Today, nearly three times as many individuals with a $5 million+ net worth own $1–$5 million in real estate, compared to the numbers in 2019 — that’s a 180{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} increase in luxury property ownership.
How did we reach such unprecedented growth in a three-year period? What power groups drive this demand, how do they redefine luxury and what should luxury real estate professionals know as they seek to serve clients in this new buying climate?
Our team at Coldwell Banker Global Luxury® once again looked to WealthEngine, Wealth-X, and The Institute for Luxury Home Marketing to compile the data for “A Look at Wealth 2021: Real Estate’s New Power Players.” What we found was staggering.
Behind the luxury housing boom
Two main factors drive the luxury real estate market today. Cryptocurrency gains, rising stock markets, and 401(k)s have combined with soaring home prices and low-interest rates, allowing consumers to borrow and save more while reinvesting cash. This new wealth allowed affluent individuals to buy more expensive homes — and more of them. People also continue to make life-changing moves, choosing to live out their values or embrace a FOMO-meets-YOLO mindset following the pandemic.
This has put the 2021 luxury real estate market on course to surpass 2020, which was already considered a record year. The volume of wealth spent on luxury real estate rose by over 21{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} between 2019 and 2020 — but when you compare January to August 2021 to the same eight months in 2019, it jumped by 79{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. Stats on August 31, 2021, already show real estate wealth in the luxury property market is now greater than 2019 and 2020 combined, with four months left to go.
Additionally, the number of properties purchased January-August 2021 in the $1–$5 million range jumped an incredible 142{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} for luxury single-family homes and 129{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} for luxury attached properties, compared to the same period in 2019. About 71{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of luxury properties owned by those with a net worth over $5 million are now valued in the $1–$5 million range. We dubbed these folks the new “power players” because of their outsized influence on the luxury real estate market over the last 18 months.
The New Power Players
Suburban settings, resort markets, and secondary cities are still booming, while major metropolises are surging back, according to 2021 data to date. Four core groups are driving demand in these places: Baby Boomers, Golden Millennials, Second Homeowners and Urban Repatriates.
1. Baby Boomers represent 51{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of power players. Speeding up retirement plans, they’re buying dream homes in places like Park City, Utah, where they can build family compounds near outdoor recreation, or Sarasota, Florida, where there’s sunny weather and a friendly tax environment. Boomers show greater affinity for second-home ownership, as well; there are 2,020,854 Boomers owning more than three properties, the most out of any age group.
2. Golden Millennials own 60{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of millennial-owned properties priced $1–$5 million. Golden Millennials have reached the life stage (35–40) where they are getting married and having children. This, combined with shifting psychologies during the pandemic and inability to travel, pushed them toward suburban locations, like the Greater Chicagoland area, and hot secondary cities like Atlanta, where they can get more house for their money. The influence of Golden Millennials will be important to watch as their wealth and real estate portfolios grow.
3. Second Homeowners still drive the 2021 market. This power group gobbled up inventory and drove up prices in resort enclaves like Coeur D’Alene and Monterey. Their influence on the overall luxury property market is one to watch; nearly 70{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of those with a net worth of $5 million+ own two or more properties.
4. Urban Repatriates pump up cities again. Luxury attached property values in 2021 increased an average 14{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} compared to 2020 and 2019, and the number of sales in the first eight months has already increased by over 45{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} compared to the full year of sales in 2019 and 59{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} compared to 2020. Investors capitalizing on low-interest rates and higher inventory in cities like San Francisco and New York are behind the uptick, as are newcomers flocking to the city and former residents who fled in 2020 and are now on the hunt for more square footage and outdoor space.
As these New Power Players continue to make moves in the high-end housing landscape, we will see new definitions of luxury emerge as they refine how and where their wealth is spent. Luxury professionals who want to stay on top of their rising influence and upward pressure on demand and prices are encouraged to read the complete ALAW report on the Coldwell Banker Global Luxury blog.
Michael Altneu is the vice president of luxury for Coldwell Banker Global Luxury.
