The Next Luxury Home Seller
Trend Report for 2021/2022
Table of Contents Executive Summary
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Meet the Next Luxury Home Seller
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MaX Insights
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Key Demographic Segments
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Key Takeaways
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Engel & Völkers Trend Report for 2021/2022
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Executive Summary Overview
T
.he North American residential real estate market is red hot. The past year has seen record-low inventory and surging demand, which has continued through the first half of 2021. Throughout,
there has been no shortage of experts willing to speculate as to how long this market will last, and if or when there will be an end in sight. While these predictions do provide fodder for news outlets and the investment community, the reality is that they have no bearing on the growth of residential real estate professionals’ businesses. In nearly every market situation, there are homeowners willing to sell their homes. The key is to identify which consumer segments fall within this group. Which North American homeowners plan to be active home sellers in 2021 and 2022? Leveraging EVI, Engel & Volkers’ proprietary data center, Engel & Völkers Americas analyzed the current sentiment of homeowners across North America.
Key findings indicated:
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All signs point to growing inventory across the housing market, with nearly 10% of homeowners planning to sell their homes.
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Within that group, specific segments of the population will drive the market, the most significant being luxury homeowners.
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Homes that were purchased for more than $1 million are projected to account for more than a quarter of North American homes that will be sold in 2021 and 2022.
In this insight report, Engel & Volkers shares a comprehensive analysis of the demographics, life stages and mindsets of North American luxury home sellers in 2021 and 2022.
Home Seller Trends Millennials and Gen Xers to Drive the Market The National Association of Realtors (NAR) reported that Baby Boomers and The Silent Generation accounted for more than half of home sellers in 2020. This trend is not expected to continue into 2022. Instead, throughout the next year, both Millennials and Gen Xers are projected to sell more homes than Baby Boomers. According to our analysis of homeowners across North America:
The Affluent Home Seller
54%
bought their home
42%
will be first-time sellers
for more than $1M
30%
own more than one home
58%
previously sold a home
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Meet the Next Luxury Home Seller Overview
Profile of the Next Luxury Home Seller Luxury home sellers will have a new look this year. To start, luxury home sellers are projected to have greater wealth at a younger age than their counterparts in years past.
80% of luxury home sellers will be Millennials and Gen Xers
31% will be selling a home for the first time
What drives the mindset of the next luxury home sellers?
81%
“I want to travel and see other countries.”
The pandemic has motivated today’s luxury home sellers to list their properties, as 58% of these homeowners were not
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77%
“I want to be active and have more experiences.”
65%
“I am seeking more unique life experiences.”
73%
“I am extra careful about my health these days.”
Engel & Völkers Trend Report for 2021/2022
considering selling their homes until new circumstances brought on by the pandemic changed their plans.
82% experienced a major life milestone within the last year. The top milestones were:
#1
Starting a Business
#2
Expecting a Baby
#3 Newly Single
#4
Caring for a Parent
#5 Moving Cities
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Downsizing Is Out In their next home, luxury home sellers want...
73% More bedrooms
19%
Same number of bedrooms
8% Fewer bedrooms
More than two-thirds own multiple homes.
Cities Will Be the Hottest Markets Over the last two years, reports have covered homeowners’ migration from urban cities to more suburban or rural areas of North America.
81%
of luxury home sellers currently live in an urban market
These urbanites are not planning to leave city life so quickly. Two-thirds are actually planning to purchase a new home in a similar urban environment. Here is a breakdown of the types of neighborhoods luxury home sellers are most interested in:
Urban Cities
Suburbs
Rural Areas
67%
14%
19% Engel & Völkers Trend Report for 2021/2022
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Ask
MaX
What is the best marketing strategy for real estate professionals to reach these luxury home sellers? MaX is a proprietary, data-driven technology platform built by Engel & Völkers. MaX provides our advisors with the marketing intelligence to develop premier, custom marketing strategies for reaching targeted consumer segments within their local market.
