Engel & Völkers conducted exclusive market research, revealing the trends that will influence luxury homebuyers in the coming years. Research showed that millennials will drive the luxury home market—representing a significant shift as baby boomers have long driven both the buying and selling sides of the luxury real estate market.
As many North Americans feel the effects of an economic downturn, the housing market has begun to revert back to normalized conditions and, in some cases, is cooling down after more than two years of unprecedented highs. While real estate professionals continue to navigate through the balance of price changes, interest rates, and the continuous need for individuals to buy and sell, the luxury market is taking on new life.
While there are many similarities across all luxury homebuyers, there are multiple trends influencing the mindsets and attitudes of specific segments within these consumers. In this blog, we identify five trends that will motivate North American luxury homebuyers in the next year.
Peak Luxury Buyers
For buyers looking to purchase homes priced above $3 million, compromise is not an option. These most affluent buyers want homes conveniently located at the center of all aspects of their lives—close to nightlife, restaurants, work, good schools, friends, family, and recreation. It’s not a question of “either/or” when it comes to luxury amenities, but rather a desire for “all the above.”
More than two-thirds of peak luxury buyers report that their jobs permit them to work from anywhere and if they don’t already own multiple homes, are planning to purchase a second home in the near future. However, it’s likely that they will maintain a primary residence, as a majority have children in the household.
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 relies heavily on Instagram and Facebook to learn about real estate professionals in their desired market.
The Next Generation Luxury Influencer
The rise of the digital influencer has seen the simultaneous emergence of a distinct subset of real estate buyers, the Next Generation Luxury Influencers. These buyers 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.
The Next Gen Luxury Influencers are investing in experiences and other external markers of wealth and status and subsequently sharing this lifestyle with followers on social media. They are likely also influential in their offline communities and considered worldly trendsetters. This segment of experienced homebuyers has said that real estate
professionals with superior local market expertise provide the greatest value, especially if they offer personalized, luxury services.
North American buyers looking to purchase internationally outside of the continent are real estate savvy; 41% already own multiple homes, and 23% own three or more homes. They are also no strangers to luxury, as nearly one-third own a boat, and one-fifth have access to a private plane. For a third of these buyers, the move to a different part of the globe will be permanent, as they’re not likely to keep their current North American residences. With two-thirds of this group comprised of millennials or Gen Z, they are also largely untethered, with the flexibility to work from anywhere in the world and no spouse or children likely to be living in the household.
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 with 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
Second home seekers are most likely millennials or Gen X, married, and currently have children living in the household. When scouting for a second home, 94% are looking to purchase domestically, with 30% looking in a region of the country different from where they currently live. Perhaps unsurprisingly, nearly all of these buyers want their second home to be convenient for recreational activities, 44% want a pool, and 33% would like a gym and spa.
Of note, they are looking to purchase sooner rather than later as nearly half report that rising interest rates are influencing them to accelerate their timeline for buying a second home. 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.
Overwhelmingly made up of millennials and Gen Z, these first-time homebuyers are making over $100,000 in household income and are the most likely segment to have moved to a new city and started a new job in the past year—however, they are often split between the desire to put down roots and buy a home in their current location and the desire to relocate to a new metro area within their same state or province, likely to be closer to family or in search of a lower cost of living outside larger cities.
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.
To read more about these trends, read the full report here.