Luxury homes are in high demand – here’s what realtors need to know

A new report from Coldwell Banker’s Global Luxury program titled “A Look at Wealth 2021: Real Estate’s New Power Players” has just been released. According to the report, the last 18 months have seen an influx of luxury home buyers the likes of which have probably never been seen before. 

Over a three-year period, individuals with a net worth of more than $5 million who own real estate valued between $1 million and $5 million has exploded, increasing by 180%. Single-family homes in that price range have blown up by 142% and attached properties like condos have increased by 129%. 

Judy Zeder is the co-founder and broker-associate of The Jills Zeder Group with Coldwell Banker Realty. She says, “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.”

More high-value and luxury properties are exchanging hands than ever, but what does that mean for realtors? Where are these clients coming from?

Who’s buying these homes?

The report identifies key demographics that are spending big chunks of their earnings on real estate worth more than $1 million. 

  • Of course, Baby Boomers are involved in this category with their wealth stores as they near retirement or enjoy time after their career. They account for just over half of the luxury home purchasers in the nation. Interestingly, Baby Boomers have the highest rate of owning more than three properties, with more than 2 million boomers included in that stat. 
  • Older millennials, referred to as Golden Millennials in the report, have a propensity for owning suburban properties or living in luxury homes in smaller cities. You’ll often find these owners have a different outlook on luxury that integrates sustainability and “authentic living”. 
  • Those with a net worth in excess of $5 million tend to have a second home. While it isn’t an age demographic, it’s a narrow attribute that can help realtors focus on client searches. 
  • Urban repatriates, or those who are once again enamored by living in the city, have grown in number over the past 18 months. 

Where are these purchases centralized?

The cities where luxury home buyers are relocating to are as diverse as the clients themselves. For Baby Boomers, the report identifies areas that are prime for wealthy individuals in their golden years like Scottsdale, AZ, Sarasota, FL, and Low Country, SC. 

For the Golden Millennials, the areas are vastly different. It’s metro areas with a reputation for growth and innovation including Atlanta, GA, Seattle, WA, and the Chicago metro area. 

Other markets that are popular for multi-million-dollar listings are San Francisco and Monterey, CA, Coeur d’Alene and Park City, ID, Boston, MA, and Brooklyn, NY.

How it impacts realtors

Whether you’re in one of the markets listed above or not, the demographics mentioned are still the best place to start in finding luxury home clients. But where do you find them? The report mentions that many are non-traditional income earners who have reaped rewards from “rebounding stock markets, cryptocurrency gains, and higher 401(k)s”. Though there are other income earners too, tapping into areas where you’ll cross paths with these individuals could be a great way to participate in some luxury sales. 

Keep in mind, non-traditional income makes it very difficult to get a mortgage on high-value property for most buyers. If and when you encounter that issue, connect your clients with MBANC. Our products and services are geared toward investors, high net worth individuals, freelancers, and non-traditional earners as well as luxury listings. Find out how we can get your clients approved for the properties they deserve.