The Fed just raised interest rates, no secret there. It went up by a quarter percent. And it's likely that we're gonna see interest rates go much higher than they are today.
And so there's concern in the marketplace, like what are these interest rates gonna mean for the real estate market? There's a lot of differences between where we're at today in the market and where we've been in the past. For instance, right now we have the lowest supply of homes ever recorded. So that's gonna indicate that demand is probably gonna stay pretty strong and healthy because we need more supply to fill the demand.
But there could be a situation where you get to what's called buyer resistance. And that's where buyers say, "I can't afford to pay anymore for a mortgage payment."
We're not there yet. We still have high demand. And just by comparison, yes, rates are higher than they were a year ago certainly. But if we go back decade by decade,...
There's one thing we've all done as human beings, living in the United States of America. I guarantee every adult has thought about this at some point:
They've thought owning a rental would be super cool.
Even if they're not homeowners yet, they've thought it would be nice to be on the other side of the equation — and not be paying rent, but also receiving rent.
So this makes for a great conversation. And there's something interesting that's happening in the world today, which we don't talk enough about in the real estate world, which is this:
A lot of millennials and the next generation of buyers coming in are being taught and embracing this concept that they don't want to own their own home.
They wanna continue renting their own home because they want a mobile lifestyle. And they wanna be able to move from New York to Miami to LA. They wanna surf around and have that mobile lifestyle, but they wanna own a couple rentals.
There's a new stat from the National Association of REALTORS, which states that 53% of our buyers and sellers now fall into a specific demographic group.
You can probably guess what that is...
It's the millennial generation.
Millennials aren't kids anymore. They're actually in their mid twenties or early thirties. They are definitely the driving force in the market. And they're far, far bigger than the baby boomer generation ever was.
So when we look at just statistically, the numbers of this, we have to embrace millennial marketing. It's super important.
And there's some things that we can do to do a much better job with them.
1. Social media
You know I was going to say that. That's where they're at. We've got to go where the audience is. That means we're doing 5 to 15 posts a week on different platforms that we know they use.
So some of you might be doing Facebook, Instagram, TikTok, YouTube, you name it. You just got to figure out...
The Wall Street Journal just put out an interesting article about a company called Invesco putting $5 billion into a hedge fund that's purchasing single family homes.
And they're not alone. There's another $6.5 billion dollars targeted with other hedge funds doing exactly the same thing.
Now, why are these hedge funds going after single family homes?
Well, they've identified that they can get a cap rate of as much as 6.8%. That's the target rate that they're comparing to apartment buildings and commercial — which is like the low sixes.
So what they're saying is: we're going to make money on this. And we're going to rent these houses to millennials that are choosing not to become homeowners.
What we need to do as an industry, number one is to recognize that we should be investing in single family homes as well. But also we need to encourage everybody that's not a homeowner today to get into the real estate arena and buy their...
Something interesting that you might find surprising that it relates to real estate, but fertility rates in the US have gone down dramatically over the last hundred years. In America today, we've actually had another 1% decrease.
We have the lowest birth rates than we've had in a hundred years.
Here are the numbers:
For every 1000 women in America aged between 15 and 44, there's 58.3 births. And you compare this to World War Two, when all the baby boomers were born, that number was more closer to 140 births! So huge difference in the numbers.
Now, how does this relate to real estate? I'm going to share with you now. Here is the the data today:
Looking at buyers who have children under the age of 18 in the home, the share of that group has declined from 58% in 1985, all the way down to 33% in 2020. So there's a much smaller group of people buying homes. It's actually the minority, not the majority, who have kids under 18 at home.
So you need to...
53% of all real estate sales are now being done with a Millennial. Yes, the millennial generation is actually a bigger generation, a more powerful generation, than the Baby Boomer Generation. Millennials are buying and selling homes. Because of this we have to shift our attention and ask ourselves:
"How can I market myself to this huge demographic, this massive group of people?"
The answer? By becoming a better marketer and really focusing in on what is it going to take to attract and keep millennial clients engaged.
Here are 5 Ways to Engage with the Millennial Audience:
1) Use Social Media. Obviously social media is where millennials spend most of their time. To connect we need to be posting 5 to 10 times a week on social media on places like Facebook, Instagram, LinkedIn, Pinterest, Twitter, TikTok, and Snapchat. Yes, there are a lot of different platforms out there. Pick the ones that you're going to use and then stretch and keep stretching...
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