BDXtra Podcast with Tim Costello, Melissa Morman and Brandon Ridenour – CEO of ANGI Home Services – Angie’s List, HomeAdvisor.com, and Other Online Platforms
Online Search for New Homes Rises for Nine Weeks in a Row – Above Records Set Prior to Pandemic
Want to understand how many consumers are searching for a new home online? BDX founders Tim Costello and Melissa Morman share the latest insights and trends each week on their BDXtra podcast, along with vital advice for building leaders.
“This is week nine in a row where we’ve had more search traffic (for new homes) every single week,” Costello said. “We dipped down in late Feb, bottomed in late March, and in all of April and now May, we’ve seen week-over-week improvement in traffic.”
“There are 22% more people searching for new construction online now than this time last year…and almost 15% more people looking for new homes than at the beginning of the year,” he added. “And January and February were blow-out months for builders.” he said.
Costello acknowledged that new home sales fell sharply in April. He views that month as a time of reaction to COVID-19 – and feels most builders and homebuyers have successfully navigated that time of transition.
Mortgage Applications for Home Purchases – Back to Pre-COVID Levels
“With mortgage applications back to normal and demand 25% over where it was last year, there is a profound opportunity for builders to gain market share,” Costello said, “because there are fewer and fewer used homes in the MLS.”
“You’ve got closings, you’ve got sales, you’ve got demand…and an opportunity for builders to sell a record number of new homes,” Costello said.
Melissa Morman, Client Experience Officer, noted that BDX recognizes that it is harder to connect with consumers – and each market varies. She agreed that most builders have worked through their initial response to the pandemic and now are focusing on maximizing the opportunities in front of them.
Lessons for Builders from the Leader in Remodeling and Home Services
Costello introduced this week’s guest, Brandon Ridenour, CEO of ANGI Homeservices, and a member of the board of Builder Homesite, Inc., the parent company of BDX. ANGI, the leading online home services firm, owns brands that include Angie’s List, Home Advisor and other online marketplaces that connect homeowners with remodelers and home service specialists.
“Brandon and his team have a unique insight into consumers – what they want and what they’re unhappy with in their current home,” Costello said. He asked Ridenour to describe the scale of his firm.
“In the last 12 months, we served 16 million U.S. homeowners. They submitted about 26 million individual (home service) requests,” Ridenour said. “The total economic value of the projects getting done on an annual basis is north of $10 billion dollars.”
Ridenour discussed the complexity of operating in more than 40,000 ZIP Codes in the U.S. to connect hundreds of thousands of home service professionals with homeowners – each seeking help with more than 500 types of home maintenance and improvement projects.
Two-thirds of the projects his team facilitates are what Ridenour called essential – non-discretionary repairs that cannot be postponed. Much of the discussion centered on lessons builders could learn from concerns that homeowners have with their current home – especially owners of older dwellings.
Costello noted that many homebuyers overlook significant differences between newly built and used homes. He cited the cost of maintenance in older homes – and their often outdated architecture, which can require costly major projects such as adding a bath or a complete kitchen renovation.
Builders Should Know the Cost of a Typical Kitchen and Bath Remodel in their Markets
“The cost of maintaining an older home is quite significant – up to 8% of a home’s value annually,” Ridenour said. “That’s probably more than most people spend, but it’s in the ballpark of what they should spend to maintain their home and keep it up to date.”
“Modernizing an older home to get it to the level where people’s expectations are today – that’s where we get into the largest projects,” Ridenour added.
Costello asked Ridenour what triggers are causing homeowners today to invest in home upgrades.
“People are spending way more time in their homes (due to COVID-19) – and expect to – for at least the medium term,” Ridenour said. “That puts more wear and tear on the home. You also notice things you’d turned a blind eye to previously.”
Both Ridenour and Costello noted that many people are working from home, not traveling, eating out less, and every family member is spending more hours than usual at home – driving demand for home services and new homes.
“The intense focus on making the home a better place to spend time and the dramatic acceleration in the use of online tools and digital experiences” were key drivers for home services, Ridenour cited.
