by Mark Koestner
There was a great article on MSNBC.com recently regarding the bi-polar housing market in the United States. It highlighted as an example the juxtaposition of downtrodden Detroit, where homes are selling at Great Depression-era prices, and nearby Birmingham, Mich., where there are bidding wars for million-dollar homes.
It shouldn’t come as a surprise, really. If your market is like most others, luxury real estate is still doing fine. Nationwide, in fact, prices of million dollar-plus homes have risen almost 1 percent in the past year, according to Zillow.
And if your market is like many others, the other end of the spectrum isn’t doing so badly, either. The homes agents have long described as “affordable” are more so than they’ve ever been, and there is demand for them.
Yes, despite the struggles of the housing market, the very top and very bottom seem to be doing OK right now. That the middle is struggling probably shouldn’t come as a surprise.
Recently, the New York Times published an analysis of U.S. Census data that showed:
The top 1% of Americans control just under 25% of the country’s income. This is the highest figure since 1928.
- The U.S. ranks #3 among all advanced economies in the amount of income inequality.
- The top 5% of Americans by income account for 37% of all consumer purchases.
- Median annual income adjusted for inflation is at 1973 levels.
- The Times also reported that more than 15 percent of Americans are now living below the poverty line, the largest percentage and number (46.2 million people) since the Bureau began tracking the statistic 52 years ago.
They say the middle class is disappearing, and — quite literally — it is. The rich are getting richer and the poor are getting poorer. And there are more of both of them.
Proctor & Gamble, one of the world’s largest producers of household goods, has responded by taking an “hourglass” approach to its marketing. It’s going to target high-end consumers — the wealthy — and those who purchase its low-end products — the poor. If the middle class is shrinking, P&G figures, why aim at the shrinking target.
At first glance, that appears to be a viable strategy in real estate sales, too. Luxury real estate is selling, and low-income housing is selling. If you’re in one of these niches and your current marketing is earning you consistent commissions, consider yourself one of the fortunate ones in our business.
Unfortunately, many agents are not that fortunate. Unfortunately, the middle class has been the bread and butter for many agents for many years. So what do they do? Do they follow P&G’s lead and start aiming at the fatter targets, the top and bottom of the hourglass?
Not necessarily. If you’re not already in the luxury home niche, chances are it’s going to be tough to start down that path now. As for the other end, marketing “affordability” is easy, but you have to sell a ton of homes because the commissions on each can be small. So the argument here is to not give up on the middle.
In fact, you can use the news above — the supposed demise of the middle class — as your marketing message. You can be the rescuer of the middle class, the defender of the Average Joe.
- Help the underwater homeowners in good areas sell their homes.
- Help beginning investors find the cash-flow machines that will line their struggling middle-class pockets with some extra income.
- Help retirees-to-be find that perfect downsized home.
- Help people with good income but poor credit understand what they have to work on
- Help recent college graduates become homeowners
The key is in your message. You can position the middle class as the endangered species. Pluck the emotional chords that say “You are the forgotten.” The news media, without question, are here to help. You simply have to remind people of the problem, then position yourself as the solution.
The top and bottom might appear easier targets right now, but don’t be afraid — with the right message — to aim for that middle.
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