If you don’t want to fly blind when doing real estate marketing, one important factor to take into consideration is demographics.
Knowledge about different demographics, what their needs and demands are and where to reach them can make or break a successful real estate marketing campaign.
If you have this knowledge you can take advantage of it and adapt your current or future campaigns accordingly.
Today’s article will discuss how you can take advantage of the major demographics that influence the real estate market of today.
What are Demographics, and How Do They Influence the Real Estate Market
One of the key drivers for real estate markets are demographics. It’s the data that details how a particular population is made up, such as age, gender, race, migration patterns, income and population growth.
These different drivers influence the real estate market directly and indirectly; for example how real estate is priced and which types of properties are in demand.
Since market demand influences prices proportionally you can already see a direct connection here.
If changes and shifts happen in the demographics of a country large new trends can develop and others or past ones may disappear.
One of those changes is the baby boomer generation being in the process of retiring in most countries of the world.
Questions that would need to be answered are:
- Will baby boomers now demand more second homes in vacation areas?
- Would they like to downsize and prefer a smaller home selling their larger first homes?
- Maybe now they prefer a smaller home abroad taking advantage of geo arbitrage, so they have access to cheaper health care systems and lower overall living costs due to a smaller income?
If you ask yourself these questions as an investor and find answers via hard data and use a little bit of common sense you can determine where the trend is going to be and also which marketing channels to use to reach the respective demographic group (or target group).
So let’s see if there is some data to determine some demographic trends and which marketing channels to use to reach the different target groups.
Needs and Marketing Channels According to Age Group
There will be an increase from 8.3 to 16.2% of over 65 year-olds in the global population by the year 2050.
On the other hand the population of under 20 year olds will decrease from 34.2% to 28.4% by the same year (source).
So, simply speaking, the world population will generally become older. This is the longer term perspective.
Now, let’s get to the medium term perspective.
As already mentioned above, more and more baby boomers (born between 1946 and 1964) will soon reach retirement age or are already retiring.
This is a respectively large group. It’s 22.18% of the American population.
In chronological order then comes generation X (born between 1965 and 1980). The American population is made up of 20% of this generation.
Almost the same size as the baby boomer generation is the millennial generation (born between 1981-1996) with a share of 22.03% of the population.
The youngest generation is generation Z (born between 1997 and later, source) and it has a share of 27.68% of the U.S. population).
If the latter were already at an age where they have enough acquisitive power, they would have significant influence on the real estate market demand.
I estimate they still have about 7 to 12 years to go until they gain market influence.
So the largest one of the generations left is the baby boomers and the millennials.
Now let’s check what their preferences are in the real estate marketplace.
Needs and Trends of Baby Boomers
Getting back to one of my initial questions most of the baby boomers will probably downsize, but not right now.
They will delay this until later in life, because they will live and work longer than previous generations (source).
Additionally, in 2018 they didn’t intend to sell their home and probably won’t in the in the near future, as they will postpone downsizing (source).
This presents a challenge for millennials (usually first-time home buyers) and Generation X looking to upsize.
In contrast to past generations baby boomers usually don’t prefer to move to an isolated retirement home but would rather prefer to live in a local community consisting of a variety of mixed generations.
These communities should ideally be walkable, and consist of community centers, pools, fitness centers, social clubs and more.
So, independence and an active live is an important requirement they have (source).
Another development or trend is an increase in baby boomers who are renting instead of buying (source).
According to this source the hottest real estate markets for baby boomers are North Port (FL), Miami (FL), The Villages (FL), Punta Gorda (FL), and Phoenix (AZ).
On Which Marketing Channels Should You Target Baby Boomers?
According to the study of this source, the top three online activities for boomers are using search engines (96%), using email (96%), and shopping for products and services.
Print materials, such as direct mailing don’t seem to be very effective with baby boomers.
Better than print media when it comes to offline marketing seems to be television.
The latter motivates them to then search online for more information (source).
It also seems that according to this source television ads have the largest purchase influence.
In the context of online marketing the best way to go is using search engines as a marketing channel.
It also seems to outperform social media and viewing online videos with regards to motivating them to take action.
So you could approach them by choosing search engine optimization via content marketing (the long game) or pay per click advertising via Google ads or Bing ads (the short game, source).
Needs and Trends of Millennials
In this article I have already covered the ways you can market to first time home buyers which are in large part now millennials.
This generation is quite savvy and more informed than former generations when it comes to the real estate process, repairs and renovation.
This is because there first word was basically ‘Internet’ when they were born.
They grew up with the development of the internet and therefore are usually very tech savvy and well prepared (source).
Therefore they often access information about listings, neighborhood reports, HGTV home renovation videos and further real estate market information on their own.
The job of a realtor to them is rather providing information they couldn’t find online such as data about a particular neighborhood, local housing regulations or local market forecasts.
Roughly one third of millennials bought a house at a selling price of $300,000 or more in 2018 (source).
They have a slightly higher preference for suburbs to more costly urban areas.
This preference is not completely conclusive, as they also like central city areas (source).
And if you are a realtor you should know that they prefer texting (source).
To be able to make a more affordable purchase they are more willing to accept a smaller house (source).
Another interesting preference in contrast to past generations is the taste for two full master suites and one standard bedroom in difference to one master and three standards (source).
According to this source the hottest markets for millennials are: Seattle (WA), San Francisco (CA), Houston (TX), Dallas (TX), and Washington (DC).
On Which Marketing Channels Should You Target Millennials?
There are some overlaps between marketing channels to reach baby boomers and millennials, but not that many as you will soon see.
- They watch on average 2.4 hours online videos (source) and spend 2 hours and 38 minutes on social media per day (source)
- When it comes to online shopping 71% do it regularly via mobile devices (source)
- Online content is useful for 83% of millennials when it comes to making a purchasing decision (source)
- More than 90% of millennials own smartphones (source)
- There is not much trust for traditional advertising, 84% don’t trust it (source)
- 70% are Snapchat users (source)
- You can find them in 90% of the cases on Facebook (source)
- Millennials are 247% more likely to be influenced by social networking sites and blogs than by advertisement (source)
So as some takeaways you can best reach them on their smartphone using and doing content marketing via video that is promoted via Facebook Ads or Snapchat.
You should desist from using direct advertising and approach them more with some sort of education based marketing.
The overlap with baby boomers is the use of search engines.
According to this source, 62% of millennials make 5 searches per day and 68% do them on the phones.
The difference to baby boomers is likely that they get prompted to search something by having seen some sort of ad or video on social media and then look it up via Google, while baby boomers watched something on TV and then searched it.
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