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Engel & Völkers Trend Report for 2021/2022
Insights Based on an analysis of the luxury homeowners in North America who are planning to sell their home in the next year, MaX has identified the marketing platforms that will be most influential among this group when they choose a real estate professional to represent them in the sale. The results are broken down based on homeowners in the United States and Canada.
Top Marketing Platforms for Influencing US Home Sellers 1. Zillow - Strength score: 92* 2. Realtor.com - Strength score: 80 3. Facebook - Strength score: 75 4. Lifestyle and Hobbyist Publications - Strength score: 68 5. Instagram - Strength score: 63
Top Marketing Platforms for Influencing Canadian Home Sellers 1. Out of home - Strength score: 94 2. Facebook - Strength score: 86 3. Community events - Strength score: 77 4. Local print publications - Strength score: 76 5. Digital advertising - Strength score: 76
*Strength score out of a total possible score of 100
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Key Demographic Segments Meet the Next Luxury Home Sellers
EVI, Engel & Volkers’ proprietary data center, identified four specific groups of home sellers who will drive luxury sales in the second half of 2021 and 2022:
1
The Wealthiest Millennials
2
Millennial Entrepreneurs
3
COVID HENRYs
4
Early-Retired Gen Xers
1 The Wealthiest Millennials Millennials are projected to account for nearly half of all luxury home sellers in the next year. As the largest generational segment within this group, they will have the greatest impact on the luxury market. However, selling their home may be a new experience for some of them.
Snapshot
Household Income
35%
Wealthy Millennials who have an annual household income of more
Intend to sell a home they purchased for more than $1M
than $100,000 will make up more than half of the home sellers within this generation:
58% Will be first-time sellers
31%
48% Own multiple homes
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38% 16%
15% less than $50,000
$50,000 to $99,999
$100,000 to $249,000
$250,000 or more
In 2020, 6.1% of American households had an annual household income of more than $250,000. It is projected that these wealthy individuals will make up nearly 7% of home sellers in the next year. Despite making up less than a third of all Americans at this income level, Millennials will account for more than half of home sellers within this wealth demograpic. More than 65% of Millennials at the $250K+ household income level are planning to sell a home in 2021 or 2022.
Where Do They Want To Move?
60% 40%
Suburbs
Urban City
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Where are the Wealthiest Millennials currently living?
83%
own homes in urban cities
67%
live in the northeastern United States
83%
live in a neighborhood with a median home price of $700,000 or more
Following the pandemic, the Wealthiest Millennials believe it will be their responsibility to take care of their parents.
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33%
are responsible for the care of one of their parents
16%
said their parents are currently living with them
80%
believe their parents will move in with them in the future
2 Millennial Entrepreneurs While only 12% of all Millennials are in the process of starting a business, nearly one-third of Millennials who are planning to sell a home in the next year said that they have recently launched a new business or are in the process of doing so. Within the larger context, 29% of all luxury homeowners planning to sell a home within the next year reported that they are in the process of starting a business. Millennials accounted for two-thirds of this entrepreneurial luxury home seller group.
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As remote work remains popular, Millennial Entrepreneurs have increased flexibility to lead their companies from anywhere in the world. As a result, 29% of Millennial business leaders are in the process of relocating to new areas.
Where They Currently Live
56%
Urban Cities
39%
Suburbs Rural Areas
5%
Where They Want to Move
44%
Urban Cities
20
Suburbs
28%
Rural Areas
28%
Engel & Völkers Trend Report for 2021/2022
It may be surprising to some, but Millennial Entrepreneurs are very family-oriented. Individuals within this segment are more likely than their peers to be married, living with a partner or have young children. Additionally, 20% are currently responsible for caring for at least one of their parents. This sentiment towards family goes far beyond the people living in their household. When asked about changes to their lives as a result of the pandemic, Millennial Entrepreneurs said they are committed to making lifestyle investments that ensure they will never be separated from their families again.
This trend is even more prevalent among members of this group who are planning to sell a home in the near future:
83%
49% 37%
All Millennials
Millennial Entrepreneurs
Millennial Entrepreneur Home Sellers
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Real Estate Advisor Insights While only 39% of Millennial Entrepreneurs are currently homeowners, they are projected to account for 32% of all home sellers in the next year. It is valuable for real estate advisors to have insights about this group’s previous behaviors when buying or selling a home.