The 2021 “A Look at Wealth” report profiles four Power Player demographics who are reshaping the wealth groups, marking shifts in home buying and lifestyle trends
MADISON, N.J., Oct. 25, 2021 /PRNewswire/ — Today, Coldwell Banker Real Estate LLC, a Realogy (NYSE: RLGY) brand, and the Coldwell Banker Global Luxury® program released the “Real Estate’s New Power Players” report, part of the annual “A Look at Wealth” series. The luxury real estate market is seeing yet another dynamic year. Staggering wealth growth – driven by rebounding stock markets, cryptocurrency gains and higher 401(k)s – combined with soaring home prices and low interest rates meant buyers borrowed and saved more while reinvesting cash, leading to the emergence of a new set of Power Players redefining the meaning of luxury.
(PRNewsfoto/Coldwell Banker Global Luxury)
The report reflects that luxury real estate’s latest movers and shakers have had tremendous influence on the market over the last 18 months. Nearly three times as many individuals with a net worth of $5 million and up own real estate in the $1 million to $5 million range compared to numbers in 2019, an 180{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} increase of luxury property ownership in a three-year period.
About 71{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of those with a net worth over $5 million now own properties in the $1 million to $5 million range. In fact, luxury homes purchased from January through August 2021 in the $1 million to $5 million range jumped 142{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} for single-family homes and 129{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} for attached properties compared to the same period in 2019.
The growth in the volume of wealth has also been extraordinary; between 2019 and 2020, it rose by over 21{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, and escalated to 79{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} when compared to January through August 2021 during the same eight months of 2019. Data from the end of August 2021 already shows that the volume of real estate wealth in the luxury property market is greater than both the full years of 2019 and 2020.
Coldwell Banker Real Estate gathered the latest wealth research and data generated by WealthEngine, Wealth-X, and other third-party sources and combined it with anecdotal evidence from Coldwell Banker Global Luxury® Property Specialists in the field to identify luxury’s affluent Power Players dominating the shifting wealth archetypes in the current market. The four core groups identified are having a major impact on the luxury real estate landscape in 2021:
Baby Boomers: Representing 51{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the Power Players, Baby Boomers, those aged between 57-75, are speeding up their retirement plans and moving into the home of their dreams. Many Boomers have leveraged the equity of their primary residences and sought out dream homes in more remote locales, like the rural countryside or resort towns. There are 2,020,854 Boomers who own more than three properties — the most out of any age group.
Golden Millennials: Golden Millennials, those aged 35-40, represent 60{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of all millennial-owned luxury properties today. Holding more focus on values and the desire for sustainability and authentic living, this age group has shown a greater propensity for secondary cities and suburban locations that can offer them enough space for work, school and access to amenities. The influence of Golden Millennials will be important to watch as their wealth and real estate portfolios grow.
Second Homeowners: Largely attributed to the pandemic, many consumers desired a “get-away” residence, resulting in a rise in second-home purchases. Their influence on the overall luxury property market is one to watch; nearly 70{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of those with a net worth of $5 million and up own two or more properties.
Urban Repatriates: As COVID-19 restrictions ease, a resurgence of the nation’s cities is prevalent. Luxury attached property values in 2021 increased an average of 14{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} compared to 2020 and 2019. Of the 184 U.S. cities reviewed by Wealth-X, there are 1,647,110 properties owned by the affluent with a net worth of $5 million and up in downtown cores as of August 2021.
With suburban settings, resort markets and secondary cities still booming, and major metropolises surging back, Coldwell Banker Global Luxury® also identified the top markets where Power Players are moving:
Baby Boomers
Golden Millennials
Atlanta, Georgia
Chicagoland, Illinois
Seattle, Washington
Second Homeowners
Monterey, California
Coeur d’Alene, Idaho
Park City, Utah
Urban Repatriates
Shifting the priorities of all generations, the pandemic formed new hotspots in the luxury real estate market. As these Power Players continue to make moves in the high-end housing landscape, new definitions of luxury will emerge as they refine how and where their wealth is spent.
“Our local luxury experts have once again identified the latest trends in luxury real estate. In 2021, we’ve seen a continuation of trends we began to see in 2020, from renewed focus on family, health and wellness, to what we have seen this year with surging stock markets, soaring home prices and increased savings – all of these variables created a perfect equation for a profound shift in the volume of wealth. These factors propelled the market to new heights, altering the definition of luxury along the way.”
