All month long in July, we’ll survey the changing luxury real estate market, talk to top producers and offer advice on how to level up — all leading to the gathering of the year, Inman Luxury Connect, Aug. 2-3 at the Aria in Las Vegas. Make plans now to join us there.
Each year new categories of luxury homebuyers emerge from the ether ready to invest their hard-earned (or inherited) dollars and cents into real estate.
They come in all ages from all backgrounds with preferences for how they want to live. Global luxury brokerage Engel & Völkers has identified six categories of emerging luxury homebuyer groups in 2022, running the gamut from a group dubbed “Crypto Visionaries” to one called “The New American Rancher,” in its Luxury Homebuyer Report released on Friday.
Anthony Hitt | Engel & Völkers
“As the way consumers live and work continues to evolve, the definition of luxury becomes increasingly personal,” Engel & Völkers Americas CEO and president Anthony Hitt said in a statement.
The prevalence of remote work opportunities keeps impacting where luxury buyers choose to live and will do so for the foreseeable future, a press statement from Engel & Völkers noted. Remote job opportunities for positions that pay more than $100,000 increased from 4 percent to 9 percent by the end of 2020 and rose to 15 percent by the end of 2021. Furthermore, career experts anticipate that 25 percent of jobs paying more than $100,000 will be remote by 2023.
“People can customize their ideal lifestyles more so than ever before, and we see that reflected in today’s buyers,” Hitt said in the statement. “From the Homeward Bound Millennial to the Crypto Visionary to the Year-Round Vacationer, luxury buyers are in pursuit of specific lifestyles and need real estate professionals with the expertise to help them achieve those dreams. As a real estate professional, understanding your market and clientele has never been more important, nor has cultivating a distinct market specialization to best serve these burgeoning buyer segments.”
These are the six emerging luxury buyer groups that top-tier agents should become familiar with today.
The Homeward Bound Millennial
Millennials now make up 43 percent of all homebuyers, according to the National Association of Realtors (NAR), and as such, luxury agents would do well to pay attention to their homebuying preferences.
The group, which includes individuals aged 25 to 41, is leaving urban areas for the suburbs now that they have the opportunity to work remotely. Homeward Bound Millennials are prioritizing being close to family and friends, and homeownership allows them to spend more time with loved ones at home in the wake of the pandemic.
“Millennials challenged their reputation for avoiding homeownership and its respective responsibilities,” Engel & Völkers’ report states. “Higher salaries, the opportunity to increase personal wealth, and built-up savings (from spending time at home, inheritances, etc.) are pushing millennials to reconsider their decision to continue renting further, and the desire to start a family or keep up with friends is an attractive incentive to purchase a home.”
Millennials take to the internet for answers during their homebuying process, but they also want the help of a knowledgeable agent, Engel & Völkers found. A substantial 81 percent of younger millennials are first-time buyers and understand they need trusted advisors to help them with their home purchases, which is good news for agents.
Although they’re ready to move away from urban centers, Homeward Bound Millennials still want amenities like bars, restaurants and an art scene in their new neighborhoods. They also want their homes to have modern, eco-friendly features like solar panels or electric car chargers. Markets like Denver, Austin, Oklahoma City, Dallas, Charlotte and Miami are popular with this group.
The New American Rancher
The New American Rancher is between about 56 to 65 years old and has the most savings and buying power out of all the groups identified in Engel & Völkers’ report. They’re on the hunt for a one-of-a-kind western property “that represents a celebration of their successful career and hard work” and can also serve as an ancestral home for their family for generations to come.
Because individuals in this age group typically have fewer professional responsibilities, they have the flexibility to move to the Midwest or West where there’s plenty of space for family and friends and an ample supply of new properties being developed.
New American Ranchers want turnkey properties that seamlessly move from indoor to outdoor living with a lot of entertaining space. They see their investments as “bubble-proof” and will ensure their families’ stability for many years to come.
Baby boomers account for 44 percent of total real estate wealth in the U.S. today, according to the Federal Reserve, and don’t seem to be slowing down anytime soon. When they look for real estate agents, they’re seeking out experienced advisors with high-quality service and a work ethic like their own. They’re looking for properties within proximity of amenities, attractions and adequate health care facilities.
Popular markets for this group include Jackson Hole, Sun Valley, Bozeman and Aspen.
