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A L O O K AT W E A LT H :

NEW AFFLUENT TRAILBLAZERS Presented By

RAMESH RAO Coldwell Banker Realty


RA M ES H R A O International President's Elite | CalBRE# 01094680 | SRES, CREN Coldwell Banker Realty 10105 S. De Anza Blvd., Cupertino, CA 95014

408.806.6496

ramesh.rao@cbnorcal.com www.RameshRaoRealtor.com RAMESH RAO CURRENTLY RANKS AS ONE OF THE LEADING SALES AGENTS IN THE SILICON VALLEY AND is REGULARLY QUOTED IN SAN JOSE MERCURY NEWS Ramesh Rao brings nearly 35 years of Sales and Marketing experience to his real estate clients. As one of the leading Sales Agents in the Silicon Valley, Ramesh performs at the top of his field. In 2019, Ramesh was voted Favorite Neighborhood Realtor on Nextdoor and is regularly quoted in San Jose Mercury News. His recent sales have been often and varied, including some of the nicest homes in Cupertino, Saratoga and Sunnyvale. He has also sold homes in San Jose, Mountain View, San Carlos and San Mateo. In addition, he has represented investor clients in tax deferred 1031 Exchange and Delaware Statutory Trusts. He offers his clients a great level of unparallel service that ensures each Buyer’s and Seller’s needs are personally met to the highest levels. It is his personal touch and excellent timely communication that are much appreciated by his clients. You are never delegated to another person in the team. As the complexities of real estate transactions increase, you can rest assured that Ramesh is always there to address them and to answer your questions to ensure his dedication to your transaction. Supporting Ramesh is an efficient team and a network of professionals that include a Transaction Coordinator, a professional marketing company and a team of contractors, interior decorators and other professionals to assist Buyers and Sellers. This expands Ramesh’s capabilities, allowing him to commit more of his time to serve each individual client on a personal level. Ramesh lives in Cupertino with his wife. He is a member of the National Association of Realtors, California Association of Realtors and Silicon Valley Association of Realtors. • • • • • •

Residential Specialist in Sunnyvale, Cupertino, Saratoga and Los Altos Tax Deferred 1031 Exchange and DST Specialist Seniors Real Estate Specialist Ranked #47 among Silicon Valley Coldwell Banker Top Agents Dedicated support team for maximum Efficiency and Results Homeowner’s Concierge service providing a network of reputable home-improvement professionals

2 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


TA B L E O F

CONTENTS 4

NEW A FFLUENT TR A ILBL A ZERS

6

W E A LTH DEFINED IN 2020

8

CH A NGES IN LU XURY

12 49,627

THE CH A NGING ROLE OF R E A L ESTATE

16

NEW DEMOGR A PHICS CR E ATED

24 28 32

W HY THEY A R E MOV ING

W HER E THEY A R E MOV ING

DR IV ERS OF R ELOC ATION

34,360

14

LU XURY R E A L ESTATE IN 2020

40

PR EPA R ING FOR THE FUTUR E

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 3


NEW A F F L U E N T

TRAILBLAZERS EMERGING WEALTH DEMOGRAPHICS IN AN UNPRECEDENTED MARKET

2020 will be remembered as an unprecedented year. Priorities have realigned toward home, family, health and wellness due to the pandemic. These profound lifestyle changes, combined with other factors such as increasing numbers of people teleworking, have led to a U.S. luxury real estate boom and a migration of wealth to new markets. In past reports, we have focused on traditional demographic classifications, such as net worth or age. But 2020 has ushered in new affluent demographics. We’re calling them trailblazers because they are charting a new path forward, choosing housing locations based on family, health or lifestyle reasons, rather than being close to their business or work. They are turning their attention away from cities and relocating to small town hidden gems, suburbs and popular second home destinations. Many of these trends were already underway prior to the start of 2020; the pandemic simply accelerated them. This report offers a study of how affluent trailblazers are approaching luxury differently, where they are choosing to live (and why) and how these changes might impact the future of real estate. Because these changes are so fresh and happening in real time, this report relies heavily on anecdotal evidence with supporting data provided by WealthEngine, Wealth-X, The Institute for Luxury Home Marketing and other third-party sources. This marks a first for “A Look at Wealth.” We hope these insights help clarify the demographic shifts and affluent influences underway in many marketplaces.

Ramesh Rao R AMESH R AO. I N T E R N AT I O N A L P R E S I D E N T ' S E L I T E

4 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


Priorities have shifted toward home, family, health and wellness due to the pandemic.”

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 5


H I G H N E T WO RT H

W E A LT H

DEFINED IN

20 20

($1M-$5M)

4.5%

Inherited

11.7%

Inherited/ Self-made

83.8%

Self-made

V E RY H I G H N E T WO RT H ($5M-$30M)

4.7%

Inherited

Since 2008, the U.S. wealthy population has increased in size at a near constant pace. Today, the number of millionaires (those with $1 million+ in net worth) has grown to approximately 26 million, according to WealthEngine. This increase has been fueled by strong economic growth, continued urbanization, digital advancement (led by U.S. tech giants) and a period of tremendous growth in the stock market. As the wealthy population has grown, it has also diversified. The source of their wealth, the different industries that they work in and other unique factors continue to shape the characteristics of today’s affluent, their lifestyle decisions and their luxury purchase decisions.

10.6%

Inherited/ Self-made

84.8%

Self-made

U LT R A H I G H N E T WO RT H ($30M+)

7.7%

Inherited

20.3%

Inherited/ Self-made

71.9%

Self-made

6 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


P R I M A RY I N D U S T RY

Finance/Banking/Investment Manufacturing Technology Business Services Construction & Engineering

Source: Wealth-X

12.9% 10.8% 7.0% 5.6% 5.5%

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 7


CHANGES IN

LUXURY The challenges, disruptions and even loss brought on by the pandemic have caused many affluent individuals to realign their priorities in 2020. This realignment has inspired them to redefine their notions of luxury and modify their spending habits.

