Ready for the Next Boom: Prudential Targets Next Wave

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By Beth McGuire

RISMEDIA, December 28, 2006-Despite all that's been written about the slumping real estate market, the National Association of Realtors predicts that 2007 will be the third best year in real estate history. That said, the reality is that real estate is a local business, and these past few months have been a mixed bag for brokers and sales professionals across the country.

Markets that experienced soaring growth over the past five years have seen business begin to stabilize. Markets where growth has been less frenzied have seen patterns change only minimally-and in many areas, including some markets where sales have slowed, home prices continue to rise.

The only constant, most would agree, is that the recent boom-set in motion by low inventory, low interest rates and high buyer demand-is settling into a more typical balance.

For Prudential Real Estate, which has put an emphasis on developing and honing its Internet strategies, it's an opportunity to capitalize on what the company has built-and, say executives, to take the lead in winning home buyers and sellers in this changing environment.

"With our Platform technology, and our exclusive marketing relationship with Yahoo! Real Estate, we took the early lead in providing home buyers and sellers with precisely what they were looking for," says Earl Lee, president, Prudential Real Estate Affiliates, Inc. "We give them 24/7 access to the most current property information and instant interaction with local sales professionals when and how they want it."

As a result of this unique online advantage, says Lee, Prudential Real Estate was well positioned to capitalize on the boom market of the past few years. Now, he believes, they have set the stage to capitalize on the coming phase.

"The pieces are already in place for the next boom in real estate," Lee says, "and it has less to do with home prices or inventory than with the influx of home buyers who will be coming into the market over the next few years."

The influx will come from three very different-but equally motivated-groups, according to Lee: retiring Baby Boomers, born between 1946 and 1964, many of whom will soon be exploring different lifestyle and housing options; Generation Xers, now between ages 30 and 40, raising families and ready to purchase first or second homes; and even a segment of Generation Y-those young people born after 1980, who are now graduating from college or returning from the military. Like their counterparts in previous generations, a certain percentage will be looking for a home of their own.
According to a recent survey conducted by Harris Interactive for NAR, the nation's 78 million Baby Boomers have long been committed to homeownership. Nearly 80% of them own their homes, and one in four owns other real estate as well. What's more, they view their homes as a significant portion of their overall net worth-and nearly half of them expect their real estate holdings to fund or partially fund their retirement.

Significantly, over 11% of the surveyed Boomer households said they expect to purchase real estate during the next 12 months-either upsizing, downsizing or acquiring rental or vacation homes, which may eventually become their primary home.

Even more significantly, 60% of Boomers buying a home, and 80% of those selling a home, have used a sales professional in the past and will likely do so again. That, Lee points out, is a sizeable source of potential business for real estate sales professionals supported by the right tools and training.

The fact is that Boomers, like the general population, are increasingly going online to research property. Only 6% of Boomers say they want the sales professional to help identify a home to purchase. Over 62% say they want the sales professional to represent their interests, negotiate on their behalf, explain contracts and manage the closing process.

"Clearly," says Lee, "sales professionals who are supported by superior technology will have an edge with this segment of buyers and sellers."

The same is true when discussing the needs and preferences of Generation X, Lee notes. The vast majority of Generation Xers, who were born into the computer age, are going online to research property before contacting a sales professional.

"Like their Boomer counterparts, they want to research online to narrow their search for property," Lee says. "They want professional representation and expertise when they are ready to buy or sell, and they are great prospects for technology-savvy sales professionals who are able to meet these needs."

Ben Calhoon, with Prudential Calhoon Company Realtors in Columbus, Ohio, has had great success hiring tech-savvy young sales professionals, some of whom have had little traditional real estate experience.

"We get a steady stream of leads from potential buyers-including military personnel and others overseas who find us through The Platform or Yahoo! Real Estate," Calhoon says. "My Platform team is well-trained, instantly responsive and very successful in converting these leads into closed transactions. Several on our team had an income last year that was well into six figures."

Those enjoying the most success are aware of the differences that separate Gen X buyers from their parents.

Housing affordability remains a concern for Gen ‘Xers. They live in a different economic reality, often carrying as much as 70% more debt than previous generations-much of it in housing costs. Marketing strategists like Reach Advisors, a Boston-based research firm, say Gen X buyers are less apt than their parents to look for huge square footage, individual space or a prestige address. They are more inclined toward affordable smaller spaces designed to accommodate maximum family usage.

Savvy sales professionals are also aware of the characteristics of Generation Y-the huge segment of young people who will slowly but surely replace the vast number of retiring Baby Boomers. Born after 1980, Gen Y grew up surfing, downloading, recording and watching everything from video games to world events. The Internet offered them access to just about everything, and it comes as no surprise that those in today's military are searching the Internet from far away places for houses where they expect to return home.
Gen Y home buyers, marketing strategists say, are practical, self-reliant and impatient. They want to research online, skip any sales pitch and simply see the homes they choose to see.

Maria Wilkes, a director of commerce with Prudential Network Realty in Jacksonville, Florida, agrees. "We've had a growing number of inquiries from military personnel in Iraq and elsewhere since we began on The Platform two years ago," says Wilkes. "They are finding this service invaluable when they have a change of duty assignment and we are able to accommodate their needs almost completely electronically. We had a record number of military transactions coming in last fall."

By the year 2010, according to the U.S. Census Bureau, Generations X and Y will make up more than half of the American population-an interesting counterpoint to the millions of retiring Baby Boomers. But while there are differences between these groups, one fact remains the same: once their online research is done, and a real estate transaction is begun, buyers and sellers of every age expect top-tier service and technical knowledge from the sales professional representing them.

In addition, says Lee, there is growing optimism in the marketplace. According to a recent NAR report, 74% of housing markets are now on an upward swing-primarily because consumers today have more job stability and financial incentive than have characterized previous housing downturns.

"At this point," says Lee, "conditions are improving as buyers have more choices and sellers are more realistic."

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