We already know the luxury market has softened in some areas of the country and at some price points BUT the luxury market is still here. The sale of $10M homes is still strong, fewer sales that take longer to close perhaps but still strong.
Coldwell Banker and WealthEngine recently teamed up to research the latest characteristics, preferences and trends among the millionaire (defined as net worth of $1M or greater) and demi-billionaire (defined as net worth of $500M or greater) demographics. Here are some of the findings:
Characteristics – Combining the two demographics, 56% live in urban settings, 44% live in rural settings and 73% have children. Nearly all of them, 99% own houses; in fact, on average, these combined two demographics own 2.7 houses. Most in this combined demographic group drive BMWs, Honda Accords and Toyota Prius’s. Some drivers within these two demographics own three or more autos. Ten percent of this group own airplanes.
Know that 10% of the demi-billionaires are between the ages of 40 – 50 years old while 7% of the millionaires are within this same age category. Older generations may have access to more current wealth but demi-billionaires and millionaires have enormous spending potential that is growing.
Preferences – This clientele has increased mobility…they can live and work remotely from anywhere. Millionaires are tending to invest in homes across New Jersey, Massachusetts, Virginia, Washington, Illinois and Maryland. Demi-billionaires are tending to purchase homes in Colorado, Illinois and Pennsylvania. Many within this combined niche demographic are tending to invest in full-season vacation homes.
Lifestyle Trends – Despite millionaires and demi-billionaires being tiny niches within the much larger consumer market, these luxury homebuyers have tremendous influence in how homes are built and how homes are renovated and decorated. In-home private gyms or flexible workout spaces, wine cellars large and small, eco-friendly materials and appliances and smart home automation are becoming almost generic in new construction and/or renovations thanks to these two tiny niches.
Most importantly for real estate agents, millionaires and demi-billionaires are extremely loyal. While that loyalty is obvious in collection toys such as the Mercedes-Benz S class, these luxury clients seek meaningful connections with professionals who customize their experiences. Each luxury client is different with her/his own interests, preferences, needs and motivations. Treat each luxury client as a one-of-a-kind client and you will have that client’s loyalty, multiple home purchases and sales and their referrals to you for the housing needs/wants of their family, friends and colleagues.
Know that the power of personalization is also required in your marketing efforts. Just like every other industry consumer, millionaires and demi-billionaires have already done the research. They want you as “their” real estate agent to be a trusted advisor that gives them concierge-level, precisely specific, sophisticated marketing experiences that connects with their uniqueness.
Just as “…the luxury real estate market led the general housing market out of the global recession…” according to Diane Hartley, general manager for the Institute for Luxury Home Marketing, your developing luxury clientele may help grow your business during this return to a more typical pricing and sales paradigm.