SPENDING HABITS

REAL ESTATE The home has become the center of people’s lives. Properties that offer proximity to nature, security and safety are in high demand, as are properties that offer amenities, like pools, wellness suites and home gyms, home offices, flex spaces and rec rooms. LUXURY SERVICES AT HOME With high-end travel and restaurant options limited, luxury services are increasingly being offered to the wealthy in their own homes. Restaurants are offering dine-at-home options, while companies are providing home delivery of ingredients for private chefs to use. LUXURY MOTORIZED TOYS Sales of RVs, boats and other motorized luxury toys have been on the rise in 2020. Since travel is limited, the affluent are looking for ways to keep their families entertained while enjoying the outdoors.

8 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


Photo Credit: VARIOmobil

LUXURY SPORT AND OUTDOOR EQUIPMENT Individual sports and outdoor activities have become increasingly popular as people seek to remain active but safe. Cycling, hiking, swimming, racket sports and inflatable water equipment have replaced team activities and sporting events. ELECTRONIC DEVICES The need to stay connected to family, friends and work colleagues has led to an explosion of sales of new devices and an escalation of advanced technology being installed in many homes. AUCTION HOUSES Auction houses are reporting robust demand online — a trend seen mostly in the ultra high-net-worth segment — with their primary focus on the purchase of fine art and jewelry. PRIVATE JETS Another sector taking off for the ultra wealthy: private aviation, which started to pick up towards the middle of the year.

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 9


LUXURY PREFERENCES

MOVE TOWARD INTANGIBLE LUXURY Intangibles, such as family, health, safety, security and space, have become the new luxuries of 2020. Wealth-X also noted that there has been “an increase in demand for intangible assets, such as additional passports and citizenships or on-demand healthcare, to ensure their family and close friends are safe and healthy.”

10 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


HEALTH AND WELLNESS Health and wellness were already being prioritized prior to the pandemic. With many fitness studios closed in 2020, affluent homeowners have had to get creative. They are focusing on creating gyms or wellness suites with yoga, meditation or special fitness gear like a connected bicycle. Additionally, they are looking to live in locations that offer access to outdoor recreation or are close to nature, which is known to have a positive impact on mental well-being. PRIVATE LUXURY Privacy has always been an important consideration for the wealthy, and that is true now more so than ever. The pandemic has created a set of circumstances that has allowed them to become accustomed to even higher levels of luxury service at home. A PIVOT TO ONLINE Digital shopping for luxury goods has continued to grow during the pandemic. “More brands have pivoted towards this medium, with many seeing results that outperform expectations,” according to Wealth-X. “With the wealthy becoming increasingly accustomed to purchasing online, and luxury providers expanding rapidly and enhancing their digital offerings, this trend is unlikely to be reversed.”

Source: Wealth-X

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 11


THE CHANGING

ROLE

O F R E A L E S TAT E The unprecedented changes of 2020 have touched every aspect of people’s lives. Luxury real estate professionals have found themselves in the center of these changes as the affluent turn toward home this year. Today’s agents bring indisputable value to their clients who depend on their knowledge and connections to make crucial life decisions for their families. Their ability to respond proactively to shifting needs, adopt new procedures for completing real estate transactions safely and pivot to virtual technologies suggests that they have an even more critical role to play in their clients’ lives and livelihoods, now and in the future.

WEALTH REDEFINED The robust stock market of the last year might have motivated some affluent individuals to lock-in their wealth growth with real estate purchases in 2020. They also began reexamining their ideas of wealth, with intangibles, such as family, health, safety, security and space, becoming higher priorities. NEW OPPORTUNITIES The affluent began to reexamine their current homes as new lifestyles took hold and new concepts of wealth materialized. Since the affluent have been known to place a high value on trusted advisors, they have been quick to engage real estate agents who can expertly, efficiently and safely guide them through the process of scouting new locations and properties. The agent has proven to be an invaluable part of this process, saving clients time, money and anxiety at a moment when it matters most to them.

12 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


VIRTUAL SHOWINGS & STORYTELLING Luxury residential professionals have adapted quickly, creating greater efficiencies in the buying and selling process. Virtual showings are now common practice, thanks to software platforms like Matterport and REveo. Agents are even reporting that some properties are being purchased sight unseen. This new virtual showing environment has put greater emphasis on storytelling through staging to explicitly demonstrate how a potential buyer might live in a home. THE IMPACT ON LOCAL BUSINESS The strength of the luxury real estate market has buoyed adjacent industries and brought new investment to many small communities. With new residents moving in, local tradespeople like landscapers, painters, designers, attorneys, home inspectors and even pool companies have seen their businesses boom. Retail, while initially hardhit by the pandemic, may also see a quick rebound with a fresh batch of customers to serve.

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 13


LU X U RY

R E A L E S TAT E IN

2020

The luxury real estate market started from a position of strength in 2020, after an exceptionally strong finish at the end of 2019. The Institute for Luxury Home Marketing reported that the end of 2019, according to Realtor.com’s Chief Economist Danielle Hale, saw million dollar sales increase by 11.4% year-over-year and the overall entry point for luxury increased by 2.1% to $1.27 million. The Institute for Luxury Home Marketing reported that at the end of the first quarter for 2020, the median price of a luxury property had increased to approximately $1.4 million for a single-family home and $900,000 for an attached property.

The median price of luxury single-family homes has

increased 4.8% since January. Sales volume has

doubled since May.

