When the top officers and sales staff of Holigan Homes went back to school a few months ago, it wasn’t to brush up on business skills or catch up on the latest home building trends.
Instead, about 30 employees–from the chairman to the office receptionist at the Dallas-based home building company–took a 10-week college Spanish course to help the builder tap into the growing population of Hispanic buyers.
“It’s a huge market that every builder is going to have to pay attention to,” said Michael Holigan, president of the firm, which builds more than 300 houses a year. “The Hispanic population has increased dramatically in Texas and will continue to grow.
“As builders, we would be foolish to turn our backs on these customers,” Holigan said.
Home builders across the country are coming to the same conclusion.
During the last 10 years, the U.S. housing industry has watched its traditional market–typically young, white, middle-class couples–slowly dwindle. Even Century 21, the country’s largest residential sales agent, recently launched a nationwide television marketing blitz targeting Hispanic buyers.
Increasingly, America’s home-buying market is made up of customers who are older and from more diverse ethnic groups.
“For as long as I have been in the residential marketing business, the scariest thing we could do is admit that our buyers were different,” said Bill Webb, who owns a Florida consulting firm. “Instead, we tried to build to one market.
“Now, the pendulum seems to be swinging the other way, and builders are paying more attention to diversity,” he said.
Along with the latest building techniques and bathtub styles, the hot topic for discussion at the National Association of Home Builders’ recent exposition in Houston was the changing marketplace.
Hundreds of builders from around the country attended seminars on how to appeal to older buyers and customers from different ethnic groups.
Home builders are realizing that there is more to the country’s housing market than the familiar Leave it to Beaver households they’ve been serving since the 1950s. “We are just starting to talk about housing products designed for the 50-plus buyer,” said Washington, D.C.-area builder Gary Garczynski. “It’s a market where we haven’t even scratched the surface.”
Older Americans already have the highest homeownership rate; about 80 percent of people 55 and older own their homes. And during the next five years, builders expect that older buyers will account for more than 30 percent of their business. That’s only slightly less than the market share forecast for first-time buyers, the industry’s longtime mainstay.
“By the year 2010, 75 million Americans will be 55 or older,” said architect Ken Rohde. “Taking care of housing for this group is going to be a major task for our industry.
“With the baby boomers approaching retirement, seniors housing is going to be one of the hottest business opportunities for builders,” he said. “What we have to recognize, however, is that these people are not looking for a place to be put out to pasture but for a new place to live.”
Big national builders such as Arizona-based Del Webb Corp. and others are struggling to come up with housing for a new generation of active, older buyers.
“We are building communities designed for the baby boomers,” said Glen McCaskey, a market director at Del Webb’s Sun City Hilton Head community in South Carolina. “These people have a totally different mind-set about retirement, and not all of them just want to play golf.”
Instead, Del Webb is crafting housing communities patterned around a “cruise ship” lifestyle that offers residents multiple recreation and cultural options.
“A lot of the old ideas about retirement housing just won’t work anymore,” McCaskey said.
Builders are having an even tougher time adapting to the tastes and desires of different ethnic groups.
“Some of us have begun to realize that what may be important to the African-American buyer may be different from what is important to the Hispanic buyer and the Asian buyer,” said Webb. “There is huge potential in these market segments, and we don’t know much about how to reach these people. Well, it’s time we found out.”
The latest census reports show that African-Americans and Asians are experiencing the fastest increase in homeownership rates. The percentage of Asian homeowners has grown at more than twice the national rate during the last two years.
Arvida Corp., a Florida-based company that is one of the country’s largest residential developers, recently began marketing Atlanta-area projects specifically to African-American buyers. The big public company has set up special sales offices and product designs based on interviews with African-American buyers.
“In the past, it’s been the smaller builders who have been willing to be more flexible and take advantage of this market,” said Edward Slotz, a marketing officer in Arvida’s Atlanta division. “But this has been a tremendously successful program for us, and we plan to do more of it.”
On the West Coast, the fastest-growing segment of the home market has been Asian buyers.
Even during the recent economic downturn in Southern California, “builders discovered that the only people buying in great numbers were Asians and a lot of them were paying cash,” said Angi Ma Wong, a Palos Verdes, Calif., consultant who teaches builders all over the country how to target Asian buyers.
Besides building houses that can accommodate extended families and laying out kitchen cabinets “big enough to hold a 50-pound bag of rice,” home builders have had to rethink basic marketing techniques to appeal to Asian buyers, Wong said. “A young, hot-shot, fast-talking person will turn off the Asian buyer,” she said. “They want someone more mature.