The Crypto Visionary
Being on the cutting edge of new technologies and processes is the Crypto Visionary’s priority, and as such, they’re building wealth within real estate and elsewhere by investing wisely in the newest thing.
Crypto Visionaries are typically between 29 and 35 years old and are drawn to new, innovative city construction — and likewise, may be interested in purchasing properties that have a good chance of setting new precedents and making headlines.
Since many Crypto Visionaries made it big when cryptocurrencies were at their height, many of these younger millennials are now interested in growing their investment portfolios through real estate. In the case of this demographic, that typically means skipping the traditional starter home and going for their dream home with every imaginable luxury.
Many Crypto Visionaries may likely want to leverage their cryptocurrencies in their real estate investments, whether through securing traditional loans and using their crypto assets as proof of wealth or by directly dealing in cryptocurrency. Therefore, agents who dabble with this group of buyers will need to be well-versed in how to deal in cryptocurrencies themselves.
With their attraction to cutting-edge design, Crypto Visionaries are likely to buy in markets like San Francisco, Vancouver, Toronto, New York and Miami.
The Eager International Buyer
International buyers were forced to pump the brakes when the pandemic hit due to international mandates and travel restrictions. Now that life in the U.S. is normalizing, international buyers are chomping at the bit to get back into the market.
Between April 2020 and March 2021, foreign buyer purchases in the U.S. were down 27 percent from the previous 12-month period, according to NAR data. However, by the end of 2021 and moving into 2022, international buyers made a comeback buying for residential purposes or as investments. In 2021, rentals and vacation homes made up 42 percent of international sales, showing Eager International Buyers’ preferences for these types of properties.
Most foreign buyers come from China, Canada, the United Kingdom, India and Mexico, and many have extensively researched different U.S. markets for their investment potential. Therefore, these eager buyers are looking for the top real estate professionals in their chosen markets to help them with all of the details that go into a foreign transaction. Personal contacts, former clients and referrals from former clients and business associates made up 65 percent of leads and referrals for real estate agents who worked with foreign buyers on residential transactions in 2021.
Traveling back and forth from their countries of residence may not always be feasible for Eager International Buyers, so they will likely rely on the detailed observations and opinions of their real estate advisors more so than other types of clients, even up to the point where they’ll be prepared to make an offer — sight-unseen — based on their agents’ recommendations.
Popular markets for Eager International Buyers in 2022 include Phoenix, Seattle, Boise, Bentonville, Atlanta, Austin and Dallas.
The Renaissance City Dweller
Renaissance City Dwellers are former city residents who fled to the suburbs or rural areas at the height of the pandemic and are ready to return to their city lives — often in the same neighborhood they were before — once again.
However, since costs in some major cities have now exceeded their pre-pandemic prices, Renaissance City Dwellers may experience a bit of sticker shock upon their return, Engel & Völkers noted.
On their list of requirements are access to the outdoors or private outdoor spaces, a roomy apartment or condo with a home office, an active nightlife scene, plenty of restaurants and different types of arts venues.
Their urgency to return to city life will typically spur the Renaissance City Dwellers to book short-term rentals or hotels during their property searches, as they’ll want to make decisions quickly. For this reason, Renaissance City Dwellers will also seek out agents who are very responsive and available. Los Angeles, Vancouver, Austin, Chicago, Atlanta, Toronto, New York, Tampa and Miami are all markets that draw these luxury buyers.
The Year-Round Vacationer
The rise of remote work has also given rise to buyers who prioritize their lifestyles above all else and move to accommodate them, whether that is a place to ski every day in the winter or go surfing year-round.
Due to rising urban home prices, the Year-Round Vacationer typically purchases what will become their second home first, Engel & Völkers reports, and they may live in the property year-round, or rent it out for some passive income. The flexibility to create their own schedule with their second home and adjust it as they like is paramount to the Year-Round Vacationer.
Home preferences of this group of buyers may vary widely depending on the market they’re looking for properties in, but most will want home offices in which to work remotely, while also living in serene environments that feel like a continuous vacation. Year-Round Vacationers will likely look for agents with similar interests in and knowledge of their chosen markets. Since their second homes may be quite far from their primary residences, they will also likely need agents who are fluent in using remote technology to showcase different homes to them.
Top markets for Year-Round Vacationers include Hawaii, Huntington Beach, Whistler, Jackson Hole, Vail and Aspen, Austin and Raleigh.
