The Housing Chronicles Blog: 1/1/11 - 2/1/11

Thursday, January 13, 2011

Social Networking Replacing Traditional Advertising?

Although most of the attention given to the ‘green revolution’ in home building has been focused on sustainable design, alternative energy uses and low-impact construction methods, another resource-saving trend continuing to impact the industry is how builders and developers market their products to customers.

Whereas advertising-centric messages such as billboards, ads in newspapers or new home guides and on-site printed collateral certainly remain part of a marketing director’s arsenal, over the last several years they’ve had to expand their artillery to include an online world which continues to evolve and expand. After all, what better – and paper-saving -- way to tell potential customers about the latest updates in green living?

A decade ago, it was considered essential for a serious company to at least have a traditional Web site. But since then, the combination of ever-evolving technology and shorter attention spans now suggests marketing campaigns should also include Web site versions for smart phones, traditional blogging, micro-blogging (Twitter), video (YouTube) and regular social networking (Facebook) to connect with potential buyers.

To be sure, most small companies aren’t set up for this additional workload, so many outsource the new tasks to their respective PR firms, or even hire specialists who focus exclusively on helping maintain an online presence. For example, if a builder wanted to launch a comprehensive campaign on their green building practices, a package could include blogging and Twittering several times per week, reciprocal links with green-oriented blogs and Web sites in the area, shooting informational videos for YouTube which rank high on various search engines and tapping Facebook fans or friends to help consistently spread the word.

At the same time, however, the most successful campaigns manage to pair these online offerings with traditional offline events such as model opening parties, community gatherings or even charity benefits. The goal of that is also increasingly long term: if a company shows that they’re truly invested in the local community, then buyers are more likely to gravitate to their products and services.

Although much of this work is being done by PR firms which specialize in the building industry, generalists with experience in other industries are also beginning to meld their press contacts and event experience with online social networking. For example, Sharon and Bob Jimenez, who have experience as TV news correspondents and currently co-host the show “L.A. Business Today,” launched ICON Imaging Public Relations in the mid-90s to assist clients in building their own brands in multiple media. With a resume that includes two Presidential campaigns, Common Cause, the City of Los Angeles and several real estate-oriented companies, Sharon was also instrumental in producing 2010’s “Gerrymandering: The Movie” and founded a non-profit to bring jobs in entertainment production back to California.

Of course in the PR world, results are what matter. By merging her offline contacts with the online world, Sharon helped her candidate raise over $10 million online, and managed to snag a coveted slot in the annual Tribeca Film Festival to promote her movie. Adds Sharon, “Although technology has certainly changed the way we promote a client, the basics of consistency, creativity and authenticity remain the same whether it’s on Facebook, Twitter or simply talking with a reporter.”

For those builders looking to promote green building or sustainability and compete with lower-priced foreclosures -- as well as the homes they themselves built just a few years ago -- social networking is providing an important new framework in which PR is slowly supplanting advertising. But, like with anything else, the framework only works if it’s intertwined with authentic messages which find the right audience.

Thursday, January 6, 2011

Does a housing bust make a declining city?

The L.A. Times has a story about a report issued by the Research Institute for Housing America, a division of the Mortgage Bankers Assn. According to the report, neighborhoods in those inland areas hit hardest by the housing bust -- such as the Central Valley and the Inland Empire -- may "never" rebound.

Really? NEVER? That's a awfully long time for some pretty large geographic areas. I can just see the headline now in the year 9011: "Prices in Riverside still at 2003 levels." Whenever anyone says either "always" or "never" I've learned to pretty much disregard what comes after that.

For one thing, the Inland Empire of today is much different than it was even 10 years or 15 years ago (I lived in Upland in the early 90s when working for a home builder). People no longer have to drive into L.A. or Orange County to get their basic shopping, culinary or entertainment fix. For another, since the 1980s, the area's economy and population grew significantly faster than those of surrounding counties and has already achieved a critical mass of eventually sustaining itself once an economic rebound resumes.

Will there be some areas of the IE which will take longer to rebound than others? Of course, just like other cities. Those submarkets further away from existing employment centers such as Hemet, San Jacinto or the High Desert simply won't have the demand seen in Temecula, Ontario or Chino. But as the local economy diversifies and grows, so will those now-moribund areas. Will there be pockets of neighborhoods which don't join the rebound? Of course -- just like we see many parts of Central Los Angeles.

Another separate issue is that of the Coachella Valley, which really doesn't consider itself part of the Inland Empire. In the north, cities such as Palm Springs, Rancho Mirage and Palm Desert cater largely to the retired and second home owner, which should benefit from the valley's enviable winter weather and Boomers across the country looking to downsize. To the south, however, it's a different story, with over-building in Indio, Coachella and La Quinta taking longer to absorb inventory.

