Engel & Völkers released today an original trend report based on exclusive market research of likely homebuyers across North America conducted to understand the current attitude, mindset, and intentions of luxury consumers who plan to buy a home in the next few years. Findings indicate that the luxury homebuying market is being driven by millennials, representing a significant shift and transfer of wealth and property from baby boomers. Furthermore, with multiple trends influencing the mindsets and attitudes of specific segments within these consumers, Engel & Völkers has identified five trends that will drive each group of North American luxury homebuyers in the next year.
Peak luxury buyers
Representing consumers looking to purchase a home above the $3 million price point, 59% of peak luxury buyers are millennials. Two-thirds of these buyers report that their jobs allow them to work from anywhere so it is not surprising that nearly all of them either currently own or are planning to purchase a second home in the near future. For real estate professionals hoping to reach peak luxury buyers, it is most important to stay active on social media, as this group of homebuyers rely heavily on Instagram and Facebook to learn about real estate professionals in their desired market.
The next generation luxury influencer
Influencer culture has given rise to a distinct subset of buyers who are curating their own personal brand of luxury and showcasing it online with a reach and scale that previously didn’t exist for the individual consumer. More than half are millennials who tend to invest in experiences and other external markers of wealth and status, and subsequently, share this lifestyle with their followers. When it comes to working with real estate professionals, these consumers value local market and luxury expertise. They are planning to spend over $1 million on their next home and are likely also influential in their offline communities, which can lead to word-of-mouth exposure for real estate professionals who provide a personalized, high-touch experience when working with these buyers.
Sixty-two percent of luxury buyers in North America looking to purchase outside of the continent are millennials or Gen Z, and they are real estate savvy. Forty-one percent already own more than one home, and 23% own three or more homes. They are looking to work with real estate professionals who have the resources and knowledge of both local and international markets and can be flexible to their schedules. International buyers also value industry experts with experience dealing in luxury properties, so real estate professionals should be sure to promote their luxury knowledge.
Second home seekers
Luxury buyers on the market for a second home are most likely to be married millennials or Gen X with children living in the household. One-third will be looking to purchase in a region of the country different from where they currently live and nearly all want this residence to be convenient for recreational activities and home amenities, including pools, gyms, and spas. Real estate professionals should note that nearly half of these buyers report that interest rates are influencing them to move up their timeline for buying a second home and that they most value an agent who can help them evaluate the pros and cons of different properties.
Emerging affluence refers to first-time homebuyers, overwhelmingly made up of millennials and Gen Z, who are making over $100,000 in yearly household income. They are more likely to have moved to a new city and started a new job within the past year. The most important factors in deciding where to purchase their first home are neighborhood vibe, walkability, and proximity to both restaurants and work. These buyers most value local expertise when working with real estate professionals and nearly half will reach out to a real estate professional for help before identifying homes they’re interested in online.
“Baby boomers will continue to have a lasting effect on our economy, empowering millennials with financial means to largely drive the buy side of the real estate market in the years to come,” said Anthony Hitt, president and CEO, Engel & Völkers Americas. “For real estate professionals serving the luxury segment, it’s important to understand and adapt to the evolving preferences of new generations who are taking up more space in the market. Continuing to serve as market experts and trusted sources of information will be vital to providing the personalized service and expertise that today’s consumers expect.”
To download the full report, click here.
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