Affluent consumers show optimism for spending and the economy in new survey.
In contrast to the March general Consumer Confidence Index of The Conference Board, which fell over 10% to the low levels last seen in Fall 2010, the affluent, who account for about half of all consumer spending, report a better outlook for the economy and their personal spending plans Spring 2011 survey by the American Affluence Research Center.
Cash talks. And it’s speaking loudly in California real estate these days, even in the nicest parts of town.
In the Southland’s $1 million-and-up market, 29.2% of buyers paid cash last year - the highest percentage since 1994, DataQuick statistics show. For home selling for $5 million and up, 62.2% paid cash.
Direct mail. Nobody talks about it. It’s not cool. It’s the Rodney Dangerfield of direct marketing. When marketers talk about it, it’s usually in the context of the drop in mail volume to the tune of tens of billions of pieces. Or about how expensive it is. Or about how they’ve stopped using it, or have cut back and re-assigned the traditional budget to digital campaigns. Except they have not stopped using direct mail, not if these latest numbers are to be believed.
Direct mail spending will grow 5.8% to $47.8 billion this year, driven by acquisition mail increases, according to a forecast released in January by the Winterberry Group, a marketing consultancy. Mail also remains the largest channel in terms of direct marketing spending.
Regardless of upswings or downturns, it is always our job to “FIND THE MONEY!”
When the economic tide turned we at Walker Marketing Associates developed highly successful direct mail campaigns for our clients in the real estate industry. Our forte has been with high-end, primary and secondary homes in the Western United States.
Between 2000 and 2008 we averaged 3,000,000 consumer household names a year to service this development/sales segment. With a huge volume of mailings, we had the opportunity to test every list of significance by creating overlays and suppressions along with using the new technological toys that more strategically targeted the territory.
Income qualification and lifestyle psychographics are paramount to successful campaigns. Our main thrust is always to FIND THE MONEY and the LIFESTYLE that results in an affinity group for a particular area. Key in all of this is to understand that if a potential buyer can’t afford to buy, there is no sense in the client spending advertising dollars to that particular household.
I love FREE. I love standing in line at my favorite grocery store and getting FREE FOOD. I really, really like going back three or more times to see when the server starts scowling and threatening to call the manager.
I love social marketing, blogging, tweeting and banging on the net. Why??? Because it’s mostly free, except of course, when you consider the time of the crazed blogger. That is not free.
I love the expression of the faces of the marketing geniuses who are selling houses and clapping their hands at the turnouts and responses of their FREE social marketing. It’s lots of fun when people share information and gang together to come out for an afternoon at the expense of the folks at Happy Acres Master Planned Community.
I love to hang out after the hot dogs are consumed and the kids are popping the FREE balloons while the sales people, furrowing their brows, are filling out their credit applications. They know right away that the revelers are not qualified to buy a dog house let alone a hot dog.
Why spend the money for a good direct mail campaign when you can do FREE and be sociable at the same time? I will tell you why. Since qualified buyers are scarce these days, you had better find them, and spend the money instead of trying to get your job done my pushing a send button on the internet. That’s why. It’s called keeping your job.
The big story for luxury in 2010 will be changes in interest rates on jumbo loans, says Gillespie. By the end of 2009, it was almost impossible to get a jumbo loan. “Today, there is mortgage money and the differential in the rate is a little more realistic,” adds Lee. Although prices garner the most attention, interest rates play an even bigger role in the cost of a property. “You only think about price twice—when you buy and you sell; but you think about payments every month.” A $10,000 difference in price amounts to only a small hike in monthly payments, but a point change in the interest rate is huge, he explains. With interest rates at a level comparable to 1951, Lee says this is the time to buy. The second round of quantitative easing from the Fed should continue to keep rates down, at least for the short term.
“The smart money knows this is the time to buy,” said Alex Perriello, president and chief executive officer of the Realogy Franchise Group, speaking to an audience at NAR’s annual conference in early November.
The most positive real estate story of 2010 was the resurgence in luxury. “The market segment which has seen growth in the number of transactions in 2010 is the over $1 million price point.” This is true nationally and in every region,” says Laurie Moore-Moore, CEO and founder of The Institute for Luxury Home Marketing.
After being almost frozen for much of the prior year, sales of 41 million-plus homes increased by 46.9 percent in January and continued to chart year-over-year increases every month thereafter. Some of the numbers, such as the 77-percent increase in sales in May, appear dramatic, but it is important to remember comparisons are being made to a period in which there was little or no activity.
Great ideas are often best expressed in the simplest of terms. For instance:
If you are selling a ten million dollar home you should be targeting households with ten million dollars in net worth.
That said . . . some relatively common methods of reaching qualified prospects are rendered by happenstance:
1. A qualified buyer can walk through your sales office door, or
2. While sitting around the pool at the San Ysidero Ranch in Santa Barbara, a high net worth individual might ask if you know of any great ten million dollar homes for sale, or
3. You may glean a referral, more than likely from your own interest list that results in a sale.
There are also more pro-active aspects of prospecting — having to dig for those ten million dollar leads in other ways:
Social marketing — While it may appear to be cost efficient, it only works if you are well- connected to a network of people with high net worth, looking for ten million dollar homes.
Email blasts – The absolute best result that can be expected from this marketing method, which reaches a measly 30% of your market, requires ideal conditions, including fresh and consistent campaigns that sneak through spam filters. A time consuming effort on a good day!
Print Media – We love magazines and newspapers. Why? Because it has been our major source of leads for Walker Marketing over the past 20 years. How does it work for the advertiser? Well, you have to usually share space with others and it can be VERY expensive.
So if these methods, which effectively have you clustered with all of the other businesses seeking high net worth individuals, work for you, then you can stop reading now.
It’s a fact that the rich get richer.
Data Quick Information Systems, in San Diego, reported that last year, in California, 22,259 homes sold priced at $1 million or more. This reflects a 21% increase from 2009. John Walsh, President, states “Prestige home buyers respond to a different set of motivations than the rest of us. Their decisions are less dependent on jobs, prices and interest rates and more how their portfolio is doing.”
Those $1 million buyers, purchasing with cash also increased, to 29.4% of the sales.
“Two other reasons for the $1-million-and-up market increase are the return of the jumbo mortgage market in 2010 and a comeback in the stock market,” states Christopher Thornberg, principal with Beacon Economics in Los Angeles.
According to Data Quick “the median-size home in the million-dollar plus category was 2,840 square feet, with four bedrooms and three bathrooms. ”
On a larger scale, the most expensive purchase, confirmed in California, 2010, was a 35,000 square foot mansion, on 2.2 acres, in Bel-Air. The sale price was $50 million.
Christopher Thornberg, principal with Beacon Economics in Los Angeles, states “Even if prices fall further, if you are borrowing, buying today makes a lot of sense because interest rates are just incredibly low.”
Source: LA Times, Business Section, Lauren Beale, 2/12/11
Direct Mail can be an important segment of the overall advertising program of any project. It is still one of the most efficient means of reaching a highly targeted audience, however; it is also one of the most expensive. This method is something that should be used as a compliment to other forms of advertising and realistically, should not be utilized if less expensive methods can bring about desired sales goals. Continue reading