Millennial Homebuyers Driving the Market– Many Seek to Leave Apartments for a New Home
Ridenour also cited the vast millennial generation as a key driver of demand for home services and home purchases. Many are entering prime homebuying years and in many cases having children. Those living in apartments and condos are experiencing with each family member home so often, he noted.
“Your hip urban pad now becomes a jail cell,” said Costello – prompting laughter and quick agreement from Ridenour.
Costello asked what lessons builders could learn from the types of home maintenance, repair, and remodeling projects seen on Angie’s List, Home Advisor and the firm’s other sites.
“Chef-designed kitchens have universal appeal,” Ridenour said. He recommended builders focus on adding technology to new homes as a differentiator – especially whole-house smart home technology. He noted that many advanced technologies that consumers want today are much easier to build into a new home from the start – and expensive and in some cases not possible to retrofit into an older home.
Costello agreed. He also suggested that builders consider offering what he called a “Five Year, Wall-to-Wall Warranty” with all basic maintenance included to further differentiate a high-tech, smart and healthy new home from an older house.
COVID-19 Weekly Update — Tim Sullivan and Ali Wolf – Meyers Research and Builder Magazine
Ali Wolf, Chief Economist of Meyers Research, kicked off the 11th installment of this essential weekly webinar with another fast-paced look at important indicators of the health of homebuilding and the larger economy.
“I want to welcome you to the recovery phase of this recession. By no means is the crisis over – and we still expect plenty of bumps along the way,” Wolf said. “But the hope at this point is that the free fall is behind us…and now we start to make strategic decisions.”
Data points that Wolf laid out to make her case included:
- Existing homes sales down 18% YOY (Year-Over-Year)
- New Home Pending Sales Index down 33% YOY
- Initial Jobless Claims neared 39 million – but the rate of increase each week continues to slow
- 73% to 80% of local businesses are now open in the Top 10 cities measured – led by Jacksonville, Oklahoma City. Memphis, Nashville and Austin
- 45% to 57% of local businesses have reopened in the Bottom 10 cities surveyed – with 55% to 57% of local businesses now open in San Jose, Chicago, Philadelphia and New Orleans
- Despite business re-openings, only 54% of consumers surveyed would shop for non-essentials, only 43% would visit a bar or restaurant, and only 19% would attend a sporting event
Mortgage Applications for Home Purchases are Roaring Back
One of the most noteworthy signals Wolf cited was mortgage applications to purchase a home. This key leading indicator has snapped sharply back – and is now almost back to pre-pandemic levels:
As Wolf has noted in recent weekly webinars, housing is continuing to out-perform the overall economy – and showing a V-shaped recovery that is significantly brighter than the overall outlook. She cited five reasons why housing is performing better than other segments of the nation’s economy:
- Wealth effect is back, thanks to the stock market.
- Half of job losses to date – income levels below those of typical new homebuyers.
- Lack of resale home inventory.
- Seriously low interest rates.
- Pent-up demand for housing was very high before COVID-19.
Wolf also noted that the shortage of resale home inventory has supported housing prices – and even led to multiple offers for homes in some markets. Despite a number of encouraging signs, Wolf remains cautious that the housing recovery could ramp up but then slip back down – or stall on the current upward trajectory before regaining the industry’s prior levels of new home sales.
Factors Wolf and her team are watching – which could slow the pace of a housing recovery — include:
- Cancelled new home orders
- Slowing housing demand
- Vacation rental homes for sale that flood some markets
- Stock market declines or a mortgage meltdown
- A second wave of the virus or a new layer of job losses
On balance, Wolf’s optimism outweighs the concerns above, but she will continue to watch – and report on – the tailwinds benefitting builders – and the headwinds holding them back.
Wolf updated her forecast for 2020 single-family housing starts to 815,000, a decline of nine percent versus 2019, in a V-shaped recovery. Her forecast in a W-shaped recovery is 697,000 starts this year, down 22% vs. 2019.
