Which markets are having the biggest influence in the luxury space? A new report from Coldwell Banker Real Estate LLC, “Real Estate’s New Power Players“—part of the brand’s annual “A Look at Wealth” series—highlights luxury real estate’s “movers and shakers” that have had the most significant impacts on this segment of the industry over the last 18 months.
According to the report, a new set of “Power Players” has emerged as wealth growth driven by rebounding stock markets, the rising popularity of cryptocurrency and higher 401(k)s—combined with skyrocketing home prices and low interest rates—has led to increased savings and buyers looking to reinvest their cash.
“Our local luxury experts have once again identified the latest trends in luxury real estate,” said Michael Altneu, vice president of luxury for Coldwell Banker Real Estate LLC, in the report. “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.”
Today’s “Power Players” increasingly own real estate in the $1 million to $5 million range—an 180% increase of luxury property ownership in a three-year period.
An estimated 71% of individuals with a net worth over $5 million now own properties in the $1 million to $5 million range. Luxury homes purchased between January and August 2021 in this range increased 142% for single-family homes and 129% for attached properties compared to the same period in 2019.
Real estate wealth in this segment has exploded, with the volume now greater than both 2019 and 2020.
“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,” said Judy Zeder, co-founder and broker-associate of The Jills Zeder Group, Coldwell Banker Realty, in the report.
Those having the most impact can be broken down into four core groups:
Baby Boomers: Representing 51% of the “Power Players,” many baby boomers are speeding up retirement plans and purchasing in more remote locations like rural countrysides or resort towns after leveraging the equity in their homes. There are 2,020,854 baby boomers who own more than three properties—the most out of any age group. Baby boomers are largely moving to Scottsdale, Arizona; Sarasota, Florida; and Lowcountry, South Carolina (including Hilton Head, Bluffton and Beaufort).
Golden Millennials: Golden millennials are aged 35-40 and represent 60% of all millennial-owned luxury properties today. They focus on values surrounding sustainability and authentic living, preferring secondary cities and suburban locations that provide them with enough space for work and school and access to amenities. Golden millennials are largely moving to Atlanta, Georgia; Chicagoland, Illinois; and Seattle, Washington.
Second Homeowners: Mainly due to the pandemic, many consumers desired a “get-away” residence, resulting in a rise in second-home purchases. Nearly 70% of those with a net worth of $5 million and up own two or more properties. Second homeowners are largely moving to Monterey, California; Coeur d’Alene, Idaho; and Park City, Utah.
Urban Repatriates: There’s a resurgence of interest in large metro areas as COVID restrictions lift. Luxury attached property values in 2021 increased an average of 14% 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. Urban repatriates are largely moving to San Francisco, California; Boston, Massachusetts; and Brooklyn, New York.
The pandemic shifted the priorities of all generations, forming new hotspots in the luxury real estate market. Changing definitions of luxury will continue to emerge as
“Power Players” decide how to spend their wealth.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to lizd@rismedia.com.