14 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

A short "pause" during April and early May 2020 was then followed by the start of a surge of pent-up demand in mid-May and June. Major lifestyle changes are thought to be responsible for a rise in demand for larger single-family homes in locations that can offer more space and greater freedom. The median price of a single-family luxury property increased 4.8% since January 2020, reflecting this shift in lifestyle preferences. The number of sales has also grown exponentially each month since May, while the average days it takes to sell a property has continued to drop. This has been compounded by unprecedented low inventory levels, approximately 30% lower than the comparative period from May to August 2019.


Median Sold Price

Inventory

S I N G L E - FA M I LY H O M E S

Total Sold

M O N T H - OV E R - M O N T H 100,000

$1,500,000

90,000

$1,437,500

$1,417,500

80,000

$1,485,750

$1,400,000

$1,410,750

70,000 $1,375,200

60,000 50,000 40,000

$1,450,000

$1,398,250

$1,287,500

$1,350,000

$1,346,875

$1,300,000

$1,300,000 38,210

35,185

32,650

37,864

36,951

36,175

37,282

35,786

34,360

$1,250,000

30,000

$1,200,000

20,000 7,228

10,000 0

DEC

4,370

4,017 JAN

FEB

5,968 MAR

Conversely, the number of sales for luxury attached properties during July and August are back to normal levels when compared to 2019 figures, despite becoming less popular at the start of the pandemic. Inventory numbers have continued to climb since April, but notably are still 12% lower month-over-month compared to the same period in 2019. This may point to the trend of the affluent keeping their metropolitan townhomes or luxury condos (for now), even as they purchase larger single-family homes in less urban areas.

Median Sold Price

Inventory

4,777 APR

4,594 MAY

JUN

JUL

$1,100,000

AUG

2019

60,000

53,065

52,402

2020

51,147

49,627

50,000 40,000

37,864

37,282

35,786

34,360

30,000 20,000 10,000 -

MAY

JUN

JUL

AUG

AT TAC H E D H O M E S

Total Sold

M O N T H - OV E R - M O N T H

35,000

$930,000 $895,000

30,000

$900,000

$905,000

15,305

15,125

14,473

16,693

16,029

15,937

15,066

$850,000

16,440

$830,000 $810,000

10,000 5,000 -

$890,000 $870,000

$876,750

$852,500

15,000

$910,000

$893,500 $892,500

25,000

15,864

$950,000

$910,000

$907,500

$1,150,000

S I N G L E - FA M I LY I N V E N TO RY C O M PA R I S O N

40,000

20,000

7,447

10,310

10,226

$790,000 2,491 DEC

1,527 JAN

Source: The Institute for Luxury Home Marketing

1,744 FEB

2,300 MAR

1,667 APR

1,233 MAY

1,885 JUN

2,513 JUL

2,714 AUG

$770,000 $750,000

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 15


NEW D E M O G R A P H I C S

C R E AT E D

The pandemic has caused people to reevaluate what is important to them in 2020, with greater emphasis placed on home, family and health. This has led to the creation of a new group of affluent trailblazers. These trailblazers defy traditional categorization commonly generated by demographic factors such as net worth, age or gender. They aren’t following traditional migration patterns dictated by their place of work either. They are changing their luxury spending habits, moving to new locations and purchasing homes that better accommodate the needs of their family for right here and now. WHO ARE THEY: TRAILBLAZERS When we look at the most current wealth research generated by Wealth-X, WealthEngine, other third-party sources and combine it with anecdotal evidence from Coldwell Banker Global LuxuryŽ Property Specialists in the field, a picture of who the trailblazers are begins to emerge. Based on these sources, we have identified three archetypes that are having a major impact on the luxury real estate landscape in 2020: explorers, new suburbanites and resorters.

16 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


New affluent trailblazers defy traditional categorization and traditional migration patterns.�

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 17


44.38

26.00

28.36

37.12

OWN AT LEAST TWO PROPERTIES

HAVE $1M+ INVESTED IN REAL ESTATE

BUSINESS OWNERS OR SENIOR EXECUTIVES

HAVE AT LEAST ONE CHILD

%

%

%

%

The percentages are representative of the averages for those with a wealth between $1 million and $5 million, located in eight of the identified explorer markets. 18 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


EXPLORERS

Explorers are ready to leave the city behind. Generally, they are looking for a new adventure in America’s exurbs, far-flung suburbs and sleepy small towns where their dollar will carry them further. They are less concerned with status and are more willing to choose “hidden gem” locations — slightly more rural, non-traditional luxury markets — if it means that they can have better schools, access to open space and a dynamic mix of shops, restaurants and recreational facilities that allow them to center a lifestyle focused on family. Explorers tend to be younger (under the age of 39), married with at least one young child, and have a net worth in the $1 to 5 million range; however, they are a diverse group and many exceptions apply. Many are business owners, or business executives or work in professions that allow them the flexibility to work from home, making it easier for them to live farther away from major metro centers.

TO P I N T E R E S T S I N 2020 New Technology Investment New Luxury Furnishings for Home Continued Education Through Readership Home Cuisine Apparel for Women Sports and Leisure Crafting Gardening

Source: WealthEngine

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 19


NEW SUBURBANITES

New suburbanites are leading a revival of the suburbs. Often, they prefer suburbs that offer personal space, private backyards, a bedroom for each child, plenty of property amenities (like dual home offices for two working parents), good schools and, in some cases, a dose of city culture with newly developed urban-style mixed-use centers with restaurants, retail, offices and open green spaces. Despite the fact that many new suburbanites are entrepreneurs, business owners or senior managers who have the ability to work from home, they may still need to be within commuting distance of cities for work or business. The majority tend to be slightly older than explorers (between the ages of 39 and 54) and are married with two or more school-aged children. While net worth and disposable income vary based on location, they also tend to have a higher net worth ($5 to $10 million). Many own more than one home. They are more likely to make luxury purchases like sports cars, boats, art, collectibles and health and wellness treatments.