Finally, even leaders in the Inland Empire are trying to get away from the long-used moniker, preferring instead to use the 'Riverside-San Bernardino region.' With reports like this from the Research Institute for Housing America, can you blame them?

From the article:

A traditional city in decline is one that has suffered a sustained population drop, leaving behind empty houses, apartment buildings, offices and storefronts. Cleveland and Detroit, for instance, suffered from the erosion of manufacturing and the loss of residents, who left in search of jobs.

Instead of eroding a particular industry, however, the housing bust left a glut of homes because of overbuilding and the foreclosure crisis. Follain argues that the future of these cities is threatened in similar ways to that of Rust Belt cities.

"Long-vacant neighborhoods are going to develop, and we can imagine what can happen," he said, including potentially higher crime and lower property taxes.

In California, some coastal cities already are seeing a housing market recovery. But inland areas that were built on optimistic assumptions of continued population growth and ever-climbing home values are facing a much more difficult recovery.

Celia Chen, a housing economist with Moody's, predicts that a full recovery in parts of California, Nevada, Arizona and Florida won't occur until 2030...

January column for Builder & Developer magazine now online

My column for the January issue of Builder & Developer magazine is now posted online. This month's issue, which is entitled "After-Effects from 'The Great Recession' Continue to Linger" -- discusses the slow economic rebound to come in 2011, how apartment demand will rebound first and offers the latest building forecasts for the year.

An excerpt:

Although the National Bureau of Economic Research officially declared the ‘Great Recession’ over in June of 2009, over 18 months later the building industry continues to wait for that proverbial light at the end of the tunnel. Sure, there were some rumblings of activity in the land market in early 2010 as it seemed that a rebound was imminent, but that turned out to be related more to homebuyers taking advantage of tax credits than sound economic fundamentals. So what can we expect in 2011?...

Click here to read the entire column.

Click here to read the entire magazine in digital format.

Monday, January 3, 2011

The Housing Chronicles Blog goes mobile

Traveling on the road without your laptop but still need your occasional fix from The Housing Chronicles Blog?

Fear not. Whether you're using an iPhone, Android, Blackberry, Windows Phone or some other smartphone, simply key in the regular Web address and the new widget will automatically allow you to scan the latest posts from the comfort of wherever you are.

Oh, and Happy New Year 2011!

Special consulting offers at MetroIntelligence to start out 2011!

As a way for new clients to become familiar with the consulting work produced at MetroIntelligence Real Estate Advisors, they're offering an introductory special to start off 2011. Here's a summary of their most common consulting assignments and the special pricing you can expect as a new client:

Reality Check

Whether you call this a gut check or a reality check, the goal is the same: an objective opinion on the merits of the real estate project in question.

Cost: $100 to $300/hour depending on the complexity of research.

2011 Introductory Special for New Clients: 25% off customary fees

Turnaround time: A few hours.

In-House Feasibility Study

What is the current competitive posture for pricing and absorption in the appropriate market area? Is it wise to spend more money on the due diligence required to close the deal?

Cost: $2,000

2011 Introductory Special for New Clients: $1,500

Turnaround time: 1 to 2 days

Intermediate Feasibility Study

By combining the insights gained from in-house analysis and conducting an on-site visit, we can get a much better sense of locational issues as well as key competitors impacting your project.

Cost: $3,500

2011 Introductory Special for New Clients: $2,625

Turnaround time: 2 to 3 days

Competitive Market and Economic Overview

By tapping the expertise of our colleagues at Beacon Economics along with insights gained from in-house data analysis and field research, we can then review the assumptions the client has made for the project's revenue, sales rates, local job growth and where their buyers will be coming from.

Cost: $6,500+ depending on complexity of the analysis and the project's location

2011 Introductory Special for New Clients: $4,875+

Turnaround time: 5 to 10 days

Opportunity Analysis

Has the client selected the appropriate product for this particular building site? What other options should they consider? This option can also include consumer research and focus groups.
Cost: $9,500+

2011 Introductory Special for New Clients: $7,125+

Turnaround time: 10 to 20 days

Demand Analysis

Who are the client's buyers for their product in that particular price range? From where will they be coming, where do they work, and how do you translate them into buyers?

Cost: Variable depending on scope and complexity of assignment

2011 Introductory Special for New Clients: 25% off customary fees.

Turnaround time: 10+ days

Affordable Housing Market Study

These studies generally conform to the guidelines set forth by state governments or the Dept. of Housing and Urban Development. Builders of affordable housing must include them as part of their application packets for tax credits, tax-exempt bonds or HOME Funds to prove there is a need for their proposed project at a specific location.

Cost: $4,000 to $7,500 depending on complexity of proposed project, income levels and populations served.

2011 Introductory Special for New Clients: 25% off customary fees.

Turnaround time: 5-10 days