t they? It really boils down to a perception of risk for most buyers because they can't find the right information. They can't see their options, they don't know their resources and they just feel like it is not in their favor. It feels like too big of a risk.
All of us are motivated by one of two things. We either run towards what we want, we run towards pleasure or we run away from pain. We run away from things that are perceived pain. We go towards the thing that we want and we run away from the thing that we don't want. And of those two, the biggest motivator is the second one.
Many people want to build a new construction home and they've got an idea of their dream home. It's just kind of a meme in American society, everybody's got a dream home. I've met so many buyers that have complete portfolios. They carry around an elevation with them that they've had in their schedule book for years of the home that they're eventually want to build and they don't do it.
That's pretty interesting and should be alarming for our industry. There are more people that would like to build, but the problem is they feel like they're at risk. They can't find the right information, they can't find the right resources and they don't understand the process well. We've set out to address that in a big way across the United States to make this process much more user-friendly for somebody who wants to build a new house.
So the number one reason that I shared with you is they can't find the neighborhoods.
It turns out that 50% or more of new home neighborhoods are not listed with a Realtor and not on the MLS. Therefore the Realtors don't know about them either. As buyers today, we want to know our options. I mean for crying out loud, if I buy a pair of tennis shoes, I'm going to go to Zappos and see everything, any brand on the market that's available. Yet the most complex purchase of my life, building a house and you can't find the neighborhoods. The second reason, and that's what I want to talk about today is:
They can't find the builders.
It turns out that somewhere around 70% or more of small and mid-sized builders have little to no web presence. Some of them have no websites at all or may have a small website that’s hard to find. And even on their websites, it's very difficult for most builders to keep up with the content that needs to be there to really engage and get connected with buyers to put buyers at a comfort level where they feel like, “Hey, this is somebody that I'm going to take this big, big risk with of building this house”.
Now we know that 100% of buyers go to the Web, according to NAR. These are not my numbers folks. According to NAR and others, a hundred percent of buyers, whether it's a new home or used home, they hit the Web pretty early in their process. If they're buying a used home, a pre-owned home, easy-peasy, right? Realtors have a feed from the MLS all over the nation, probably around the world. And you can very finely define exactly what's available to you.
But building a new home is a different process that begins with finding the right neighborhood for “me”. Not a particular developer's choice for me, but what are my options? And number two, it's finding the right builder for me.
When a homebuyer goes to the web, what they typically find is all the production builders. And there's nothing wrong with that, there's everything right with it if that's what they want. But a majority of people would rather do semi-custom or custom. And again, these are not my numbers. These are numbers that are from much bigger organizations than we are. They can't find a majority of the builders.
A lot of times we go out and talk to builders. I remember one builder that I met here a couple of years ago said, “well, you know, I guess you could say that I'm kind of in stealth mode.” That's not a good place to be. What we're trying to do is to level the playing field and really make it much easier for a buyer to be able to find all their options on who the builders are.
A small builder that only builds five or 10 houses a year deserves to be seen as well. The buyers want to know all their options in their local market on something as big as this. They absolutely want to know their options on neighborhoods, and builders, and more that I'm going to share with you in the next blog.
We have a free e-book that we wrote on the seven top ways that we feel like homebuilding is fundamentally broken for new construction buyers. I would love for you to download that and give me your feedback. Whether you agree or disagree, reach out, and connect with us. Our free e-book is at newhomenicheblueprint.com. You can download that e-book and connect with us in other ways as well.
By the way, our Website is Hoodle and we'd love to help connect you with new construction buyers.
Hey, thanks so much for reading this blog. I hope you got some value out of it. if you have any questions, any thoughts, reach out to me.
God bless. Hope you all have a great evening.