TO P I N T E R E S T S I N 2020 New Luxury Furnishings for Home Continued Education Through Readership New Technology Investment Home Cuisine Apparel for Women Children's Products and Services Health and Medical Services Gardening

20 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

Source: WealthEngine


54.26

84.24

55.60

53.35

OWN AT LEAST TWO PROPERTIES

HAVE $1M+ INVESTED IN REAL ESTATE

BUSINESS OWNERS OR SENIOR EXECUTIVES

HAVE AT LEAST ONE CHILD

%

%

%

%

The percentages are representative of the averages for those with a wealth between $5 million and $10 million, located in eight of the identified new suburbanite markets. COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 21


RESORTERS

Resorters are those who are flocking to world-class vacation destinations where they can enjoy a resort lifestyle filled with fresh air, freedom and access to recreation and luxury amenities. Whether they ski, golf or enjoy wine, resorters often choose their locations based on their life passions. They may either be permanently relocating to their favorite vacation destination or are converting a seasonal second home already in their possession to a primary residence in response to the pandemic. Because resort markets tend to have higher price points, resorters are often in a higher wealth bracket — $10 million and over. In many cases, they are not giving up their city homes completely. The majority of them are slightly older (over the age of 54) and are married with possibly older or adult children. They often own at least two properties, including a home in a city. The majority are established business owners with middle management onsite, giving them the freedom to work remotely. They may also be at retirement age, giving them extra freedom to live anywhere they want. However, accessibility and driveability to their resort home may still be important factors for them. They are accustomed to sophisticated living and look for properties that afford them a lifestyle that matches their affluence. They place a premium on privacy and freedom. They enjoy a range of outdoor activities, including skiing, biking, hiking, boating, tennis or golf. Because of their activity, they love their toys — cars, boats and collectibles. However, they also prioritize health and wellness.

TO P I N T E R E S T S I N 2020 New Luxury Furnishings for Home

Charity Donation and Contribution

New Technology Investment

Real Estate Investment

Continued Education Through Readership

Health and Medical Services Gardening

Apparel for Women

22 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

Source: WealthEngine


70.16

90.54

87.53

33.54

OWN AT LEAST TWO PROPERTIES

HAVE $1M+ INVESTED IN REAL ESTATE

BUSINESS OWNERS OR SENIOR EXECUTIVES

HAVE AT LEAST ONE CHILD

%

%

%

%

The percentages are representative of the averages for those with a wealth of $10 million plus, located in eight of the identified resorter markets. COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 23


WHY THEY ARE

MOVING The pandemic has created a set of new lifestyle circumstances that is propelling affluent trailblazers to make residential moves in 2020.

THE RISE OF TELEWORKING

Those who can telework tend to be more educated and more affluent. Many affluent trailblazers were already mobile prior to the pandemic. In a Pew Research Center survey conducted in late March 2020, 40% of adults ages 18 to 64 reported they had worked from home as a result of the coronavirus outbreak. This was a notable jump from what the 2019 National Compensation Survey (NCS) from the federal Bureau of Labor Statistics reported: “Only 7% of civilian workers in the United States, or roughly 9.8 million of the nation’s approximately 140 million civilian workers, have access to a ‘flexible workplace’ benefit, or telework.”

24 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

62%

of workers with a

BACHELOR'S DEGREE OR MORE EDUCATION had jobs that could be

PERFORMED REMOTELY 1

See page 43 for list of resources.


Higherincome workers are

MUCH MORE likely to be

teleworkers

2

WO R K I N G F RO M H O M E D U R I N G T H E PA N D E M I C BY INCOME QUINTILE 75%

Worked from home

60%

Stayed home from work and unable to work 40%

20%

0%

Bottom quintile

See page 43 for list of resources.

Second quintile

Middle quintile

Fourth quintile

Top quintile

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 25


FINANCIAL CONSIDERATIONS

Even prior to the pandemic, homebuying patterns had begun to show a migration of wealthy individuals away from luxury hotspots like New York and California, where their dollar could be stretched further. This trend was particularly pronounced among the affluent in high-cost coastal cities moving to lower-cost areas and lowertax venues. The circumstances of 2020 have simply reinforced the trend. Record low interest rates have been another driver. While many affluent homeowners can afford to purchase properties in cash, they are opting to take advantage of current rates (reduced by the Fed earlier in the year to help the economy recover from the coronavirus crisis) and keep their money in other high-yield assets.

MAJOR LIFE CHANGES

The pandemic has also accelerated major life changes for people, leading to relocations. Perhaps they are retiring sooner than they anticipated, or making a dramatic career move, or want to be closer to family.

Home Schooling Area

Family Room

Home Automation

Security

Garage Home Office 26 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

Home Theater


CHANGING RESIDENTIAL PREFERENCES

With teleworking taking off and commutes becoming less of a consideration, affluent trailblazers are looking to make a move to improve their overall quality of life since they are spending more time at home. They are looking for amenities to entertain their families. Outdoor spaces, pools, recreation rooms and game rooms have emerged as high on priority lists. Zoom Rooms for video conferencing, home offices, flex spaces, and home gyms are other new must-haves. They are willing to move out of cities — even if it’s just temporarily — to get more land and a little more to do at home.