Tim Sullivan, the Senior Managing Principal of Meyers Research, opened the second half of the webinar with his now-patented Heard on the Street segment. Builder observations last week included:
- Continued week-over-week increases across most markets and product types
- Tire kickers coming back out
- Spec building picking back up, but cautiously
- Strong model home traffic
- Some builders report May sales may exceed their original plan
Echoing Wolf’s cautious optimism, Sullivan noted that 62$ of builders that Meyers surveyed reported a week-over-week increase in contracts – and 50% of builders expect to meet or exceed their sales plan for 2020. Other key indicators:
- 63% of builders kept base prices flat week-over-week – but 36% increased them
- 9% of builders increased incentives vs. the prior week
- 12% reported cancellations – a drop from last week
- Entry-level and first move-up product continues to lead the way in traffic and contracts
Sullivan compared three rebounding markets – Phoenix, Tampa and Austin. He contrasted these “Comeback Kids” with two markets dominated by leisure and hospitality jobs – Orlando and Las Vegas –, which continue to lag in the recovery.
“We’ll keep saying it,” Sullivan said. “The recovery is very jagged and uneven – varying by market.” He cited showing activity and Open Table restaurant reservations by market to bolster his case.
After weeks of noting that the active adult market was “frozen,” “on hold” and driven by “discretionary buyers,” Sullivan is seeing 55+ buyers coming back in phases. He cited baby-chasing boomers following their adult children and grandchildren to markets like Austin, Charlotte, Raleigh and Phoenix – that lead the nation in net migration, based on employment demand and housing affordability.
Wrapping up this week’s webinar, Sullivan cited “Five Things That Surprised” his team:
- How varied the response and concern around COVID-19 is by market
- How fast the economy shed jobs
- The power of fiscal support from the government
- The resiliency of the new home market…so far
- Our restless spirit after only 12 weeks of quarantine
Envision: Now is The Time Webinar – Melissa Morman and Chad Bria – BDX
Melissa Morman, co-founder and Client Experience Officer of BDX, opened this week’s re-tooled webinar on the Envision Online Design Center by adding an important look at closely related digital marketing tools from BDX that can be used on a stand-alone basis or in combination with Envision.
Morman underscored the timeliness of this suite of products – each of which enables the homebuyer to visualize and design a home online – comparing options and upgrades, selecting design packages, and seeing costs translated into incremental monthly mortgage payments.
Shelter-in-place and the desire of many people to reduce physical contact have all made the need for visualizers, interactive online tools, and the Envision Online Design Center even more vital.
Morman noted that the design of these – and every product from BDX – was driven by builder request and focused on meeting the needs of the homebuilding industry.
“Our team works with 1,500 builders and we develop our products – and even our pricing – with builders and for builders,” Morman said.
Before kicking off the discussion of Envision and related tools, Morman gave a brief summary of the latest Online New Home Search Index from BDX.
“Our online search index is up for nine weeks in a row,” Morman said, “and there are more consumers searching for new homes online now than last year – a record year for home search – or during January and February of this year, which were even hooter months for builders.”
Not only are people searching, Morman noted that they are serious shoppers who are converting into leads. “Leads on NewHomeSource.com, our flagship website for consumers to find a home and builder, are up 30%,” Morman added.
The Ability to Personalize a Home is a Top Reason to Buy New – But Confusion Over the Options Selection Process is Also the #1 Reason Many Buyers Who Prefer New Buy a Used Home Instead
With so many serious shoppers now – most desiring to conduct their buyer journey online – Morman noted that options selection and home design are important at every stage of the customer journey – not just at the contract stage.
“Confusion on options is also the number-one reason that consumers bail on new homes – and that was pre New Normal,” Morman said. The data she cited are from BDX’s Home Shopper Insights Survey – Wave 5 and a related Home Buyer Journey Survey. In total, BDX surveyed more than 9,300 current home shoppers and recent homebuyers in 43 markets.
The ability to personalize a new home by selecting options is a top reason that consumers buy a new home. Conversely, confusion around options selection is the number-one reason that many shoppers who start their homebuying journey preferring a new home buy a resale home instead.
The Envision Online Design Center and Family of Related Tools is a Pain-Killer – Not a Vitamin
“Visualizers, interactive floor plans, virtual tours, interactive site plans and the Envision Design Center are all pain-killers – not vitamins,” Morman said.