– Michael Altneu, vice president of luxury for Coldwell Banker Real Estate LLC
“In 2021, luxury real estate market growth has remained at unparalleled levels. The emergence of new Power Players flush with cash has been transformative in many markets around the country as affluent buyers flocked to sleepy rural towns, resort markets and the suburbs, and are now contributing to the resurgence of major cities. As interest rates remain low, paired with all-time high demand and the return of international buyers, the luxury market will continue to experience low inventory levels that we anticipate will have a lasting effect in the years to come.”
– Judy Zeder, co-founder and broker-associate of The Jills Zeder Group, Coldwell Banker Realty
“The ALAW data show what I have seen this year: the L.A. lifestyle will never grow old with buyers. Our beach cities, including Malibu, Newport Beach and Santa Barbara are popular for second homes. International buyers are also beginning to return to the L.A. market, because people feel safe investing their money in the U.S. With just a few months remaining in the year, sales in 2021 are already outpacing both 2019 and 2020. In particular, our $5 million and up market fared extremely well.”
– Jade Mills, president, Jade Mills Estates and International Ambassador of Coldwell Banker Global Luxury, Coldwell Banker Realty
About A Look at Wealth
A Look at Wealth is a collaboration between the Coldwell Banker Global Luxury® program and Wealth-X, WealthEngine and the Institute for Luxury Home Marketing. Released once a year, A Look at Wealth is a supplement to The Report, which combines industry research with anecdotal insights from local market experts affiliated with the Coldwell Banker® brand.
Methodology
The Coldwell Banker Global Luxury® program collaborated with WealthEngine, Wealth-X and the Institute for Luxury Home Marketing to provide insights into wealth creation, real estate and property investment, luxury spending preferences and new emerging trends regarding demographic and geographic changes.
To profile the affluent with a net worth of $5 million+ population and its combined wealth, this report leverages the unique and proprietary Wealth-X Database, the world’s most extensive curated research and intelligence on wealthy individuals.
Data was also collected from the WealthEngine platform, which is powered by more than 1,500 wealth and lifestyle attributes that support half a trillion data points, and uses proprietary learning science to create unique WealthEngine Profiles for more than 300 million people and 122 million households in the U.S. Information was gathered on individuals ages 18 and above, with a net worth (assets minus liabilities) of over $5 million as of August 31, 2021.
For more information on the methodology used in this survey, please refer to pages 56-57 of the report.
About Coldwell Banker Global Luxury®
The Coldwell Banker Global Luxury® program legacy traces its roots to 1933 and has been a world leader in luxury real estate since. Coldwell Banker Global Luxury Property Specialists are an exclusive group within the Coldwell Banker organization, making up under ten percent of independent sales associates affiliated with the brand worldwide. Coldwell Banker affiliated agents conducted 32,663 transactions of homes priced at $1 million or more in 2020. This equates to $168.4 million in luxury sales every day (+16.6{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} YOY) with an average sales price of $1.9 million in this category. Coldwell Banker, the Coldwell Banker logo Coldwell Banker Global Luxury and the Coldwell Banker Global Luxury logo are registered marks owned by Coldwell Banker Real Estate LLC. Each franchise is independently owned and operated.
About Realogy Holdings Corp.
Realogy (NYSE: RLGY) is moving the real estate industry to what’s next. As the leading and most integrated provider of U.S. residential real estate services encompassing franchise, brokerage, relocation, and title and settlement businesses as well as a mortgage joint venture, Realogy supported approximately 1.4 million home transactions in 2020. The company’s diverse brand portfolio includes some of the most recognized names in real estate: Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, Corcoran®, ERA®, and Sotheby’s International Realty®. Using innovative technology, data and marketing products, high-quality lead generation programs, and best-in-class learning and support services, Realogy fuels the productivity of its approximately 194,200 independent sales agents in the U.S. and more than 142,700 independent sales agents in 117 other countries and territories, helping them build stronger businesses and best serve today’s consumers. Recognized for ten consecutive years as one of the World’s Most Ethical Companies, Realogy has also been designated a Great Place to Work four years in a row and is one of LinkedIn’s 2021 Top Companies in the U.S.
Additionally, the number of properties purchased January-August 2021 in the $1–$5 million range jumped an incredible 142{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} for luxury single-family homes and 129{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} for luxury attached properties, compared to the same period in 2019. About 71{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of luxury properties owned by those with a net worth over $5 million are now valued in the $1–$5 million range. We dubbed these folks the new “power players” because of their outsized influence on the luxury real estate market over the last 18 months.