HOME AMENITIES IN DEMAND

Sustainability/ Eco-Friendly Features

Dining Area Outdoor Space: • BBQ • Swimming Pool • Large Fenced Yard • Toy Storage Large Deck Area

Gym/Rec Room/Spa COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 27


WHERE THEY ARE

MOVING

Historically, wealth has been concentrated in New York and California. This is still true for 2020; however, it is beginning to shift. The lifting of mobility constraints, combined with changing residential preferences and other financial considerations, has hastened relocations and fueled an exodus out of dense metropolises. Some experts have nicknamed these places “Zoom towns3.” The emergence of these markets points to the growing diversification and decentralization of wealth in the U.S.

SUBURBAN SHIFT4

60% 40% 20% 0% Suburb/Subdivision

Rural Area

28 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

Small Town

Urban Area

Resort Area

See page 43 for list of resources.


COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 29


RELOCATIONS OF INTEREST IN 2020

EX PLOR ER M A R K ETS Malvern, AR Van Buren, AR Lancaster, CA Olivehurst, CA Stockton, CA Truckee, CA Vallejo, CA Winton, CA Edwards, CO Torrington, CT Middletown, DE Paletka, FL Columbus, GA Covington, GA Fitzgerald, GA Griffin, GA Coeur d’Alene, ID Twin Falls, ID Carbondale, IL Danville, IL Demotte, IN Milltown, IN Salem, IN Dodge City, KY

Yale, MI Breckenridge, MO Biloxi, MS Laurel, MT Hudson, NY Calcutta, OH Marietta, OH State College, PA Aiken, SC Greenville, SC Rock Hill, SC Athens, TN Fayetteville, TN Henderson, TN Murfreesboro, TN Ripley, TN Sevierville, TN Shelbyville, TN Springfield, TN Fredericksburg, TX Greenville, TX Kerrville, TX Heber City, UT Manassas, VA

NEW SUBUR BA NITE M A R K ETS Cottondale, AL Carmel Valley, CA Coto de Caza, CA Cupertino, CA Dublin, CA Fremont, CA Hillsborough, CA Los Altos Hills, CA Menlo Park, CA Milpitas, CA Palo Alto, CA Pleasanton, CA

San Ramon, CA Sunnyvale, CA Yorba Linda, CA Darien, CT Greenwich, CT Barrington, IL Hinsdale, IL Winnetka, IL Bethesda, MD Chevy Chase, MD Gaithersburg, MD Potomac, MD

30 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

Short Hills, NJ Westfield, NJ Scarsdale, NY Brentwood, TN La Vergne, TN Smyrna, TN Hunters Creek Village, TX West Lake Hills, TX McLean, VA Bellevue, WA Kirkland, WA Redmond, WA

Source: WealthEngine


These markets

POINT TO THE

decentralization

OF U.S. WEALTH.

R ESORTER M A R K ETS Scottsdale, AZ Huntington Beach, CA La Jolla, CA Laguna Beach, CA Laguna Niguel, CA Lake Tahoe, CA Malibu, CA Napa, CA

Newport Beach, CA Rancho Palos Verdes, CA Aspen, CO Vail, CO Boca Raton, FL Bonita Springs, FL Longboat Key, FL Marco Island, FL

Miami Beach, FL Naples, FL Pelican Bay, FL Port Royal, FL Vero Beach, FL West Palm Beach, FL Honolulu, HI Maui, HI

Nantucket, MA Ocean City Beach, MD Long Beach Township, NJ Ocean City, NJ Hamptons, NY Stowe, VT Seattle Islands & Inlets, WA

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 31


DRIVERS OF

R E L O C AT I O N To take a deeper look at what is influencing affluent trailblazers’ decisions to relocate in 2020, we took an analysis of 24 markets. The Affluent Relocation Index scores these markets based on 12 key drivers of relocation. To obtain an Affluent Relocation Score, we gave each of these key indicators a ranking between 1 and 12, based on analysis from local experts in the Coldwell Banker network. These scores were calculated based on a maximum score of 96. The higher the score, the more influential the indicators were in that particular market.

32 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


E L O C AT I O R T N E U L AFF

N INDEX

erty Size p o r P  enities m A y t r e p o r  P tdoors u O / e r u t a N o lose t  C ivacy  Pr Environment e f a S  erations d i s n o C e l y t s bies or Life b o H  t of Living irports) s o A , C s y a w e e r F  ssibility ( e c c A / y t i l i b rivea  D orkplace W o t y t i m i x o  Pr enities m A y r u x u L cess to  Ac hools  Sc Health 

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 33


S C O R E I N D E X F O R E X P LO R E R S

MARKETS TO WATCH: EXPLORERS

Safe Environment Hobbies or Lifestyle Considerations Cost of Living Property Size Close to Nature/Outdoors Access to Luxury Amenities Property Amenities Privacy Driveability/Accessibility Schools Health Proximity to Workplace

79 67 66 60 57 56 51 50 40 34 33 31

Many explorers are choosing to live in towns we’ve dubbed “hidden gems” — exurbs, suburbs and small towns far from city centers with a lower cost of living. These towns are not typical luxury markets. Often remote with reasonable high-end price thresholds starting at around $500,000, they satisfy a desire for more space and privacy, yet still offer town-like features, good schools and a strong sense of community. You might find them in states like Indiana, Montana, Idaho or Sun Belt states like Alabama, Arizona, Arkansas, Florida, Georgia, Mississippi, South Carolina and Texas. It might be places like Rock Hill in South Carolina that have big-city amenities with a small-town feel, or charming Fredericksburg in Texas Hill Country — a true small town with a population under 12,000. In California, it’s places like Vallejo, Olivehurst, Winton or Truckee, a mountain paradise just northwest of Lake Tahoe that has a median home price roughly half that of San Francisco and a population of about 16,500.

