Hawaii Real Estate
Hawaii Real Estate
Making the Bacon
How do you promote a property or brokerage service in the age of algorithms and artificial intelligence? One method is to submit to Silicon Valley firms. Pay them ever larger shares of your income to promote your property or brokerage service with their proprietary algorithms and artificial intelligence. Understand that others will do the same and commit yourself to an endless arms race that will enrich Silicon Valley firms and stretch your profit margins.
But then you could operate outside the system. When everyone goes digital, you go analog. Promote your message person-to-person through hidden human psychology. In this focus piece, we reveal proven scientific methods for radically expanding the reach and power of word-of-mouth advertising.
MAKING THE BACON
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Introduction
Welcome to Hawaiʻi Real Estate, a podcast on the buying, selling, and leasing of property in Hawaiʻi. Each episode of the Hawaiʻi Real Estate podcast consists of two components: a Real Data Report, which analyzes Hawaii’s most recent real property pricing, inventory, and market data, as well as a Focus Piece, which provides legal guidance or special insight into Hawaii real estate transactions.
The Hawaiʻi Real Estate podcast is produced by the Hawaii Association of REALTORS® with support from its Legal Kokua program. New episodes of the podcast are released on the first Wednesday of each month.
Today is Wednesday, July 5, 2023. In our focus piece for this episode, we offer a scientifically-based method for advertising Hawaii real estate in the age of Internet advertising and artificial intelligence.
First, however, we go to the number. Here is our July Real Data Report:
Real Data Report
Median Days on the Market
Homes remain on the market for longer now than they did at this time last year, but median listing times are shortening. Consider the City and County of Honolulu. Median monthly year-over-year listing periods there dropped significantly. Monthly median year-over-year listing periods in the City and County of Honolulu dropped last month from 62.5% to 47.44%.
Hawaii County and Kauai County also saw median listing period drops. In Hawaii County, median monthly year-over-year listing periods fell in June 2023 from 56.32% to 49.46%. And in Kauai County they fell from 68.62% to 52.14%.
Only Maui County saw an increase in its median monthly year-over-year listing periods—and that increase was statistically insignificant. Maui’s monthly median year-over-year listing period last month increased from 52.08% to 54.55%.
Price
Price data is more of a mixed bag. The monthly median price for a home in the City and County of Honolulu rose last month from $811,500 to $824,018, and median monthly listing prices in Maui held last month at $1,395,000. But median monthly listing prices fell in Hawaii County from $617,944 to $610,625 and likewise fell in Kauai County from $1,846,250 to $1,788,750.
Monthly median year-over-year listing price data last month was also negative. Although all counties recorded positive year-over year price data for May, all counties recorded negative data for June. Compared to June 2022, median listing prices in June 2023 were down in the City and County of Honolulu by 2.1%, down in Hawaii County 2.61%, down in Kauai County 1.33%, and down in Maui County 0.14%.
With the exception of the City and County of Honolulu, listing prices in Hawaii homes are also slipping relative to other homes in the United States. Hawaii County median listing fell from 1.39 times the national median price to 1.37 times the national median price; Kauai County fell from 4.18 to 4.01, and Maui County fell from 3.16 to 3.13.
Only listing prices in the City and County of Honolulu improved relative to the rest of the county. Last month the monthly median listing price for a home in the City and County of Honolulu improved from 1.83 times the national median listing price to 1.85 times the national median listing price.
Focus Piece: Making the Bacon
Preface
We mentioned at the start of the show that each episode of Hawaii Real Estate consists of our monthly Real Data Report and focus piece. You just heard our July Real Data Report. Now it’s time for our July focus piece: Making the Bacon: promoting a Hawaii property and real estate services in the Information Age.
Introduction
How do you promote a property or brokerage service in the age of algorithms and artificial intelligence? One method is to submit to Silicon Valley firms. Pay them ever larger shares of your income to promote your property or brokerage service with their proprietary algorithms and artificial intelligence. Understand that others will do the same and commit yourself to an endless arms race that will enrich Silicon Valley firms and stretch your profit margins.
But then you could operate outside the system. When everyone goes digital, you go analog. Promote your message person-to-person through hidden human psychology. In this focus piece, we reveal proven scientific methods for radically expanding the reach and power of word-of-mouth advertising.
Information Saturation & Balkanization
There’s simply too much information for us to digest or retain. According to the old advertising maxim, a message must be seen at least six times before it will be remembered.
