Homebuilder KB Home is used to working with hammers and nails. But this year, the company is putting some virtual tools in its belt. Later this month it will build its first model homes in the metaverse with a new community in Decentraland that allows customers to visit and customize virtual homes. The company views the offering as a way to enrich the customer experience and grow awareness for its real-life homebuilding capabilities, according to Chief Marketing Officer Amit Desai.
“The metaverse promises to allow us to connect the digital world and the physical world together,” Desai said.
Making such connections while deploying new marketing methods will take on an added urgency for homebuilders and real estate companies this year as marketers try to spur buying interest amid a deteriorating business climate. Average national mortgage interest rates are nearing 7%—more than double rates from a year ago—and inflation continues to affect the prices of everyday items. Brands must combat these forces as they attempt to convince customers that the time is right to buy a home.
Unlike at the beginning of the pandemic, when rates were low and consumers were flush with cash and eager to invest in their homes, the category is seeing declines as many consumers take a wait-and-see approach. Some brands are decreasing marketing amid employee layoffs. Experts expect that brands will switch things up in 2023, with more targeted marketing designed to reach specific groups of customers, as well as more investment in digital areas such as the metaverse and virtual tours.
“The constraint on the market is these very high rates that have really moved housing out of reach for a lot of growing families,” said Sam Chandan, director of the Chao-Hon Chen Institute for Global Real Estate Finance at New York University's Stern School of Business.