ROCK HILL, SOUTH CAROLINA “Rock Hill is a hidden gem just outside of the Charlotte metro, where your dollar goes just a bit further but still provides you with an opportunity to acquire the type of home and lifestyle that makes you feel at home. Climate, jobs, affordability, the local culture and Southern charm make it attractive to people. It really is a ‘Field of Dreams’ scenario for Rock Hill. The city’s growth and future plans are enticing to buyers of all price ranges. The buzz has gotten the attention of businesses such as the Carolina Panthers, which made its corporate move last year here.”

T Y PE OF MOV E: Permanent

R ELOCATING FROM: Northern and Midwestern states

HOTTEST PR ICE POINT: $750,000

MOST WA NTED A MENIT Y: SAM GROG AN & CANDACE THOMPSON, C O L D W E L L B A N K E R R E A LT Y, B A L L A N T Y N E

34 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

Outdoor spaces

Source: Score Index based on survey from local Coldwell Banker experts in eight identified explorer markets.


TRUCKEE, CALIFORNIA “We are typically a vacation community. However, the trend for buyers in 2020 is to either move permanently from the Bay Area or Sacramento and work remotely from home or finally buy that second home that was always on the bucket list. Mountain living, outdoor exercise in all four seasons, being able to work remotely, and homeschooling the kids are all reasons for making a move to Truckee and the Lake Tahoe area. Vacation home buyers, who still outweigh permanent transplants by ten to one, are buying to have a safe haven. They can no longer travel to Hawaii, Asia or Europe, so having a vacation home within driving distance is key.”

T Y PE OF MOV E: Temporary

R ELOCATING FROM: The Peninsula, East Bay, San Francisco, Los Gatos, Danville, Marin, Sacramento

HOTTEST PR ICE POINT: $600,000–$850,000

MOST WA NTED A MENIT Y: Access to recreation

J A N E S H E P PA R D & C H R I S T Y C U R T I S , C O L D W E L L B A N K E R R E A LT Y, TA H O E -T R U C K E E

FREDERICKSBURG, TEXAS “Because of the pandemic, more people have found that they can work from home and want to get out of the city. Due to the central location of Fredericksburg in Texas Hill Country, they can commute as needed. Austin and San Antonio are a 90-minute drive for city amenities if one desires. Land and larger lots are more readily available in Fredericksburg and less for the dollar compared to these cities. Major draws for people include outdoor activities such as golf or hiking, local boutique shopping, acclaimed dining and winery experiences and a top 100-ranked hospital. It is also a large ‘second-home’ area.”

T Y PE OF MOV E: Permanent/Temporary

R ELOCATING FROM: Austin, Houston, Dallas, California

HOTTEST PR ICE POINT: $900,000–$3M

MOST WA NTED A MENIT Y: Outdoor living

BIZ Z Y DARLING, C O L D W E L L B A N K E R D ’A N N H A R P E R R E A LT O R S

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 35


SCORE INDEX FOR NEW SUBURBANITES

MARKETS TO WATCH: NEW SUBURBANITES

Schools Safe Environment Access to Luxury Amenities Property Amenities Drivability/Accessibility Property Size Hobbies or Lifestyle Considerations Proximity to Workplace Cost of Living Privacy Close to Nature/Outdoors Health

72 69 69 68 65 53 52 48 43 37 26 22

Wealthy suburbs across the country are roaring back on account of a fresh influx of suburbanites who are looking for more space, property amenities, good schools and a close-knit town-like atmosphere with luxury amenities at their disposal. Since many are long-established affluent enclaves near large cities, luxury price thresholds tend to be higher — about $750,000 to $1 million. Think New Jersey suburbs like Short Hills and Westfield, which are prized due to their proximity to Manhattan and the Newark Airport. Greenwich and Darien in Connecticut, just outside of Manhattan, are also seeing a resurgence. In the metro Washington, D.C. area, it’s Travilah and Great Falls in the Potomac area, which offers plenty of land and space. In Texas, two affluent Houston suburbs, Piney Point Village and Hunters Creek Village, remain highly sought-after, while West Lake Hills outside of Austin is a favorite thanks to its lakeside setting and proximity to outdoor recreation. Nashville’s Brentwood — home to country music stars and athletes, and the wealthiest city in the state —and La Vergne are two other beloved bedroom communities known for their large mansions and greenery. Chicago communities like Hinsdale, a western suburb, and Winnetka, a North Shore suburb, are also having a moment.

BRENTWOOD, TENNESSEE “Brentwood was already known as an affluent destination for the wealthy, but there has been a definite increase in buyers since the pandemic. Buyers are escaping the city scene and buying permanently in the Brentwood area. Equally, we have had a large influx of buyers from NY, Chicago and California due to lower property taxes and no income tax. Many of these buyers are keeping a home in the city and buying in Brentwood to expand their home's footprint, like true office space and extra space for homeschooling and pools.”

T Y PE OF MOV E: Temporary/Permanent

R ELOCATING FROM: Nashville, New York, Chicago, California

HOTTEST PR ICE POINT: $1.5M–$2.5M

MOST WA NTED A MENIT Y: A S H L E Y B OY K I N , COLDWELL BANKER BARNES

36 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

Space

Source: Score Index based on survey from local Coldwell Banker experts in eight identified new suburbanite markets.


WESTFIELD, NEW JERSEY “Our proximity to Manhattan and Newark Airport has made Westfield attractive for people who work in the city and travel often. If and when the time comes that people will need to commute back into the city on a regular basis, they certainly can from Westfield. With people working and schooling from home, home office space has become very important. Gyms, home theaters and outdoor living spaces are also on the top of their lists. We have seen a huge increase in demand for pools. The top-rated school system has always been a huge draw for Westfield, as well.”

