The housing bubble: who’s on first?

Jan 28th, 2015 | By FCT

Then there’s the story of the 102 year-old stockbroker, who, back in 2009, was asked by a reporter what he thought of the “biggest crash since the Depression.” The old guy smiled a little and replied: “At this point in my career, I’ve seen the world end maybe ten times by now.”

Exactly.

So oil’s falling off the table, the Bank of Canada’s given us vanishingly small interest rates, Alberta’s on the ropes, housing prices and construction starts are slipping into a state of suspended animation and the stock market is looking like the indomitable Canadian boxer George Chuvalo ten rounds in with Muhammad Ali—battered but unbroken.

Is this bad for business? Without a doubt.

But here’s the thing: the economic forces set in motion by oil’s huge drop (sidebar: why hasn’t diesel come down in price?) are so complex that, like the intricate pattern of winds that drive the planet’s weather, who the heck can really say just how this will all play out?

The takehome lesson of ‘The Challenger Sale,’ as we saw back in September, is that not only did some very savvy financial services folk survive the mess in 2009 but they actually grew their business.

The real game here is context: trying to understand just what’s happening across the economy and then relating that to your marketplace is way too big an undertaking—a national average may not relate at all. Case in point: Winnipeg’s going to see very different forces at work on the housing/mortgage market than Moncton or Tofino, so most TV and print pundits aren’t worth betting on.

Why? Because their crystal ball-gazing’s way too ‘big picture’ to be of much local intelligence value. Moreover, contrarian or not, they’re only human and most are wrong far more often than they’re right. (This is of course the premise of Nassim Taleb’s profound book on anyone predicting anything because of the fragility of financial modelling, The Black Swan)

So what’s a trusted advisor to do? Capitalize on the trust you’ve banked with your clients already. No matter how grim things get in Calgary or St John’s, people will still have children, need a bigger house, divorce and need a smaller one, suffer a death or health crisis, lose a job or win one. Life, as our old stockbroker knew, goes on.

Understanding the psychology of a client’s needs and wants means asking the right questions—and listening carefully—at the right time. What influences clients in 2015?

Are you sitting down? In 2014, 47% of Americans sampled for this terrific ‘Search Engine Journal’ financial and insurance advisors survey infographic said that Facebook was the #1 factor in their purchasing decisions. Common sense suggests that even in a fragile market, early adopters will form decisions (even about complex financial and insurance considerations) from peers on Facebook—and the infographic makes clear that’s where you’ll find them. (And, yes, you’re right: this data isn’t referenced by bank researchers or mortgage guys. It’s behavioural.)

That Facebook preference isn’t necessarily true of not-so-early adopters: they’re already in your trust network, so if you’ve been following our three-part business development series, you’ll have a CRM system in place and have identified and are talking to prime clients and ensuring they stay, trusting you and your business acumen, in your pipeline.

But here’s a shocker: the fastest growth in social media adoption is on Twitter…and for both men and women over 50. So if you want to build relationships with that segment, that’s where they are.

Canada’s Twitter population is slated to grow by some 28% this year (twice the US rate of adoption), according to the well-established web stats company eMarketer, skewing heavily towards urban areas.

What are potential clients scoping on Twitter? That’s a good question (answer: trending consumer patterns for just about everything) but the better question is where are potential clients interacting with Twitter? Answer: on their smartphones, where Canadians lead the world in per capita Twitter consumption growth, doubling since 2012.

Social media marketing for the mortgage industry is still in its infancy but it’s a solid bet—even in these strange and difficult times—that those who know their client networks will not only survive the harsh stuff now but will prosper.

Remember that BMW, one of the most successful brand marketers around, wisely never cuts its marketing communications spend in down markets: the car company doubles down, knowing that recessions always end…and when they end, the spend begins.

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