For new home buyers, looking for their first home seems to be as difficult as trying to find the latest iPhone on release date at a local Apple store. As the pandemic began, the prevailing perception was the home buying market was going to fall off its already remarkable pace. For instance, home sales in February of 2020 were already up 8% compared to the same time in 2019. And while sales did slip briefly, from 716,000 units in February 2020 down to 570,000 in April, they rocketed up immediately, up to 979,000 in July. Spurred on by low mortgage rates, the ability to work from home, and of course, needing your own space amid a raging global pandemic, buyers were looking for every opportunity to move into a new home that better fit their current needs.
The pandemic caused a significant hurdle for new home builders; while the demand for new homes was high, COVID-19 made building new homes extremely expensive. Once the virus reached North America, lumber mills in Canada and America shut down. With the lack of lumber supply, prices skyrocketed up to 200% of their original cost.
Just like so many other businesses in the world, home building was not prepared to fulfill the needs of their customers during a worldwide pandemic. The demand so far has exceeded the supply for over a year now, and home builders have been playing catch up ever since.
This then begs the question; will new home builders be prepared when the market slows back down? Homebuilders has the unique problem these days of having so many leads, they don’t have enough homes to fill them. This problem won’t last forever and will eventually be replaced by a glut of newly constructed homes with not enough buyers.
One scenario at play is the sales boom following the outbreak of COVID-19 in April 2020 that surprised many real estate economists; like many other businesses, real estate was expected (and sometimes required in most locations) to lock down. But to their surprise, by mid-April, sales were soaring as buyers, many of them millennials, took advantage of record-low mortgage interest rates. Through the remainder of 2020, rates remained below 3%, and existing home sales reached their highest level in 14 years.
The combination of sales, and the extremely low supply, drove the median existing-home price for all housing types up 12.9% from December 2019.
The multi-year run of significant price increases will end, at least temporarily, but inflationary pressure on entry-level homes will continue in most markets until new home construction will relieve it. The National Association of Realtors forecast median prices will rise between 3 to 8% in 2021, a significant drop from 2020 but nothing like the fall in prices seen during the last housing crash.
So, while builders will not have to prepare for another 2007 crash, the numbers will inevitably come down. When that time does come, it will be important to be prepared to close on leads more quickly than the competition. One of the more efficient ways to do this is the combination of an artificial intelligent chatbot and human sales teams.
The global chatbot market size is expected to witness astounding growth by exhibiting a Compound Annual Growth Rate (CAGR) of 22.5% between 2020 and 2027. COVID-19 has caused a demand for information and answers at an instant, and virtual solutions that do not require face-to-face interaction. Chatbots have been the benefactors of the demand for information. One of the many benefits for a new home builder of having a chatbot is the ability to automate all communications throughout the entire sales process, from exploration through construction.
With the number of buyers eventually declining, the lead lists will become smaller, making it more important to convert as many leads into buyers as possible. Oakwood Homes has been using an AtlasRTX chatbot to help improve interactions with their leads and help close more deals.
“I use AtlasRTX for every prospect that comes through the door which is so helpful because there is so much more information you can get from a buyer through text message compared to a face-to-face conversation,” said Amber Youngers, Oakwood Homes Sales Representative. “Now with the ability to send video texts, I can take thorough notes and send my prospects a video of the model of their favorite floorplan, which they LOVE.”
Progressive builders are also realizing that relying primarily on email to engage with their prospects is an outdated, and ineffective, solution. HH Hunt Homes identified this quickly, and has implemented an AtlasRTX chatbot to communicate with buyers through their preferred method, text messages.
“The AtlasRTX solution allows us to communicate effectively with prospects in a timely manner and gather crucial information at several points in the sales cycle. This eliminates a lot of wasted time and speeds up the sales cycle, while ensuring we don’t miss sales due to lack of follow-up,” said Lise Anzelone, HH Hunt Regional Director of Sales.
When leads start to become sparce, it will be important to be able to answer questions from buyers 24/7/365 and allow sales teams to focus on those higher-intent buyers who are ready to purchase. Allowing a chatbot to do the hard work of sifting through poor leads and provide a strong list of qualified candidates for a sales team to close will not only help home builders deal with the busy times we are in, but will also help when the demand for new homes inevitably slows down. Those builders that can set themselves up now with automated solutions like chatbots will be better prepared to continue their success and increase market share after the market slows, while those builders simply riding the wave of easy money will be caught flat-footed and finding themselves playing catch-up.