T Y PE OF MOV E: Permanent

R ELOCATING FROM: Jersey City, Hoboken, New York City

HOTTEST PR ICE POINT: $1M

MOST WA NTED A MENIT Y: Space

FRANK ISOLDI, C O L D W E L L B A N K E R R E A LT Y, W E S T F I E L D

WINNETKA, ILLINOIS “The last few months have caused a lot of people to accelerate their plans to move to the 'burbs. Drivability and proximity to the city do tend to be important factors for buyers choosing Winnetka, as the city is easily accessed via Sheridan Road, the highway and train. People are learning that outdoor living is good living. Even when this pandemic is in our rearview mirror, people will have learned the value of having room to breathe, stretch out and entertain. Big lots, large open rooms, spacious patios and decks and pools are all very hot right now.”

T Y PE OF MOV E: Permanent

R ELOCATING FROM: Chicago

HOTTEST PR ICE POINT: $1M–$2M

MOST WA NTED A MENIT Y: D AW N M C K E N N A & K AT I E M O O R D AW N M C K E N N A G R O U P | C O L D W E L L B A N K E R R E A LT Y

Outdoor living

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 37


S C O R E I N D E X F O R R E S O RT E R S

MARKETS TO WATCH: RESORTERS

Hobbies or Lifestyle Considerations Close to Nature/Outdoors Access to Luxury Amenities Safe Environment Property Amenities Privacy Property Size Health Drivability/Accessibility Cost of Living Schools Proximity to Workplace

73 70 69 63 60 59 47 47 41 40 33 22

Resorters are finding their version of paradise in world-class vacation destinations this year. These markets are known for offering outdoor recreation, access to hobbies or passions, a sense of tranquility and a sophisticated lifestyle with shopping and restaurants. Luxury price thresholds vary considerably among these markets, but price is often dictated by demand and smaller available housing stock. The Hamptons, a favorite summer refuge among wealthy New Yorkers, is seeing high numbers of people moving there indefinitely since the pandemic. Florida also has high concentrations of resorters who are either moving or converting their seasonal homes into primary residences in Naples, Boca Raton and Palm Beach. On the other side of the coast, Malibu and Honolulu fulfill every vacation fantasy as they offer beach, land, space, clean air and outdoor activities like hiking, biking, surfing and a healthy lifestyle. Mountain resort towns like Aspen, Vail and Stowe in Vermont are also popular escapes.

ASPEN, COLORADO “Many buyers are relocating to Aspen permanently, although we are still seeing an influx of second homeowners who are keeping their current homes but plan to spend more time here. We are seeing demand for at least one dedicated home office, as well as a separate space for kids to pursue distance learning. Buyers are also looking for homes with more outdoor space. Buyers are trending toward buying homes away from downtown, where they get a bit more space and privacy. Being in the school district and near Aspen, schools are also important for many young families relocating here.”

T Y PE OF MOV E: Temporary/Permanent

R ELOCATING FROM: Major metropolitan centers like New York

HOTTEST PR ICE POINT: $7M–$12M

MOST WA NTED A MENIT Y: Space

CARRIE WELLS, COLDWELL BANKER MASON MORSE

38 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS

Source: Score Index based on survey from local Coldwell Banker experts in eight identified resorter markets.


B O C A R ATO N , F LO R I D A “Boca Raton is typically a seasonal destination; however, this is changing. In my estimation, about three-quarters of buyers are now moving permanently to the area. Many are keeping their metropolitan homes — for now. The pandemic has accelerated their decision, but many had already started looking for a taxfriendly haven with more square footage for their money and good weather. Gated communities for security reasons and access to outdoor recreation like golf and tennis are highly sought-after features. Club/movie/rec rooms are a must! Furnished homes with contemporary décor are selling fastest, which may reflect the large number of Californians moving here.”

T Y PE OF MOV E: Permanent

R ELOCATING FROM: Northeast (New Jersey and New York) and the West (California and Seattle, WA)

HOTTEST PR ICE POINT: $5M–$7M

MOST WA NTED A MENIT Y: Outdoor living

J O N AT H A N P O S T M A , C O L D W E L L B A N K E R R E A LT Y, B O C A R AT O N

HAMPTONS, NEW YORK “The Hamptons has become a seller’s market. People are moving here indefinitely. Many families are enrolling their kids in the public schools; one small district saw 47 new applicants. They are mainly coming from New York City, as many wealthy New Yorkers already have summer homes here. Usually, we see folks renting for our Memorial Day to Labor Day season, and leases are typically signed in April, May or June. This year, we saw leases signed in March. Now, people are extending their leases through the winter. Among the most sought-after home features are pools, tennis courts, open-floor concept and proximity to beaches and village districts.”

T Y PE OF MOV E: Temporary

R ELOCATING FROM: New York City

HOTTEST PR ICE POINT: $2M–$3M

MOST WA NTED A MENIT Y: Pools

JOSEPH PICCININNI, C O L D W E L L B A N K E R B E A U H U L S E R E A LT Y G R O U P

COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 39


P R E PA R I N G

FOR THE

FUTURE While it remains uncertain whether these lifestyle changes and migration trends will hold for the long-term, luxury residential professionals have an important role to play. Those who remain flexible, attentive and proactive during this time will be in a stronger position to help clients map a new path forward if priorities should shift yet again.

