While inventory is slowly inching up around the country, it appears the next wave of sellers will be in the luxury market, according to a report by Engel & Völkers. Millennials and Gen Xers will represent some 80% of luxury home sellers in 2022. Knowing these trends can help you better serve clients.
The Next Luxury Home Seller, a consumer trend report based on data from EVI, Engel & Völkers’ data center, identifies the demographics and mindset of luxury home sellers in North America, defined as homeowners who are planning to sell a home for more than $1 million dollars in 2021 or 2022.
“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,” said Anthony Hitt, president and CEO, Engel & Völkers Americas.
“In every market situation there are homeowners willing to sell. The key is to identify which consumer segments fall within this group.”
The report identified four distinct segments of Millennial and Gen X luxury home sellers that will drive luxury real estate sales throughout 2021 and 2022:
The Wealthiest Millennials
More than 65% of millennials with household income levels of $250,000+ are planning to sell a home in 2021 or 2022, accounting for more than half of all home sellers within this wealth demographic. However, the wealthiest millennials are not fleeing the cities — 60% say they are interested in buying in an urban city. An overwhelming 96% said that their parents currently live with them or believe their parents will move in with them in the future. This suggests that this group is staying in urban environments and looking for spaces that can better accommodate current or future multigenerational living.
Millennials accounted for two-thirds of luxury home sellers who are also in the process of starting a business. No longer constrained by the limits of a physical office, 29% of millennial business leaders are relocating to new areas. While the majority choose to live in an urban city, about 28% want to move to rural areas.
HENRY is an acronym for “High Earners, Not Rich Yet” and refers to young professionals who have an annual household income between $100,000-$250,000. Covid HENRYs are the members of the millennial and Gen Z generations who emerged from the pandemic within this salary range, yet haven’t amassed the same amount of wealth as older generations. More than half of all luxury home sellers in 2021 and 2022 will be Covid HENRYs. A third of Covid HENRYs work remotely and nearly half want to travel globally and have more unique experiences. Forty-one percent of these luxury home sellers also own a second home, indicating a desire tp pursue travel and experiences. As a whole, Covid HENRYs are more evenly split when it comes to their desire to live in cities (49%) or suburbs (43%.)
Early Retired Gen Xers
More than one in five of all Early Retired Gen Xers plan to sell a home in 2021 or 2022, accounting for 27% of all luxury home sellers. Historically, those who reach retirement plan to downsize their homes. However, today’s Early Retired Gen Xers are facing atypical situations. Thirty-nine percent have adult children, parents or other extended family living with them in their home. In fact, 58% of Early Retired Gen X luxury home sellers have had family move in since the pandemic, driving them to list their current homes in favor of larger homes with more bedrooms. More than half of Early Retired Gen X luxury home sellers are looking for their next home in rural areas.