That presents a thorny problem for anyone seeking to advertise their property or brokerage service. In the Information Age, when everyone is drinking their information through a firehouse, how can anyone be expected to notice the same message six times?
Even if advertisers could cut through the clutter, how would they know where to advertise? Technology balkanizes. We receive our media from disparate sources based on finely tuned algorithms that produce highly individualized results. Each of us lives in a silo. I get different information than you, and you get different information than me.
When you go home tonight, you might choose to veg out by streaming the latest murder mystery on Netflix, I may choose the newest baking show on Amazon, our friend down the street might choose the football game on Hulu, the family next door might watch a movie on Disney+—regardless of who you are or what you watch, each of us receives customized content, delivered to us separately, via finely tuned, impersonal algorithms.
Those algorithms are powerful on streaming services, but they are overpowering on platforms with more frequent personal inputs, like Google, Facebook, Instagram, or—the input king of them all—Tik Tok. Unlike the inputs you give when you choose a new movie or TV show on Netflix or Amazon, the inputs you give to Google, Facebook, Instagram, and Tik Tok are frequent and deeply personal, allowing each user’s experience to be more heavily customized and isolated.
OK, so you’re looking to get your message heard in this environment. There are too many channels, streaming services, and websites to reach a wide audience. And you can’t reach a particular audience without opening your wallet to the Silicon Valley firms or purchasing a supercomputer and developing esoteric programming skills.
Even if you could reach a large or desired audience, they wouldn’t be listening. They’d be too overwhelmed with other information to remember anything you say.
So how do you get your message across? You go old school: word-of-mouth campaign. Work outside the system.
But not all word-of-mouth campaigns are the same. Some are more effective than others.
Intra-Industry Connections
The actor Kevin Bacon is said to be connected to other actors and actresses by no less than six degrees of separation. From this premise was born the popular parlor game “Six Degrees of Kevin Bacon.”
Maybe you haven’t played the game, or maybe you haven’t played it for a while. So let me describe the rules.
You gather a group to play the game. Someone in the group names a random television or major movie star. Your job is to connect that star to another actor or actress who starred in the same television show or movie, and then connect that star to someone who starred in some other TV show or movie, and so on, and so on until you reach someone who starred in the same TV show or movie as Kevin Bacon.
So, for example: George Clooney was in Ocean’s Eleven with Matt Damon, Matt Damon was in The Departed with Jack Nicholson, and Jack Nicholson was in A Few Good Men with [drum roll], “Hey, I’m Kevin Bacon.”
In the example I just gave—Clooney to Damon to Nicholson to Bacon—George Clooney has a Bacon Number of 3. Damon-Nicholson-Bacon, 1-2-3.
Paul Edelman and Tracy George, writing for Green Bag and George Mason University School of Law, have found that the total number of actors and actresses that can be linked to Mr. Bacon is nearly 900,000. Of those 900,000, the average number of steps to reach Mr. Bacon is three.
Mr. Bacon is connected to people in his industry. Many actors and actresses have low Bacon Numbers because Mr. Bacon has multiple ties to people in Hollywood.
A person’s ties to others is a person’s paths of influence and access. Identifying people with multiple paths of influence and access is integral to developing an effective word-of-mouth campaign. Don’t think of your social circle as a circle. It’s a pyramid. Some people, like Mr. Bacon, are better connected to their industry than others. Spreading your message through those people can radically expand your network’s message-carrying capacity.
So, if you’re trying to build an effective word-of-mouth campaign across the real estate industry, look for those that are connected to the real estate industry like Kevin Bacon is connected to Hollywood. Play the real estate version of the Kevin Bacon parlor game. See who in the real estate industry can be connected to the most people in the fewest steps, and make sure your network includes those people.
But what about cross-industry connections? What about a REALTOR®, for instance, who wants to reach across the real estate industry to spread their message and connect with a potential client? How do they connect with a potential client by a word-of-mouth campaign.
A study by the psychologist Stanley Milgram suggests an answer.
Cross-Industry Connections
Stanley Milgram wanted to understand how connected we are to each other. To answer this puzzle, Milgram studied how many steps a personal letter would take to travel from a random person in Omaha, Nebraska to a specific stockbroker in Boston. He asked many people from widely varying backgrounds to give his letter to a connection. That connection would then give the letter to one of their connections. And so on and so on until the letter was eventually hand-delivered from one remote acquaintance, however many times removed from the original sender, to the stockbroker. Milgram found that most letters made it to the stockbroker in six steps.