40 COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS


COLDWELL BANKER GLOBAL LUXURY | A LOOK AT WEALTH 2020: AFFLUENT TRAILBLAZERS 41


METHODOLOGY The Coldwell Banker Global Luxury ® program collaborated with WealthEngine, Wealth-X and The Institute for Luxury Home Marketing to provide insights into wealth creation, real estate and property investment, luxury spending preferences and new emerging trends regarding demographic and geographic changes. Data was collected from the WealthEngine platform, which is powered by more than 1,500 wealth and lifestyle attributes that support half a trillion data points, and uses proprietary learning science to create unique WealthEngine Profiles for more than 250 million people in the U.S. Information was gathered on individuals ages 23 and above, with a net worth (assets minus liabilities) of over $1 million, between the periods of September 1, 2020 and October 6, 2020. Explorer Markets identified and surveyed: Coeur d’Alene, ID; Columbus, GA; Edwards, CO; Fredericksburg, TX; Heber City, UT; Rock Hill, SC; Torrington, CT; Truckee, CA. New Suburbanite Markets identified and surveyed: Brentwood, TN; Carmel Valley, CA; Chevy Chase, MD; East Bay, CA; Hunters Creek Village, TX; Potomac, MD; Westfield, NJ; Winnetka, IL Resorter Markets identified and surveyed: Aspen, CO; Bonita Springs, FL; Boca Raton, FL; Hamptons, NY; Lake Tahoe, CA; Maui, HI; Seattle Islands and Inlets, WA; Stowe, VT To profile the wealthy and their relationship to luxury, this report leverages the unique and proprietary Wealth-X Database. Graphs on pages 6 and 7: HNW Graph and Primary Industry Graph: High Net Worth Handbook 2019; VHNW Graph: Very High Net Worth Handbook 2020; UHNW Graph: World Ultra Wealth Report 2020 Note: The totals on Wealth-X graphs may not add up to 100% as a result of rounding. Quotes on Pages 10 and 11: Wealth-X’s Global Luxury Outlook 2020: A World of Changing Preferences. The Wealth-X database provides insights into affluent financial profiles, career history, known associates, affiliations, family background, education, philanthropic endeavors, passions, hobbies, interests and much more. The Wealth-X proprietary valuation model (as defined by net worth) assesses all asset holdings, including privately and publicly held businesses and investable assets. Statistical Data on Pages 14 and 15: Data contained is from December 1, 2019 to August 31, 2020 and has been computed by The Institute for Luxury Home Marketing’s data research partner and shared with Coldwell Banker Global Luxury ® and based on information attained both privately and publicly. Data is based on closed and recorded sides of homes sold during December 2019 through August 31, 2020 and represents 90 markets across the U.S. The Top 10% is defined as homes (or in terms of inventory, list prices), matching or exceeding the 90th percentile sold price for homes sold from December 1, 2019 to August 31, 2020. Closed sales reported later than this analysis period will not be included. All active status listing records were downloaded and processed to the same standards, at the end of each calendar month, from December 2019 through August 2020. Property-specific active and sales records were standardized, inaccurate list and sale prices were corrected when necessary, and all duplicate records were manually excluded. As a result, statistics available via the source data providers may not correlate to this analysis. DISCLAIMERS ©2020 Coldwell Banker. All Rights Reserved. Coldwell Banker and the Coldwell Banker logos are trademarks of Coldwell Banker Real Estate LLC. The Coldwell Banker® System is comprised of company owned offices which are owned by a subsidiary of Realogy Brokerage Group LLC and franchised offices which are independently owned and operated. The Coldwell Banker System fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. This report was compiled using the data platforms of WealthEngine, Wealth-X and The Institute for Luxury Home Marketing. Data is deemed reliable but not guaranteed for accuracy. The information contained herein has been compiled together for informational purposes. The Coldwell Banker ® brand is not making any recommendations for action based on the data within this report. Readers are encouraged to engage with their appropriate legal, accounting and professional counsel before implementing any suggested actions. The Coldwell Banker ® brand and WealthEngine, Wealth-X and The Institute for Luxury Home Marketing have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof and shall not be held liable for any claims or losses that may rise from the implementation of the data in this report. The data is subject to change at any time.


RESOURCES Page 24: 1 Pew Research, “Telework may save U.S. jobs in COVID-19 downturn, especially among college graduates.” (May 6, 2020) Page 25: ²Brookings Institute Page 28: ³“Zoom Towns and the New Housing Market for the Two Americas.” NPR (Sept 8, 2020) National Association of Realtors 2020 Market Recovery Survey, conducted June 24-26 Realtors were asked to describe locations where home shoppers were looking among those who shifted searches in response to COVID-19.

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C O L DW E L L B A N K E R G L O B A L LU X U RY W I S H E S TO A C K N OW L E D G E T H E C O N T R I B U TO R S TO A L O O K AT W E A LT H 2020:

C O L DW E L L B A N K E R L O C A L M A R K E T E X P E RT S : Aspen, CO – Carrie Wells

Hunters Creek Village, TX – Eric Campbell

Brentwood, TN – Ashley Boykin

Lake Tahoe, CA – Monique McIntrye

Boca Raton, FL – Jonathan Postma

Maui, HI – Dano Sayles

Bonita Springs, FL – Douglas Grant

Potomac/Traviliah, MD – Loretta Saba

Chevy Chase, MD – David Cox

Rock Hill, SC – Sam Grogan and Candace Thompson

Coeur d’Alene, ID – Kathleen Tillman

Torrington, CT – Katie French

East Bay, CA – Joel Goodrich

Truckee, CA – Christy Curtis and Jane Sheppard

Edwards, CO – Jennifer Coulson

Seattle, WA – Lisa Turnure

Fredericksburg, TX – Bizzy Darling

Stowe, VT – Mckee Macdonald

Hamptons, NY – Joe Piccinnini

Westfield, NJ – Frank Isoldi

Heber City, UT – Brad Jensen

Winnetka, IL – Dawn McKenna and Katie Moor


www.coldwellbankerluxury.com

RAMESH RAO

408.806.6496 | ramesh.rao@cbnorcal.com | www.RameshRaoRealtor.com

Profile for The Report Group

Ramesh Rao CBGL: A Look a Wealth 2020