Staggering new report: ‘A Look at Wealth 2021: Real Estate’s New Power Players’ - BY MICHAEL ALTNEU

Dated: November 12 2021

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From urban repats to second homeowners, here are the new and emerging power groups changing luxury real estate

Today, nearly three times as many individuals with a $5 million+ net worth own $1–$5 million in real estate, compared to the numbers in 2019 — that’s a 180% increase in luxury property ownership.

How did we reach such unprecedented growth in a three-year period? What power groups drive this demand, how do they redefine luxury and what should luxury real estate professionals know as they seek to serve clients in this new buying climate?

Our team at Coldwell Banker Global Luxury® once again looked to WealthEngine, Wealth-X, and The Institute for Luxury Home Marketing to compile the data for “A Look at Wealth 2021: Real Estate’s New Power Players.” What we found was staggering.

Behind the luxury housing boom

Two main factors drive the luxury real estate market today. Cryptocurrency gains, rising stock markets, and 401(k)s have combined with soaring home prices and low-interest rates, allowing consumers to borrow and save more while reinvesting cash. This new wealth allowed affluent individuals to buy more expensive homes — and more of them. People also continue to make life-changing moves, choosing to live out their values or embrace a FOMO-meets-YOLO mindset following the pandemic.

This has put the 2021 luxury real estate market on course to surpass 2020, which was already considered a record year. The volume of wealth spent on luxury real estate rose by over 21% between 2019 and 2020 — but when you compare January to August 2021 to the same eight months in 2019, it jumped by 79%. Stats on August 31, 2021, already show real estate wealth in the luxury property market is now greater than 2019 and 2020 combined, with four months left to go.

 

Additionally, the number of properties purchased January-August 2021 in the $1–$5 million range jumped an incredible 142% for luxury single-family homes and 129% for luxury attached properties, compared to the same period in 2019. About 71% of luxury properties owned by those with a net worth over $5 million are now valued in the $1–$5 million range. We dubbed these folks the new “power players” because of their outsized influence on the luxury real estate market over the last 18 months.

The New Power Players

Suburban settings, resort markets, and secondary cities are still booming, while major metropolises are surging back, according to 2021 data to date. Four core groups are driving demand in these places: Baby Boomers, Golden Millennials, Second Homeowners and Urban Repatriates.

1. Baby Boomers represent 51% of power players. Speeding up retirement plans, they’re buying dream homes in places like Park City, Utah, where they can build family compounds near outdoor recreation, or Sarasota, Florida, where there’s sunny weather and a friendly tax environment. Boomers show greater affinity for second-home ownership, as well; there are 2,020,854 Boomers owning more than three properties, the most out of any age group.

 

2. Golden Millennials own 60% of millennial-owned properties priced $1–$5 million. Golden Millennials have reached the life stage (35–40) where they are getting married and having children. This, combined with shifting psychologies during the pandemic and inability to travel, pushed them toward suburban locations, like the Greater Chicagoland area, and hot secondary cities like Atlanta, where they can get more house for their money. The influence of Golden Millennials will be important to watch as their wealth and real estate portfolios grow.

-BY MICHAEL ALTNEU

 

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Andy Dirks

After retirement from a successful Major League Baseball career with the Detroit Tigers, Andy moved directly into full-time real estate sales with Keller Williams in Overland Park, KS. Upon moving ba....

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