The six degrees of separation in Milgram’s study is probably where we got the idea that Kevin Bacon is separated from everyone in Hollywood by six degrees of separation. But remember. Paul Edelman and Tracy George found that most actors and actresses in Hollywood have a Bacon number of three or less. Why the variance?
The answer is a concept called “homophily.” In forming acquaintances, we zero in on people who are similar to ourselves. Homophily means that we restrict our networks to those who are similar to ourselves.
Imagine yourself at a conference that’s attended by people you don’t know. When you approach someone, your natural tendency is to probe them for similarities—did they attend the same school as you, grow up in the same hometown, root for the same football team, or watch the same Housewives franchise? We probe because we are seeking similarity.
How many married couples do you know who share largely the same political opinions or world outlook? How many come from the same social class, have similar family upbringings, or share meaningful cultural similarities?
Couples who don’t fit the mold of likes attracting likes are the subjects of epic tales. Cinderella, a destitute house maid, unites with her prince, but only through magic—literal magic. Romeo and Juliet tragically fail to overcome the divide between their families. Both stories captivates us because they exhibit the rare phenomenon of dissimilar people crossing group divides.
If Kevin Bacon, George Clooney, and I were at a party, I would be the odd man out. Messrs. Bacon and Clooney would spend the entire party regaling their diamond Hollywood lives while I sat in the corner. Bacon and Clooney would probably enjoy themselves, and I would suffer a crushing lost opportunity to gain either Mr. Bacon or Mr. Clooney as a future real estate client—now that’s not exactly a Romeo-and-Juliet tragedy, but it manifests the same concept: the difficulty of uniting with people over group divides.
So, how to counteract this tendency of likes attracting likes? Indeed, there are mechanisms in our nature that can counteract the default tendency of likes attracting likes. There are ways to spread your message across group divides. Let me tell you about them.
Solutions to Homophily
We’ve identified two methods for getting your message across group divides: (1) become your own Kevin Bacon or (2) find your own Kevin Bacon. Separately or together, these two methods can propel your message across segregated groups so that your message may be heard by the full population of potential clients.
First, let’s start talking about becoming your own Kevin Bacon.
Becoming Kevin Bacon
You can bridge the divide between groups and get your message heard across the population. You, yourself can develop connections to disparate groups. True, homophily drives us to seek out people who members of our own group, but more important than similarity is physical proximity.
A group of psychologists in a well-known study found that people living in a densely populated urban high rise were in fact drawn to form acquaintances with people who were similar to themselves, but the pull of someone who was physically closer was stronger. Proximity trumped similarity.
So, although Kevin Bacon and I don’t seem to have nearly as much in common as Bacon has in common with George Clooney, if Bacon and I lived in adjacent apartments, he and I would be more likely than he and Clooney to strike up an acquaintanceship—similarity is trumped by proximity.
Another popularly known study found that, although we say we associate with those with similar views, we are more likely to associate with people who engage in similar activities. Take the high-rise example from before and change the facts just a little bit. Imagine Clooney, Bacon, and I living on the same floor. Clooney and Bacon, both Hollywood A-listers, share largely similar views, but Clooney starts each day by drinking Nespresso and gazing deeply into a romantic rising sun, while Bacon starts his day on dawn patrol with his Pyzel surfboard looking for the gnarliest waves to just rip. Although Bacon is more similar to Hollywood Clooney, I am more likely to strike up an acquaintanceship with Bacon because he and I both like our morning shred sessions—similar views are trumped by similar activities.
So you can overcome the innate homophily problem and spread your message across widely divergent groups by identifying people who largely dissimilar to you and then either: (a) find where they are and intentionally placing yourself in repeated physical proximity with them or (b) find what they do and engage in similar activities.
Because everyone is connected to you, you become your own Kevin Bacon. The multivarious connections you develop will allow your word-of-mouth campaigns to travel far and wide.
But there is a second method to bridge the divide between groups and have your message heard by a full audience of potential clients. We’ve just described the first method, becoming your own Kevin Bacon. Now it’s time to describe the second, finding your own Kevin Bacon.
