Not a great season for industries, including real estate
In June 2023, the UN reported that the world economy faces the risk of a prolonged period of ‘sub-par growth’, whether it be due to pandemic aftershocks, worsening impact of climate change, stubbornly high inflation, or structural macroeconomic challenges worldwide.
Needless to say, while this global economic downturn has had a major impact on various industries, real estate too has not been spared.
Market downturns around the world
One of the most significant effects of an economic downturn on the real estate sector is a sudden drop in demand for properties because the number of people willing to purchase houses reduces drastically as they hold off on big purchases until the economy recovers.
A good example of this was seen in the United States, where home sales fell 0.7% from July 2023 to August 2023 alone, according to the NAR.
As the economy slowed down and people lost their jobs, many homeowners found it impossible to keep up with their mortgage payments. The result was an increase in the number of properties that were foreclosed upon. In India, for instance, the number of foreclosures jumped 13% in the first half of 2023, the highest level since before the pandemic.
It’s not all bad news though
In Australia, house prices had been rising steadily every month in the first half of 2023, with housing affordability plummeting to all-time lows. In July, Reuters reported that most state and territory capitals had recorded higher prices for dwellings, with Sydney leading the way with a 1.7% surge.
China’s property industry too has seen a historic downturn in the last two years, according to CNN, with new home prices falling for 16 straight months through last December. Despite a brief period of stabilization, China’s property prices have once again started declining since June, signaling the very real challenges of stirring up demand in the world’s second-largest economy.
But despite the negative impact, there are positive effects as well. For one thing, the economic downturn has forced real estate companies to become more innovative and creative in their advertising, marketing and sales strategies.
Can advertising help alleviate real estate woes?
In the last 100 years alone, the world has seen and survived several recessions and times of economic turmoil, the COVID-19 pandemic being a recent occasion with long-lasting ramifications on financial markets.
During such times, cutting back on advertising (and therefore marketing) campaigns has often been seen as a way to save costs with little impact on long-term business goals. However, experts say research shows this is not the case.
In fact, some studies show a recession is the perfect time to capture attention and increase market share:
- Companies who continued to advertise during a recession saw over 250% higher sales than counterparts post-recession
- Those who chose not to advertise during a slump saw virtually 0% market share increase, (and only 18% increase once the economy regained traction). In fact, 60% of brands that went ‘dark’ during the 2008 recession (no TV ad spend for 6 months) saw ‘brand use’ decrease 24% and ‘brand image’ decrease by almost 30%.
Today, advertising technology has experienced a quantum leap; we can now address and segment users on an individual or household basis in ways that were never possible before.
Why is this significant?
Because it means that advertising budgets can now be optimized to reach the right, hyper-targeted audience.
It also means smart real estate agents are highly aware that economic downturns don’t stop people from searching on their phones, with US consumers being at home and watching content on their (smart, reachable) devices more than ever before.
Real estate expert Kurt Uhlir writes that there are real advantages that a sharp digital marketing strategy can have for agents during economic crisis, including:
- Increased personal brand visibility
- Increased site visitors
- Increased credibility and market share
- Increased returning visitors
- Increased sales
- Increased profits
Advertising is an Investment, not an Expense
Agents and real estate firms should view advertising and marketing as an investment, not an expense, and best-performing ones will actually use economic downtimes to:
- Take inventory of existing stock, portfolio etc, for example, improving on their real estate website (remember, many people spend more time on the internet during a recession)
- Assess which materials can be enhanced and improved to retain existing client base
- Identify new opportunities to gain more visibility in front of target niche audience
- Renew focus on driving conversions
- Carefully choose and adopt platforms/software that can automate mundane, repetitive tasks
- Generate and write more content for immediate and scheduled release, with some experts recommending up to 1500 words to build meaningful hyperlocal pages.
- Blog posts, landing pages, slide decks, social media updates, videos - all of these contribute to healthy organic traffic and content marketing, which still outperform other channels and get more powerful over time. They also increase site authority and ranking opportunities on Google.
- Measure, test, pivot, repeat
It’s undeniable that advertising has become an indispensable aspect of real estate marketing strategies, and its importance continues to grow in 2023 and beyond.
No matter the economic climate, as long as technology progresses, real estate marketers have unprecedented opportunities to embrace innovative advertising strategies, helping them stay ahead in a competitive industry and provide enhanced experiences to their audiences.
And this isn’t just the case for agents - read our recent blog on how homeowners can buck the economic trend by promoting their own properties for a faster or more lucrative sale: The “Vendor Paid Model” in Australia - What’s the Big Idea?