The North American residential real estate market is red hot. The past year has seen record-low inventory and surging demand, which has continued through the first half of 2021. In nearly every market situation, there are homeowners willing to sell. The key lies in having the ability to identify which segments of consumers fall within this group. In a new consumer trend report, The Next Luxury Home Seller, Engel & Völkers taps into EVI, our proprietary data center, to identify the trends, demographics, and mindsets of North American luxury homeowners who plan to sell in the next year.
EVI has identified four distinct segments of Millennial and Gen X luxury home sellers that will drive luxury real estate sales throughout 2021 and 2022: the Wealthiest Millenials, Millennial Entrepreneurs, Covid HENRYs, and Early Retired Gen Xers.
The Wealthiest Millennials
More than 65 percent of Millennials with household incomes above $250,000 USD plan to sell a home in 2021 or 2022, accounting for more than half of all home sellers within this wealth demographic. However, the Wealthiest Millennials are not fleeing the cities. The reality is quite the opposite—60 percent reported the desire to purchase in cities. Instead of relocating from suburban or rural environments, this sentiment actually represents a shift of priorities among the Wealthiest Millennials. Eighty-three percent already own properties in urban cities, and an overwhelming 96 percent said that their parents currently live with them or that they believe their parents will move in with them in the future. This suggests that the Wealthiest Millennials are staying in urban environments and looking for spaces that can better accommodate current or future multigenerational living.
Millennials account for two-thirds of luxury home sellers who are also in the process of starting a business. No longer constrained by the limits of a physical office, remote work has given Millennial Entrepreneurs the flexibility to lead their companies from anywhere in the world. As a result, 29 percent of Millennial Entrepreneurs are relocating to new areas. While most of this cohort prefers living in an urban city, a significant 28 percent want to move to rural areas, reflecting Millennial Entrepreneurs’ family-oriented mindsets. Individuals within this segment are more likely than their peers to be married, living with a partner or young children, or responsible for the care of at least one parent. Perhaps it is not surprising, then, that 83 percent of Millennial Entrepreneur home sellers are committed to changing their lifestyle because of the pandemic to ensure they are never separated from their families again.
HENRY is an acronym for “High Earners, Not Rich Yet” and refers to young professionals who have an annual household income between $100,000-$250,000 USD. Covid HENRYs consist of the members of the Millennial and Gen Z generations who emerged from the pandemic within this salary range yet haven’t amassed the same amount of wealth as older generations who have been in the workforce longer. More than half of all luxury home sellers in 2021 and 2022 will be Covid HENRYs. A third of Covid HENRYs work remotely, and nearly half want to travel globally and have more unique experiences. Forty-one percent of Covid HENRY luxury home sellers also own a second home, indicating a desire to sell and actively pursue travel and experiences. As a whole, Covid HENRYs are divided more evenly in their desire to live in cities (49 percent) or suburbs (43 percent).
Early-retired Gen Xers
More than one in five of all Early-retired Gen Xers plan to sell a home in 2021 or 2022, accounting for 27 percent of all luxury home sellers. Historically, retirees plan to downsize their homes. However, today’s Early-retired Gen Xers are facing atypical situations. Thirty-nine percent have adult children, parents, or other extended family living with them in their homes. In fact, 58 percent of Early-retired Gen X luxury home sellers have had family move in since the pandemic, driving them to list their current homes in favor of larger ones with more bedrooms. More than half of Early-retired Gen X luxury home sellers are looking for their next home in rural areas.
Across the board, luxury home sellers in 2021 and 2022 are focused primarily on family and space. They are making housing decisions based on proximity to family members and ensuring that they have enough space to live comfortably. Sixty-seven percent of luxury home sellers who currently live in an urban market would like to remain in a city, indicating that urbanites are not fleeing their cities as has been otherwise reported. Instead, the pandemic has shifted luxury home sellers’ priorities to homes that allow them to live where, and with whom, they want.
To access the full report, click here.