Finding Your Own Kevin Bacon
The second strategy for overcoming homophily and bridging the divide between disparate groups is to find your Kevin Bacon to the world. Find someone who can serve as your bridge and carry your message across the divide.
There are people out there who are simply more connected than most. Trust me, their described and the literature, and I’ve met many of them.
Sometimes people are more connected than others because their profession demands it. A lawyer, for instance, is more likely to have cross-group connections than a novelist. Both the lawyer and novelist basically write for a living, but the lawyer has to leave his keyboard and personally interact with non-lawyers to counsel and represent clients. With each new client, the lawyer’s network of acquaintances grows, all the while the novelist stays home alone. So, if you are looking to build your network, try to form acquaintances with people who, by nature of their profession, are likely to stretch their daily experiences across diverse and often divergent groups.
There are other principles of anti-homophily, other principles that run against the ingrain desire that people have to connect with those that are similar to them. The young, for instance, are usually more open to diverse experiences than the old. And the wealthy more likely to be connected than the less fortunate.
There will be standouts, however, in each group. A lawyer is more likely to be connected than a novelist, sure, but there are some lawyers that are more connected than others. So focus on the groups of people that more likely to have cross-group connections and then identify the people within each of those groups who, by nature of their personality, are even more likely to have cross group connections—those are the people you want to connect with and spread your word-of-mouth campaign through.
Some of this may be counter intuitive. Wouldn’t it be best, you might ask, to spread your message through your friends, family, and close contacts, rather than loosely connected, borderline strangers?
Two responses to that.
First, there are only so many strong ties that a person can have. It’s actually been studied. Turns out, the amount of meaningful social connections we can have is primal. It goes back to the hunter gather days. Our brains are actually limited by what British anthropologist Robin Dunbar doved our "the neocortex ratio"—that is to say, the maxim capacity our brains have to form genuine social relationships, i.e. understand who someone is and how they relate to us.
To understand the concept of “genuine social relationship” better, imagine yourself in a bar. Someone you know walks in, and you feel comfortable inviting them over to share a drink. How many people do you know like that?
That’s type of person Dunbar has in mind when he says, “genuine social relationship.” And the maximum number of genuine social relationships a human being can have, says Dunbar, is about 200.
You ever wonder why most people start their Instagram or Facebook accounts with about 200 friends, or why most military fighting units across the world are largely limited to 200 people? It’s because our brains struggle to grant us the capacity to understand the relationships between people in large groups, groups larger than 200.
If we had to transmit our word-of-mouth campaign through our close contacts, Robin Dunbar’s principle would pose a serious problem. We wouldn’t be able to reach past our 200 close contacts, and many messages would fail to reach the outside world.
Fortunately, our messages need not pass through those with whom we have a genuine social relationship. Actually, people with whom you share only a weak tie are likely to share your message better. The people with whom you share a genuine social relationship are likely to share your message to people in your own group, people that you would likely give the message to, anyway. Your weak contacts, by contrast, occupy different worlds and, thus, are more likely to spread your message far and wide—weak contacts are better than strong conatcts at spreading your message.
So you want to spread your message through your weak contacts and, in turn, you want those weak contacts to spread your message to their weak contacts. But how do you find people with multiple weak contacts?
Look for people who make an acquaintance as an end to itself. They need not be overly gregarious, but they must be fascinated by the relationships between people—not the people themselves, the relationships between the people.
Most of us make an acquaintance as part of a kind of proving ground or verting exercise. We want to know if they will make a good friend—do they have enough in common with us that they will understand us, that we will understand them, and that we will enjoy each other’s company?
A person focused on connections, by contrast, is less concerned with the person themselves than with the connections between the people. As you might imagine, many politicians have this quality. They may like the people that they form a relationship with, but ultimately they are fascinated by the relationships, not the people.
So look for the person with 1,000 weak acquaintances, not 200 close friends. That’s your Kevin Bacon. That’s the person who will help you rise above Instagram, Facebook, and Google and spread your message via a word-of-mouth campaign.
If you can’t find your Kevin Bacon, become your own Kevin Bacon. Put yourself in repeated close proximity with people who are unlike yourself or engage in activities with people who are unlike yourself. In short order, you will become your own Kevin Bacon—and your message will spread powerfully and wide.
Conclusion
And that’s our episode. Remember: we release new episodes the first Wednesday of each month. If you like our podcast, please remember to like and subscribe. A hui hou!
