The Impact of the “Young Affluents” on Real Estate
Don’t know if indeed the rich are getting richer, but what I do know for observing the trend year after year, is that the number of rich people is growing and the rich are getting younger! To put it another way, a rising number of young people qualify for the label “rich” these days. I suppose it’s good, considering the alternative.
Pretty exciting news really if you are very young, rich (and beautiful perhaps…). You “own” the world and did not have to pay for it…yet. In any case, this phenomenon has a considerable impact on real estate. Not only on sales units, but also on the type of homes this emerging group is looking for.
Our global high-end marketing partner, Luxury Portfolio International, is an authority in luxury trends and tracking. They study all aspects of the affluent consumer with a laser focus, to see how the market is evolving. They anticipate on the needs.
With this objective in mind, they just produced, together with the Harrison Group, a White Paper on “The Young Affluents in a Digital World”. In this paper, they explored the influence that technology has on the purchasing habits, mindsets and preferences of young affluent consumers with household discretionary income of $100,000+ (gross income minus mortgage, real estate taxes, etc.).
The following income strata was used as references: “Upper Middle Class” ($100k to $149k in discretionary income), “Core Affluent” ($150k in d.i. to $450k in household income), and “One Percenters” (over $450k in household income).
Here are some of the key lessons we learn from the study:
Young Affluents value home ownership just as much as do older consumers (over 50). 90% of them are homeowners and are very active in the market. Case in point: 21% of them bought a primary residence in the past 3 years, compared to only 9% of those 50 or older. Also, 12% of them plan to purchase a second home over the next 1 to 3 years, compared to 7% of the 50+.
Even though the economic recovery has been anemic, the affluent & wealthy are confident they can manage no matter what, thanks to the reserves of wealth they built around themselves. A mindset of self-reliance and resourcefulness has become the “new ordinary”.
For many Young Affluents, digital research includes social media. Over 1 in 3 of the 69% who use Facebook, have made purchase decisions in part from research or feedback they got on Facebook.
Heads up for real estate professionals: Three quarters of the affluent say they rely less on salespeople than in the past. They feel they can get quality information on the internet. The proliferation of online listings made it possible for consumers to find info at the same rate and even sometimes faster than industry insiders.
The above evolution does not mean that real estate agents are wasting their time working with younger consumers, quite the opposite in fact, it means that those buyers or sellers want to speak with an agent that knows the market and the home intimately. In a world where quality of life is the goal, no website can address the myriad lifestyle considerations of a consumer.
Engaging in online research for preliminary footwork prior to conversations with Realtors, helps ensure that interactions with agents are both efficient -saving time- and effective. Agents become “lifestyle concierges” of sort, focusing on distinctive details of a property, a neighborhood, and unique attributes that meet the needs of home buyers, from a perspective only an insider could know.
As the study goes, Young Affluents react positively (and often with their wallet) to great sales experiences. They choose where to take their business based on the quality of sales professionals. The key is the content of the conversation. They look to an agent for value-added information that reveals details and nuances they could not get on their own.
What personal main characteristics are the Young Affluents looking for in a professional? Someone who treats them with respect, takes the time to understand their wants & needs, understands the product in detail, looks professional and has a passion for his/her work.
If you are a Realtor, I hope you recognize yourself in these traits! If not, time to prepare your next career move…