Homebuying Experience
59%
were represented by a real estate professional when buying their home
73%
researched homes online prior to contacting a real estate professional
Home Selling Experience
20%
have previously sold a home
88%
were represented by a real estate professional when selling their last home
38%
visited the real estate professional’s personal website during their selection process
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3 COVID HENRYs For the youngest adults, Millennials and Gen Zers, the pandemic hit at a critical time in their lives. They experienced this unprecedented event just as they began to mature in their personal and professional lives, which has caused them to change many of their previous behaviors. Throughout the pandemic, many of these young professionals benefitted from having jobs that allowed them to work remotely, while still maintaining a six-figure salary. These are the COVID HENRYs. The term HENRY is an acronym for “High Earners, Not Rich Yet” and commonly refers to young professionals who have an annual household income between $100,000-$250,000. We have defined COVID HENRYs as the members of the Millennial and Gen Z generations who emerged from the pandemic within this salary range, but haven’t had time to amass the amount of wealth as compared to older generations.
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COVID HENRYs will be a key demographic in the residential real estate market through 2021.
83%
are homeowners
22%
own multiple homes
41%
of home sellers own a second home
Not surprisingly, most COVID HENRYs are Millennials, but the younger members of the group make up a significant portion.
81%
Millennials
19%
Gen Z
These young professionals had to rearrange their family life during the pandemic.
22%
moved back to living with their parents
63%
were raising at least one young child
The pandemic has had a significant impact on the habits, attitude and life outlook of this group, including significant changes in those:
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Wanting to travel globally
Working remotely
Investing in online learning/education
Desire to have more unique experiences
41%
33%
39%
50%
Engel & Völkers Trend Report for 2021/2022
Where are COVID HENRYs planning to live? Will they stay in the city or move to the countryside? COVID HENRYs are currently living in mostly urban and suburban areas:
Urban Cities
Suburbs
Rural Areas
49%
41%
10%
As a whole, this group wants to stay in cities and suburbs:
Urban Cities
Suburbs
Rural Areas
49%
43%
8%
But many COVID HENRYs who are planning to sell their homes in the next year are planning to relocate to more rural areas:
Urban Cities
Suburbs
Rural Areas
38%
38%
23% Engel & Völkers Trend Report for 2021/2022
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Real Estate Advisor Insights More than one-third (38%) of all home sellers in the next year will be COVID HENRYs. Additionally, more than half (56%) of luxury home sellers will be members of this group. Below are some insights about this group’s previous behaviors when buying or selling a home.
Homebuying Experience
77%
were represented by a real estate professional when buying their home
70%
researched homes online prior to contacting a real estate professional
80%
said watching listing videos important in their decision to consider buying a home
Home Selling Experience
56%
will be first-time home sellers
89%
were represented by a real estate professional when selling their last home
62%
used Google or a real estate professional’s personal website to learn about their agent prior to hiring them
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4
Early-Retired Gen Xers There has been significant coverage in the media about Gen Xers that will face new challenges when saving for retirement due to work disruptions during the pandemic. Understandably, there has been little focus on the small number of individuals in this generation who have retired early. Yet, this group has amassed a substantial amount of wealth and will play a significant role in the residential real estate market. In the next year, more than one in five (21%) of all retired Gen Xers plan to sell a home. They are projected to account for 12% of all likely home sellers and 27% of those that will be selling a luxury home.
Snapshot
57% Own multiple homes
71% Previously sold a home for more than $1 million
86% Sold a home in the last three years
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Historically, those who reach retirement plan to downsize their homes. However, retired Gen Xers are facing atypical situations, as 39% have adult children, their parents or other extended family living with them in their home, most of which was a result of the pandemic. In fact, 58% of retired Gen X home sellers had family move in since the pandemic, driving many of them to sell their homes. As a result, many Gen Xers are actually looking to purchase homes with more bedrooms than their current homes rather than downsizing:
Compared to your current residence, how many bedrooms will your next home have?
