By Joshua Lawton, CRO and Co-Founder of Abraxas Technology and is a member of the Forbes Technology Council.
It should come as no surprise that the real estate industry makes up a large portion of the US economy. Just in market value alone, the total value of real estate in the U.S. is 1.5X America’s Gross Domestic Product. Unlike many industries which have similar or larger market values, real estate is both local and in the vast majority of cases requires the consumer to visit a physical location. This presents a special opportunity for those in the Out of Home (OOH) industry, but only if they know what is important to those selling real estate and what the industry trends are.
International buyers are reducing their purchases.
Due to the turbulence of international markets, international investors for the past decade have been pouring dollars into the U.S. real estate market. While their snatching up of property has been terrible for those on the lower ends of the income spectrum, it has been a boon for municipal taxes, sellers, and real estate developers. Across the United States, international buyers purchased $121B in property value with the median purchase price being $300,000. However, U.S. properties purchased by international buyers are down by 21% this year. Therefore, real estate sellers will need to increase their focus on local buyers to make up for this reduction of purchases by international buyers.
Inventory is growing.
If you’ve ever taken a basic economics or business course, you’ve heard about the supply and demand curve. Supply of housing across both existing and new verticals is increasing. The flattening out of new home sales combined with the increase in foreclosures and the possibility of interest rates increasing is putting additional pressure on sellers to move their homes quickly. Today, “On average, it takes 4.3 months to buy a home and 2.8 months to sell.” While, real estate markets can significantly vary across the U.S., the vast majority of them are facing significant time on market pressures.
The rental market is growing.
In 2017, U.S. consumers spent $458.5 billion on rent. During this past year, the majority of the 16 most expensive real estate markets has seen an increase in rental rates. According to the Wall Street Journal, rental rates are expected to continue their upward progression due to“slumping home sales and rising interest rates…”.
How does the real estate industry spend its marketing dollars?
Depending on which segment of the real estate industry is surveyed, the weight of the individual marketing budget items can change. However, according to ATTOM Data Solutions, “Overall…groups spent the largest portion of their marketing budget on leads, followed by social media marketing. Agents were the only group that had a majority spend the most on social.”
How can I use this information to grow my business within real estate?
Focus on the macro trends that are concerning developers. As of October 2018, “…the National Association of Realtors said sales of existing homes in September fell 3.4% from the previous month and 4.1% from a year earlier. The seventh-consecutive monthly decline was steeper than economists had expected and marks the latest in a string of data points that call into question the housing market’s momentum.” Differentiating yourself through data is key to proving that you can mitigate this macro trend.
According to Nomadic Genius’ Regis George, he was able to win his most recent large real estate developer account through showing how what he knew about his mobile billboards’ performance could directly contribute to positively impacting the developer’s bottom line. As Regis put it, “These days, it’s all about having the best trucks and the best data. If you have the best trucks, but can’t even prove the number of people who saw the developer’s creative, they’re not interested. Likewise, these developers don’t want a ratty truck being associated with their real estate development. You need quality through and through.”
The successful acquisition, interpretation, and application of data has resulted in a windfall of billions for the tech industry. Not wanting to be left out the 21st century, a number of OOH owners and advertisers working with mobile, restaurants, jewelry stores, and other brick and mortar establishments have realized the value offered by data analytics. Solutions exist (like us at Abraxas) to provide this data that can make the difference in winning new work and increasing an advertiser’s spend.
You can reach Joshua Lawton at JLawton@abraxastechnology.com.