She explained that many top venture capital firms divide products and services into vitamins – that may be good for you – and painkillers, where the need is imperative.
“Envision is making a huge difference in keeping buyers emotionally committed – since they have designed their home, their way – after contract and reducing cancellations,” Morman said.
Builders have also been achieving success using Envision as a pre-sales tool on a builder’s website to attract, engage and convert home shoppers into leads.
“Envision is the highest-converting lead type that builders have today,” Morman said. “Current Envision builders are adding divisions and our nearly 200 Online Design Centers are successfully holding virtual appointments every day.”
“What’s amazing to me is how quickly new builders are jumping in,” said Morman, “and how quickly our team is able to get them live on the right level of Envision – customized for each builder’s needs.”
The Envision Content Hub Powers a Family of Vital Tools for Homebuyers and Builders
As important as the Envision Online Design Center is, Morman underscored that is also part of a larger spectrum of digital and online marketing tools – each of which can also be customized for each builder’s needs.
“A lot of these digital assets help the homebuyer through their customer journey – and we work with each builder to make sure we reflect the unique buyer journey they provide their customers,” Morman said.
“For example, all of our virtual tours and visualizers have options changers built in that are powered by the Envision Content Hub,” Morman said. “I say content – and not data – because there’s a huge difference between data and compelling, immersive and interactive visual and video content. Envision is a content hub, not just a data hub.”
Morman stressed that each of BDX’s digital tools complement each other – and each can be added by a builder in the order they wish – to create a seamless digital journey for their buyers.
Time for a Demo! View the Recording – Or Sign Up for an Upcoming Live Envision Demo
Morman turned the webinar over to Chad Bria, Director of Envision. As he shared his demo site – built for a fictitious Beacon Homes – Bria noted that each instance of Envision was customized.
“The first thing we’ll do is match the look and feel – the colors and the fonts – of your website and your brand,” Bria said. Bria took the audience through a fast-paced and informative tour and demo of Envision.
The best way to fully experience the product is to view the recorded demo – or sign up for one of Bria’s upcoming live demonstrations. Some of the highlights that Bria covered included:
- Key categories and sub-categories of products on Envision
- Breadth and simplicity – while Envision included comprehensive content on more than 375,000 products from 350 leading building product manufacturers, builders display only those products that they actually offer as standard features – or Good-Better-Best upgrades.
- If a product manufacturer used by a builder is not yet on Envision, Bria noted that the BDX team can add them to the platform.
- Envision enables buyers to create wish-lists and compare products side-by-side
- Users can create and save or share visualizations of their favorite choices to personalize their kitchen.
- Different user types can be created. Bria noted that family members are often influencers and noted that Envision can create an account for a buyer, co-buyer, parent or friend to share and suggest designs.
- Envision supports stand-alone product selections – and packages, such as the Roma Chef Kitchen with eight different options all sold together as a single, nearly $15,000 Kitchen Package.
It’s All About the Buyer’s Monthly Payment
In every case, Bria noted that one of the most compelling features for buyers was Envision’s ability to convert the total price of an option or package of upgrades into a simple and relatable incremental increase in a buyer’s monthly mortgage payment.
“When that buyer sees she can have that professional-grade range for just $11.17 more in monthly payment, she sells herself,” said Bria.
“Envision and our family of related virtual tours and visualizers offer builders important new ways to get your buyers excited and involved in the home you’re building with and for them,” he added.
“We listen to three million home shoppers a month on NewHomeSource, actively looking for a new home,” Bria said, “as well as nearly 15% of new homebuyers who will use Envision this year.”
Making It Easy for Builders to Help Buyers
“Our Envision and Media Teams work together to capture all the details. We make it easy for builders to launch and customize Envision – and our platforms for consumers are simple, intuitive, compelling and engaging,” Bria said.
In closing this look at Envision and the BDX family of integrated tools, Morman said, “We have all the pieces you need. No other company has the full spectrum of tools we do or the ability to help you customize them to your needs. Just get started on your journey,” she added.