Navigating a housing market that moves too fast

Transcript:  

Allie Barefoot:

I am Allie Barefoot with Cotality, and this is Data in Context. Today we're going to be talking about how homebuyers really feel about the process of purchasing a home. And to do so, we'll be talking with Cotality’s Head of Research and Development Anand Srinivasan. Because let's face it, the market is tough, fast, and people are struggling to keep up. So, we at Cotality asked homebuyers how they really feel about the process, and there was one commonality - they just felt overwhelmed. But analyzing thousands of unique, complex emotional responses is a tough task. This is exactly why we built Cotality’s Core AI. We put our proprietary platform to work, processing the vast, unstructured data of how buyers really feel about the process. So, we'll take a closer look and dive deeper into why that stress is happening and how we can help provide them with confidence and clarity. So, let's go on ahead and jump into our conversation today with Anand.

Allie Barefoot:  

Anand, thank you so much for joining. This is actually our first Data in Context video. Really, really excited to hop into our conversation here today. So, let's just go on ahead and just start with the big picture. How would you describe what's changed the most in the home buying process over the past few years?

Anand Srinivasan :

Allie first, thanks for having me. I look forward to the discussion here. Look, the grand takeaway from this survey of the homebuying process is that it is particularly speedy. The industry has developed in terms of speed, and speed is seductive, speed is sexy, right? Everybody wants speed, and speed is everywhere. Faster listings, faster approvals on home loans, etc. But what we have found is there appears to be a mismatch between speed and timing. When people are asking for a faster speed and faster closing and faster home buying process, what they're actually asking for is confidence, trust, and comfort. They want to finish all of that, and sometimes the industry moves too fast to the point where there are some unanswered questions on the part of the home buyer and they suddenly step back. And this mismatch between speed and timing is what leads to the lengthening of the process.

And so what we have discovered is we have created or discovered a new superpower called comfort and a combination of trust, speed, loyalty, and confidence in the process individually, it's not any one particular factor that moves the needle. It's not loyalty, it's not speed, it's not convenience, it's comfort. And this is different for different generations is what we have discovered through the survey. And what we have also discovered is that the millennials, the Gen Z, excuse me, the youngest generation and boomers, the oldest generation, are far more alike in some ways than they're different. I don't know if either generation would care to admit that, but what they're seeking is comfort. So boomers want clarity and consistency of information. The Gen Z wants a guide through the whole process, and the millennials and Gen X, the in-betweeners want bureaucracy and process steps to go away. So our grand takeaway from the survey and trying to articulate how do we convert houses to homes is that we have to microdose the consumers with the right info at the right time to drive comfort. And this converts houses to homes.

Allie Barefoot:

I am Gen Z, and I completely agree with what you just said. I want everything by the click of a button, whether it's a package I'm waiting on or my food to come out at a restaurant. I mean, I'm equipped to think that things are better if they're faster, but it's not always necessarily true. And obviously every market is a little bit different, but there are places right now where homes are selling like hotcakes. I mean, they're just going one after the other, but there are other markets where it's a little bit slower and they require more thought out decisions. So the survey that you just mentioned, Cotality’s From House to Home survey, we found that almost half of the respondents said that today's market is pushing them to make faster decisions. So this is where I'm very curious, how is that need for speed really showing up in that buyer behavior?

Anand Srinivasan:

The interesting part is 43%, that same survey that you mentioned, 43% said buying a home requires finding a home requires faster decision. Roughly about 41% says finding a mortgage requires faster decisions, but after that, the need for speed falls off a cliff, right? So finding insurance not so it doesn't need to be so speedy and neither does going through the legal process. So we've optimized, the industry has optimized for speed, but what we are trying to, the consumers are trying to tell us is what they're looking for is timing. And if we bring them along the entire process at the speed at which they are comfortable, then the process seems to go much faster. The process only works for a quarter of the people, the remainder, 75% are they hit a hiccup at some point in the process, 12% felt uncertainty, even beginning the process, 8% felt confident even after they found the home, 13% didn't feel confident at all until they closed.

