Luxury Real Estate’s New Power Players: A Snapshot

  • blog.coldwellbankerluxury.com
  • 11/5/21

About 71% of U.S. luxury properties owned by those with a net worth over $5 million are now valued in the $1–$5 million range. These individuals have been dubbed the new “Power Players” — because of their outsized influence on the luxury real estate market over the last 18 months, as per the newly released report “A Look at Wealth: 2021” from the Coldwell Banker Global Luxury® program.

Using wealth data compiled by Wealth-X, WealthEngine and The Institute for Luxury Home Marketing, there are four key groups of Power Players who have expanded their wealth since 2019, and are primarily responsible for the bulk of luxury real estate transactions in this country today. Baby Boomers, Golden Millennials, Second Homeowners and Urban Repatriates are driving demand in the suburbs, resort markets and secondary cities. Many are even moving back to major metropolises — bucking the urban exodus trend of 2020.

Here’s a quick snapshot:

1. Second Homeowners still drive the 2021 market.

This power group gobbled up inventory and drove up prices in resort enclaves like Coeur D’Alene and Monterey. Their influence on the overall luxury property market is one to watch; nearly 70% of those with a net worth of $5 million+ own two or more properties.

2. Baby Boomers represent 51% of Power Players.

Speeding up retirement plans, they’re buying dream homes in places like Park City, where they can build family compounds near outdoor recreation, or Sarasota, Florida, where there’s sunny weather and a friendly tax environment. Boomers show greater affinity for second-home ownership, as well; there are 2,020,854 Boomers owning more than three properties, the most out of any age group.

4. Urban Repatriates pump up cities again.

Luxury attached property values in 2021 increased an average of 10% compared to 2020 and 2019, and number of sales is up 39%. Investors capitalizing on low interest rates and higher inventory in cities like San Francisco and New York are behind the uptick, as are newcomers flocking to the city and former residents who fled in 2020 and are now on the hunt for more square footage and outdoor space.


4. Golden Millennials own 60% of millennial-owned properties priced $1–$5 million.

Golden Millennials have reached the life stage (35–40) where they are getting married and having children. This, combined with shifting psychologies during the pandemic and inability to travel, pushed them toward suburban locations, like the Greater Chicagoland area, and hot secondary cities like Atlanta, where they can get more house for their money. The influence of Golden Millennials will be important to watch as their wealth and real estate portfolios grow.

 

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