Millennials have been branded “The Debt Generation.” But over the next few decades, they may be better known as the wealthiest generation. Why? Because they are expected to inherit approximately $68 trillion from their Baby Boomer parents in what has been dubbed, “The Great Wealth Transfer.” They will have a lot of power in shaping future luxury real estate trends, especially now that they make up the largest portion of the U.S. population and the largest group of homebuyers in the nation.
The big question for us luxury real estate professionals is: will they keep the properties they inherit from their parents, or will they sell the properties and invest elsewhere?
As a member of the top-producing The Jills-Zeder Group from Coldwell Banker Residential Real Estate in Miami, I work with many high-net-worth millennial clients. I’m also a millennial myself. While I can’t predict what my generation will do with their future wealth, I do have insight into their perspectives and lifestyle habits. The Coldwell Banker Global Luxury® program and WealthEngine also just released “A Look at Wealth: Millennial Millionaires” (ALAW), a report that details everything from how current millennial millionaires are building wealth to where they live and their interests.
If you hope to have a long career in luxury real estate, it’s imperative that you understand high-net-worth millennials and learn how to turn them into lifelong clients. I’d like to share a few key insights that you should know about them, based on the ALAW report and my own experience.
1. Homeownership rates among millennial millionaires are high
According to the ALAW report, 92% of millennial millionaires have purchased property and a vast majority (80%) bought a single-family home. They own about three properties on average, with an average real estate portfolio worth $1,367,022. The data is clear, and it’s been my experience as well, that affluent millennials believe that real estate is a key component of wealth creation.
2. They are interested in home improvement — to a point
Some luxury real estate agents have privately lamented that younger generations of millionaires aren’t DIY-types who are interested in fixer-uppers. However, 77% of millennial millionaires say that they are interested in home improvement. That said, “home improvement” to a millennial buyer might mean akin to “customization,” paneling a wall in reclaimed wood or changing out the countertops, not necessarily taking on big renovation projects. In Miami, millennial buyers still tend to gravitate toward new construction — modern product with open floor plans. But even if it’s a brand-new home, they still want to personalize it.
3. They’re changing the definition of what a “good location” means
“Location, location, location” is still true in real estate, but millennials are changing the definition of what is a good location. It used to be that the prestigious neighborhoods were gated and secluded, often outside of town. Millennial buyers want to be close to the action. They want to be able to walk to the neighborhood coffee shop, bakery, and markets. Health and wellness are also priorities for them, so they like to be close to fitness facilities and yoga studios. The ALAW report supported this view as 62% of millennial millionaires said that they are interested in health.
4. They’re willing to give up space in order to live in a good location
Many of my high-net-worth millennial clients will pay a premium for a good location as opposed to having more square footage and rooms upon rooms that they won’t use. They’d rather have a home with a smaller footprint — one that is eco-conscious with energy efficiency and smart home technology — than the biggest house they can afford on the biggest piece of land.
5. They’re adventurous and more willing to consider non-traditional luxury markets
One statistic that caught my eye in the ALAW report is the top ZIP Code for millennial millionaires: Traverse City, Michigan. You might be scratching your head at this one, but I’m not. Millennials have a real traveler’s spirit as compared to previous generations. If they do inherit properties from their parents, my sense is that they will sell them and look for vacation homes in non-traditional markets like Traverse City, where their dollar goes a little further yet still offer the lifestyle they want.
There are many more interesting findings in the ALAW report, which you can find on the Coldwell Banker Global Luxury blog. It’s an invaluable tool for real estate professionals who want to better understand current and future high-net-worth millennials, and the tremendous opportunities they bring to our industry. More information on the Coldwell Banker Global Luxury program is also available here.