39%
more bedrooms
13%
fewer bedrooms
48%
same number of bedrooms
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Many retired Gen Xers are planning for a change of scenery in anticipation of the pandemic coming to an end. In fact, 30% say they are planning to move to a different city, or are already in the process of doing so. Currently, this demographic is nearly evenly split between residing in urban cities, the suburbs and rural areas.
Where They Currently Live
36%
Urban Cities
Suburbs
32%
Rural Areas
32%
As a whole, most Gen Xers plan on moving to areas that resemble their current environments:
Where They Want to Move
Urban Cities
33% 39%
Suburbs Rural Areas
27%
However, the same cannot be said for a large contingent of retired Gen Xers who plan to sell a luxury home in the next year. More than half (57%) of these individuals are planning to move to a rural area. Engel & Völkers Trend Report for 2021/2022
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Real Estate Advisor Insights Given their wealth and experiences, it shouldn’t be a surprise that retired Gen Xers have significant experience in buying and selling homes. Real estate professionals should keep this in mind when approaching these potential clients. Unlike Millennials, these homeowners most likely have already sold at least one home in the past.
Homebuying Experience
92%
were represented by a real estate professional when buying their home
82%
said watching listing videos is important in their decision to consider buying a home
60%
watched a listing video on Instagram
Home Selling Experience
75%
have previously sold a home
81%
were represented by a real estate professional when selling their last home
38%
said they learned about their agent on Facebook or Instagram
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Key Takeaways The North American residential real estate market has experienced historic value during the last two years. In evaluating this trend in conjunction with the unprecedented nature of the pandemic, it shouldn’t be surprising that the traditional dynamics of home buyers and sellers have evolved quickly, as well. There is good reason to be optimistic that residential real estate will continue to have positive growth in the next year even as inventory opens up across the continent. That doesn’t mean that there won’t be significant shifts as the market evolves — in fact, we should count on it. The best approach for real estate professionals will be to monitor current trends and prioritize a market specialization that resonates with specific segments of potential homebuyers and sellers. Engel & Völkers Trend Report for 2021/2022
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Here are five suggestions for real estate professionals to consider when planning their strategy for reaching out to prospective luxury home sellers:
1. Focus on Younger Homeowners The generational shift is evolving quickly. For more than a decade, the narrative across the industry focused on older homeowners that have been looking to downsize. That trend may return, but in the near term it will be Wealthy Millennials and Gen Xers who become the most likely sellers of luxury homes. 2. Experienced Home Sellers Despite their age, younger home sellers will have more experience buying and selling homes than their peers. It is important to remember to take this into account when marketing to this group of savvy clients. 3. Current Mindset An unprecedented experience for all, the pandemic has had a significant impact on the mindset of many homeowners planning to sell a home. It’s critical to take peoples’ changing attitudes and evolving outlooks on life into consideration in developing marketing materials that convey a sense of understanding. Luxury home sellers are prioritizing life experiences, such as global travel and seeking out new unique experiences. 4. Changing Primary Residences It is more likely that luxury home sellers will own multiple homes, rather than just one. As their lives and family situations changed due to the pandemic, it is possible that they will be transforming their second homes into their primary residences. 5. Family Matters More than any other consumer segment, younger luxury homeowners are putting family first. They are making lifestyle changes to ensure they are never separated from their families again, and are planning for future family situations. Real estate professionals must take this into consideration when developing marketing materials and listing presentations for this group.
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Methodology In partnership with Researchscape, Engel & Völkers Americas surveyed 1,700 respondents from across North America between June 22 and 23, 2021. The responses presented in this report were weighted to be representative of the overall population by the following variables:
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Standard: Canada (11%), United States (89%)
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Generation: Greatest Generation (<1%), Silent Generation (7%), Baby Boomers (30%), Generation X (25%), Millennials (27%), Generation Z (11%)
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Gender: Female (52%), Male (48%)
§
Standard: Less than HS (8%), HS graduate (30%), Some college (30%), College graduate (20%), Postgraduate (11%)
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