Luxury homesellers are reentering the market, but those who will be driving the market through the end of 2021 and into 2022 look a bit different than they have in previous years, according to Engel & Völkers’ “The Next Luxury Home Seller” report released on Thursday.
Inventory is gradually making gains across North America, the global luxury brokerage noted, and nearly 10 percent of luxury homeowners throughout the continent plan to sell by 2022. In 2020, nearly half of homesellers were classified as baby boomers or the silent generation, but through the next year, a whopping 80 percent of luxury sellers will be millennials and Gen Xers. And nearly one-third of those sellers will be selling a home for the first time.
For this report, Engel & Völkers defined luxury sellers as homeowners planning to sell a house for more than $1 million in 2021 or 2022. The brokerage surveyed 1,700 respondents across North America in partnership with market research consultancy Researchscape from June 22 to June 23, 2021.
“The past year has seen a significant surge in housing demand, resulting in record-low inventory levels with rising prices to match and a red hot market across North American real estate,” Anthony Hitt, president and CEO of Engel & Völkers Americas, said in statement.
Anthony Hitt | Credit: Engel & Völkers
“However, in every market situation there are homeowners willing to sell. The key is to identify which consumer segments fall within this group, and that is what we have done in this new trend report. At a time when the market is moving very quickly, we’ve gathered the intelligence that will allow real estate professionals to stay ahead of consumer trends and provide their own clients with an edge when buying or selling a home right now.”
Up-and-coming luxury homesellers have largely been motivated by circumstances resulting from the pandemic —58 percent were not planning to sell prior to the pandemic, but have now changed those plans.
Many are also driven by a desire for exploration and new experiences, with 81 percent of luxury sellers stating they’re driven by a desire to travel and see other countries, 77 percent reporting they want to be more active and experience new things and 65 percent saying they’re looking for “more unique life experiences.”
The overwhelming majority of luxury homesellers are seeking out a larger home with their next move, with 73 percent stating they want more bedrooms. Luxury homesellers have also largely remained in urban areas, despite overall migration patterns away from urban centers during the pandemic, with 81 percent currently residing in an urban market, and 67 percent of those homeowners planning a move to another urban area.
These are the major groups of luxury homesellers that will emerge in the next year, according to Engel & Völkers:
The wealthiest millennials
Wealthy millennials (those with an annual household income of more than $100,000) will make up 54 percent of all sellers within this generation through 2022, according to Engel & Völkers. More than 65 percent of millennials with annual household incomes of $250,000 or more plan to sell a home through 2022.
Sellers within this group are very much urban-focused, with 83 percent already living in an urban city, and 60 percent intending to buy their next home in an urban area. More than half of them will be first-time homesellers when they list their home.
They also have their sights set on future homes that accommodate multigenerational living. Ninety-six percent of the wealthiest millennials reported that their parents either currently live with them or that they will move in with them in the future.
Millennial entrepreneurs
Nearly one-third of millennials planning to sell their home by 2022 are either in the process of launching a business or have recently done so. On the luxury side, 29 percent of all luxury homeowners planning to sell within the next year are in the process of starting a business, and millennials made up two-thirds of this group.
Many millennial entrepreneurs have taken advantage of remote work, with 29 percent relocating to a new area. Most expressed a desire to move to urban areas (44 percent), but a substantial 28 percent also expressed a desire to move to rural areas.
Engel & Völkers noted that this demographic is more likely than other millennials to be married or have children, and 20 percent are responsible for caring for one or more parents. “Millennial Entrepreneurs said they are committed to making lifestyle investments that ensure they will never be separated from the families again,” the report states.
COVID HENRYs
COVID HENRYs are millennials and Gen Zers who have emerged from the pandemic with salaries in the $100,000 to $250,000 range. (HENRY stands for “high earners, not rich yet.”) More than half of all luxury sellers through 2022 will be part of this demographic.
COVID HENRYs appreciate flexibility in their living, with one-third of them working remotely and almost half of them expressing a desire to travel the world and have unique experiences. About 40 percent of these sellers own a second home, suggesting they may be selling now in order to act on travel desires.
Sellers in this group are currently split between living in urban and suburban areas, and largely hope to stay in those areas in the future. However, after they sell their home, about one-quarter plan to relocate to a rural area.
Early retired Gen Xers
More than one in five of all retired Gen Xers plan to sell a home through 2022, and will make up about 12 percent of all homesellers. More than one-quarter of luxury homesellers in the next year will be early retired Gen Xers, and over 70 percent of them previously sold a home for more than $1 million.
Unlike previous generations of retirees, many early retired Gen Xers are looking for a larger home after they sell — 39 percent reported they wanted more bedrooms in their next home, which stands to reason since 58 percent of sellers in this group had family move in with them since the pandemic.
Nearly one-third of this cohort plan to move to a different city, but this group of sellers is pretty equally split between urban, suburban and rural areas, as far as where they currently live — 36 percent are in cities, 32 percent in suburbs and 32 percent in rural areas. However, out of those early retired Gen Xers who plan to sell a luxury property within the next year, 57 percent plan to move to a rural area.