Discover how Millennials are finally becoming a major force in the luxury housing market.
After years of media coverage around millennials not entering the housing market, the affluent cohort of these buyers is finally becoming a major force in the luxury housing market. But these buyers are faced with challenges including low inventory in many markets, and competition for high-end homes with affluent buyers who are downsizing into urban areas. We asked our experts across the world, what are the two largest demographic cohorts of affluent home buyers looking for and how are their preferences shaping the luxury market?
What the experts in the field have to say:
Boomers are embracing a new lifestyle: “The tail-end baby boomers continue to be a major market force, adding supply and demand pressures on the market as they downsize. Boomers are selling large luxury properties and reinvesting in multiple homes with different lifestyle locations. A boomer selling a $4 million residence may purchase two homes for $2 million to meet their changing retirement needs.”
Terry Sprague, Luxe Platinum Properties, Portland, Oregon
Staying put rather than downsizing, some boomers are adding to inventory constraints: “Boomers have voiced objections to living the same way as their parents did in retirement. Often in good health and with active lifestyles, they want residences that give easy access to local culture and recreational facilities, but also have the flexibility to meet future care requirements. The current lack of suitable accommodation is having a negative impact on the wider housing market. With empty nesters lacking an incentive to downsize and deciding to stay in their existing homes, there is less housing stock available for younger buyers.”
Stephanie McMahon, Strutt & Parker, London, UK
Empty nesters want to be close to, but not in, the action: “More baby boomers are moving from their estates in the suburbs to luxury condos in more urban or close-in suburban (sometimes called “surban”) areas. Even when downsizing, these buyers want additional bedrooms and bathrooms to accommodate visiting guests or adult children. They’re looking in similar areas as millennial buyers, but the boomers often want to be one block off the activity, versus right on top of the action.”
Jeffrey S. Detwiler, Long & Foster Real Estate, Washington, DC
Affluent older millennials are leveraging the sharing economy to upgrade a second-home purchase: “Millennials are buying second homes that are slightly more expensive than they otherwise would have bought, as long as they can use Airbnb or VRBO (Vacation Rental By Owner) to rent them out more frequently and at higher price points.”
Mike Herman, Oliver Luxury Real Estate, Lake Tahoe, Nevada
Second-home millennial buyers want in-town convenience and modern entertaining amenities: “Millennials are attracted to the second-home lifestyle in Cannes—it is a large market for such buyers, especially as it is busy year-round with festivals. Affluent millennials typically spend €5-15 million on contemporary properties that are ready to live in, with sea views and large reception rooms that open onto terraces. They prefer homes near the town center in La Californie and the Super Cannes area.”
Angie Delattre, Michaël Zingraf Real Estate, French Riviera, France
Nomad millennials are reinventing luxury by telecommuting from and reinventing second-tier urban locales: “Millennials are looking for lifestyle experiences that cater to their specific tastes. Many are forgoing life in the suburbs in favor of second-tier cities experiencing a rebirth such as Austin, Lisbon, and Asheville, as well as once-gritty urban enclaves—including parts of Brooklyn and New Jersey’s Hudson Waterfront—in order to enjoy a ‘hip’ yet luxurious lifestyle at a more affordable price. Entrepreneurs and creatives are flocking to entry-level luxury residences in these cosmopolitan communities and remote-working destinations.”
Bill Hamm, Christie’s International Real Estate, NYC
“Young luxury—where parents partially or fully fund purchases for their adult children, who are still in school or who are early in their earning years—demonstrates a definite preference for dwellings where personal services are either contained within or immediately adjacent in location.”
Jenni Bonura, Harry Norman, Realtors; Atlanta, Georgia
[ Excerpt from Christie’s International Real Estate’s 2018 Luxury Defined white paper on the international prime property market. Read more insights from the latest report here ]