This summer we’re looking at the state of the luxury agent and broker in today’s increasingly complex real estate market. In October, we’ll gather in Beverly Hills at Luxury Connect to share best practices, network and create a blueprint for the luxury agent/broker of tomorrow. Don’t miss it.
The number of millionaires in the U.S. soared to 32 million in 2018 while those with more than $500 million shot up to 1,770 — an economic bellwether that could greatly reshape the luxury housing landscape, according to a new analysis from Coldwell Banker Global Luxury.
The report, released last month in conjunction with predictive marketing company WealthEngine, found that a robust economy, both globally and nationally, has helped lift millions of American homeowners into seven-digit tax brackets, subsequently straining the nation’s high-end housing stock while prompting a greater demand for luxury agents attuned to the “unique nuances” of these rarefied clients.
Craig Hogan, Coldwell Banker
“Customizing the search and experience for these people is the way of the future,” Craig Hogan, vice president of luxury at Coldwell Banker, told Inman. “It’s a waste of time to bother people at this level with offerings they’re not interested in and lifestyles that wouldn’t connect to them.”
“Builders and developers study these people, their lifestyle and travel habits and how long they stay in a residence,” he added.
The number of U.S. millionaires cited by Coldwell Banker — 32 million individuals, or between 17 million and 19 million households — appears to have increased by several million since 2017, when a separate analysis by Credit Suisse pegged the number of households at 15.4 million.
Among these high earners, more than half are between the ages of 60 and 80 while younger high net-worth individuals between the ages of 40 and 50 comprise 6.7 percent of all millionaires and 10 percent of those with $500 million or more, referred to as “demi-billionaires” in the study.
For millionaires both young and old, however, property values average just shy of $1 million, with approximately 20 percent of all millionaires owning three or more homes. Demi-millionaires, meanwhile, own property valued at more than $10 million on average, according to the Coldwell analysis.
Those $10 million mansions typically boast property in excess of 7,000 square feet, while those $1 million homes owned by millionaires often clock in at more than 4,000 square feet, according to the analysis. Demi-billionaires remain in their homes for around 10 years on average compared with eight years for millionaires. A typical homeowner with less than $1 million in the bank remains in their home for six to seven years on average.
Historically, U.S. millionaires reside in wealthy coastal enclaves across California and New York in addition to tax havens such as Texas and Florida.
But the wealthiest Americans are distributed more widely today, with high-end homes now sprouting in Massachusetts, Virginia, Washington D.C., Illinois and Maryland, according to the Coldwell analysis. While Silicon Valley and New York boast the country’s most expensive zip codes, the analysis also identified “hidden millionaire pockets” in Rancho Palos Verdes in Southern California and Brentwood, Tennessee, an affluent Nashville suburb.
Demi-billionaires are primarily situated in California, New York, Florida and Texas, but they also reside in Colorado, Illinois and Pennsylvania.
While smaller, homes owned by millionaires are frequently “tricked out” with wine cellars and garages to show off car collections and toys, Hogan said. Often well-traveled and collectors of valuables, these high-net-worth clients expect a “personal, hands-on, bespoke marketing experience” from agents.
“Today’s luxury real estate marketing is not one-size-fits-all,” Hogan added.
As the high-net-worth homeowner grows more diverse and fragmented, an opportunity exists for luxury agents willing to understand the “unique nuances” of their clients and prospects, according to the Coldwell analysis.
A simple Google search can tell agents a lot about potential buyers and sellers, from their travel passions to their philanthropic connections, Hogan said.
“It’s critical to figure out these people before engaging in conversation,” Hogan added. “If the agent has done their research and can draw these correlations, it may be the first of many conversations with this prospect.”
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