So in this equation, in this process, confidence doesn't lead speed. Confidence is a lagging indicator. And so the survey, what it demonstrated to us is isn't necessarily that we need to go faster is how do we go better? How do we deliver better timing? And how do we microdose the consumer with the right info at the right time so that they can feel confident and comfortable with the process so that they move faster? And funnily enough, that's what the industry wants, but you aim for comfort and confidence not necessarily for speed. In doing so, you actually get speed, you actually get velocity, which is speed with direction.

Allie Barefoot:

The home buying process, like you said, there's so many different stops that you have to make. Some are faster than others. And for somebody like me, like I said, who is Gen Z, if things are taking longer, I do start to lose a little bit of confidence because I'm so equipped to everything happening so fast. However, when do you notice or do you notice that there is a pattern of when that confidence starts to kind of fall off during the home buying process?

Anand Srinivasan :

Yeah, we heard this from home buyers quite a bit. Heard words like I knew I was missing something.

And what we have found is if the confidence breaks early in the process, then the doubt lingers, right? It carries over into every part of the process. So half the buyers are overwhelmed with the prospect of even finding a home. 20% said there's no need for speed at all. So what we as an industry need to do is instill confidence and comfort at every part of the process for every generation. And the notion of comfort is different for every generation mind you. So we have to deliver that information the right way to the right party at the right time to build confidence and early and often so that it carries over. And you do it step by step by step so that when they feel okay, you found the home, you guide them through the process, and then after that, you guide them through the mortgage finding process.

And after that, you might guide them through to the legal review process and through the insurance process. And after that, even after that, we have to guide them to maintain their home and all of the other stuff that comes owning a home. So every step of the way, confidence needs to be instilled, but particularly at the onset, because Gen Z doesn't like surprises, boomers want confidence in the overall process. And the intermediate generations, gen X and millennials of which I'm a part, they want the bureaucracy to go away. So the confidence to drive comfort has to be instilled at every part of the process as often as possible, particularly heavy emphasis early on. And we have to do it throughout the process

Allie Barefoot:

And to be able to keep that confidence, like you said, not just through the home buying process, but after the closing, after they purchase that home, making sure they're settling in and everything is a way that it should be. You're going to need some kind of technology and some tools to help you as a real estate agent to connect with your client. What are a few overlooked tools or resources that can simplify the buying process of today's consumers and sellers?

Anand Srinivasan :

Look, the name of the technology these days is AI. Funnily enough, the industry appears to be catching up to Cotality because we've been using AI for a decade plus now, and we're creating a foundational AI model to help speed up this process. But one of the things we discovered from the survey was that at AI, the interest in the use of AI is rapidly increasing. Even between recent home buyers and prospective homebuyers, there was a 15-point bump between AI's infusion and the trust in AI. So people alone or AI alone, and AI with people that use their trust in that particular group jumped 15 points between recent home buyers and prospective home buyers. So AI is here to stay, but one of the things that we have also discovered through this process is, look, it's just a tool and AI can help us do our job better to deliver comfort and confidence because this is such a big decision for most people.

Arguably their largest decision of their lives. And Gen Z for example, wants a guide. They've been crying out for guidance, and that's where they're actually very similar to the boomers, their trust. They want a guide through this process. So one of the things that AI can help us do, us as stakeholders in the industry, is in every part of the process, what is the information that we need to deliver to the customer? How can we curate it so that the right piece of information is delivered? How can we microdose this? How can we time this and go through every step of the process? AI is a fantastic tool that can help us do all of that better from a consumer management standpoint, and then it can also help make our catastrophe models better. Our accuracy from a prediction of valuation, better propensity for predicting insurance and taxes, AI can help us with that. And we're doing all of that within Cotality. So across the board, improving the quality of the information, improving the delivery of the information, improving the timing of the delivery, and managing the end-to-end process so that it's smooth. AI can help us with all of that.

Allie Barefoot:

And you said that it can help instill that confidence as well. I spend most of my free time looking at homes mainly that I probably could never afford, but some that I can. But I do start with searching on AI. It's going to show me exactly what I am looking for, maybe something I didn't even know was possible for me in my lifetime. So does it instill that confidence is one thing, but how do we use AI to really reduce friction in the home buying process? Because you and I both know it is not smooth sailing from start to finish. So how do we use it in that sense?

Anand Srinivasan :

So for example, gen Z, one of the complaints that we got from the survey was that they were surprised by costs. That's not necessarily a cost problem, it's an awareness problem. So one of the things that we can do is make sure that the consumer is aware at every step of the way, and we remind them of that, that here's some corners coming up where you have to make the turn. Here's the cost associated with each of the turn. Here's the cost range of each of those items. Here's for the properties that you're looking at, here's the range and here's how that compares to the averages for your county or your state. Again, then you reset the expectations of, hey, there's a corner coming up. I know it's on the other side of that corner and I am familiar with it, right? So that was one. Second is we shouldn't as stakeholders in the industry suddenly disappear when they're done with that step. We should be always present directly or through technology and help them with every step. Congratulations, you finished Step one A, here's step one B, by the way. Let's see what's one C, one B and two A and two B so that you're aware the next three or four steps, and by the way, here's the whole composite process you'll be going through.

There's no surprises there. And as a result, the digitally native, your generation, gen Z is stated with all the information that's coming in it's microdose so that you can digest it and it's coming in at the right time. Too much information, too early is noise, too much information, too late is redundancy. And so we have to time it. That's how your generation is used to consuming that information. And we deliver in bite-sized chunks, which is very different from others mind you. But we have to do a better job of chunking it up.

Allie Barefoot:

No, absolutely. And I didn't have AI throughout college, but I do have it as an adult now, but I've had technology for primarily most of my life. But I want to switch over to another generation I feel like we haven't touched on as much. And that's the millennials. Millennials, they trust technology and humans almost equally, however, are recent survey kind of showed us that they're choosing the trust technology more than any other generation. Why do you think that is?

Anand Srinivasan :

Look, the Gen Xers and the millennials are the skittish generation, right?

Anand Srinivasan :

Okay. So we have to do a better job of instilling trust and technology is a tool, and AI is here to stay. And we've seen this through survey results, recent buyers versus prospective home buyers. 15 point jump in desire to use and trust AI. So let's use it. Let's take the administrative hassles out of the process, which is what they want bureaucracy to go away and let us deliver that information in the right format in a technologically efficient way. And we can curate what they're looking for, how they can consume it. They've told us how they like their information delivered, so let's serve it to them the way they like it, and AI can help us with that,

Allie Barefoot:

Right? Kind of just create that fine line and just be able to help both sides of the whole process here.

Anand Srinivasan :

Everybody likes a different bento box. Everybody likes it delivered in a different way,

Allie Barefoot:

A hundred percent.

Anand Srinivasan :

And so what we can do as makers of this Bento box, we must not assume one size fits all now that everybody likes every item in the Bento box. So we can swap things out and as a result, it'll come back to benefit the stakeholders as well. Because you drive comfort, you drive confidence, you drive trust, and it'll make the whole process go faster. So it's a win-win for the consumers and for the stakeholders of the property ecosystem.

Allie Barefoot:

I like the bento box analogy. I'm literally picturing like, oh, this doesn't fit, this fits and of moving things in and out. So speaking of that, my last question here I have for you is that you touched a little bit here on how even with millennials, you have to kind of trust that, excuse me, shift that trust and use what works for them and what works for boomers and Gen Z and how they have that trust. But if you could speak right now to real estate professionals, what is something they can be doing right now to strengthen that trust to more modern buyers?

Anand Srinivasan :

Use technology tools in a wider way. Getting comfortable with the tools will make you understand the consumer a whole lot more. Work with the consumer to articulate what are their demands, what are their wishes? Serve as a guide to them. Just because they're asking for things in a faster way doesn't mean that's the end goal. They're actually looking for confidence and guidance. So we as professionals can help microdose the consumer with the right info at the right time and that will deliver comfort and that will turn houses to homes.

Allie Barefoot:

Absolutely agree. Thank you so much anon for joining me here on Data and Context. I've absolutely loved this conversation a lot to think about too, as I am Gen Z and I'm starting to figure out what I need in this process here

Anand Srinivasan :

Indeed. And we have to do a better job of acquiescing to your needs. And we will. And we will.

Thank you, Allie.

Allie Barefoot:

Thank you. Thank you guys so much for listening. We'll be back here with more episodes on Cotality’s YouTube channel, so be sure to leave us a review like this video and subscribe to the channel. That way you guys can be notified for when Cotality drops a new episode.

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