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MSC Insights: Understanding Today’s Luxury Buyer

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Luxury Portfolio Affluence Forum 2018

Last week, LeadingRE and Luxury Portfolio hosted the last of its mid-year forums, the Luxury Portfolio Affluence Forum in New York City.

Geared toward all affiliate brokerage staff involved in the marketing of luxury properties around the globe, MSC Marketing attended to network with peers from across the country (plus two international attendees) as well as hear the latest insights on what drives the purchase journey of today’s affluent consumer.

Here are our top 5 takeaways and speaker highlights.

Think Psychographics, Not Demographics.

Luxury consumers today are different than they were a decade ago. Perhaps the most prominent trend that threaded throughout the two-day conference was the notion of luxury consumers as a mindset, not an age.

None better elaborated on that topic than the team from the international, Internet-based market research and data analytics firm YouGov. Chandler Mount, Vice President of YouGov and Cara David, Managing Partner of YouGov, dove in immediately the second morning of the forum, revealing the global high-net-worth population is growing at an exponential rate (127% increase in $50M+ earners since 2010). This, in conjunction with a rising young aristocracy being fueled by higher levels of education, means the age-old tactic (pun intended) of putting consumers into tidy categories based on their year of birth is not an effective way of connecting. In the end, the lifestyle fit the consumer is trying to achieve is the most important determining factor in finding their next home or second home.

Whether they’re risk-takers, activists or foodies, however, some things rang true across the majority of those surveyed:

  • 61% Said they are tuning out the “noise of the world” (which could, in turn, affect the type of marketing tactics employed)
    • 81% of those “tuning out” are taking steps to simplify their life
  • 62% want luxury brands to take them more seriously as a consumer
  • Cybersecurity is their top concern with just under half of those surveyed also concerned they may not retain their wealth due to cryptocurrencies or political unrest
  • More affluent consumers are making real estate purchases based on quality of investment rather than guilty pleasure

A “Characterful” Home is a Happy Home

Peter Pennoyer Architects; Photographer: Scott Frances

Design: Peter Pennoyer Architects; Photographer: Scott Frances

NYC Architect Peter Pennoyer said it best when he noted that “people want to remember the process” of creating their home. His expertise on renovating the structural nuances of The Big Apple, along with that of acclaimed interior designer Jae Joo and HomePolish Founder and CEO Noa Santos, clearly communicated the affluent customer looks to romanticize personal memories through the décor and design of their home. These “collected moments,” as Santos called them, become a characterful reflection of the life consumers want to remember and continue to lead.

Their tips for real estate professionals and home buyers? If you’re looking at the spaces too literally but love the location of a home, tap into your local interior design network and arrange another walkthrough of the property focusing on how the home can be transformed.

Friendly, But Not Familiar

Stephanie Anton, President of Luxury Portfolio, kicked off the conference with a global market update and a quick overview of notable trends making a splash in luxury; among them the focus on “local.” Giving the example of Hilton’s latest extension, LXR Hotels and Resorts, Anton discussed the quiet brand shift of three major luxury hotels in Dubai as a means for the hotels to retain their independent operation while also including them in the Hilton portfolio. She highlighted a comment given by a Hilton spokesperson when interviewed by Hotel Business:

“At Hilton, we are continuously evaluating the market, examining trends and listening to traveler and owner feedback so that we can better address new guests and new markets…we have developed LXR, a luxury collections brand comprising independent, iconic properties that maintain their own identity but are united by the benefits of the Hilton enterprise and award-winning Honors program.”

Mickey Khan, Founder and Editor in Chief of Luxury Daily, kicked off the panelist discussions following this presentation with the same topic, mentioning that “local” is the new, underlying trait of many business models, even those of the luxury goliaths. Brands, however, shouldn’t leap to change as an effort to gain clientele. The intuitive consumer of today’s clickbait age looking to tune out the noise of the world can detect inauthenticity from the seat of their private jet. As the source for all things high-end, he noted that local is something earned by being a concierge to your community no matter what line of luxury business you pursue. The greatest asset a company has is knowing its people and knowing its neighborhood. To see how Michael Saunders & Company prides itself on being an ever-present resource to the community, make sure you read our blog post paying homage to our independent heritage.

 

Affinity-based Relationships Drive the Purchase Journey

An additional insight given by YouGov was that many of the world’s affluent at times feel isolated by the very success that has amassed them their wealth. This tends to result in the enclave behavior of master-planned communities, where high-net-worth individuals are able to enjoy the high-end lifestyle and wellness offerings very much ingrained in their identity and provide them with neighbors that share those interests. This extends to choosing real estate agents, as many affluent consumers looking to buy or sell their residences choose to seek out professionals that have similar interests and, thus, a firsthand understanding of their individual needs.

 

The Global Luxury Market Is Doing Well…Especially Sarasota

In her opening market update, Stephanie Anton alluded to the end of Q2 as a “tale of two markets,” meaning that some markets were very hot while others very cool. Overall, prices were up in almost all markets and inventory challenges persisted whether the high demand was driving numbers down or recent tax reform caused consumers to press pause.

Stephanie Anton, Luxury Portfolio President

Stephanie Anton, Luxury Portfolio President, giving the Global Market Update

  •  19 of 91 major U.S. markets posted double-digit price growth in the top 5%
  • $1-million-plus sales rose 13% year-over-year
  •  Nationally, luxury prices are up 5%

State-by-state highlights:

  •  California:

    • N. California – Seven markets showed significant price growth: Santa Clara (14%), Santa Cruz (13%), San Mateo (13%), Sonoma (10%), San Luis Obispo (10%), Sacramento (10%), Marin (9.7%)
  • Florida:

    • Prices in Florida are rising at the fastest pace in 5 years – Luxury up 16% in Q2 vs 7% for the rest of the market
    • The fastest-growing market was Sarasota, with sales price up 21.2%.
    • Half of the luxury homes in Sarasota sold within 157 days on the market, 21% faster than the same month last year
    • Southwestern Florida’s luxury home sales were the highest in at least a decade, rising 25% from a year earlier
  • New York

    • Queens, New York
      • The second fast-growing market in the country. Luxury sales price in the county rose 16%.
    • Manhattan
      • Q2 was the worst quarter since the financial crisis with the average sale price down 5% and total sales down 17%
      • Oversupply (16 months) as a result of foreign buyers, tax changes and a volatile stock market
    • Westchester County – The nation’s highest property taxes
      • Sales down 18% and inventory up almost 5%
      • $1.5 million to $3 million range most affected
      • Number of homes at $2 million to $2.49 million up 26%
      • Scarsdale – Median price fell 5%
      • Mamaroneck – Median price fell 13%
  • Colorado:

    • Boulder (14%), Douglas (11%) and Denver (11%) all saw double-digit growth and typically sell in under 95 days, among the faster-selling luxury markets in the country.
  • Texas:

    • Houston home prices rose to another record high in July
    • Home sales YTD are 3.4% ahead of a record-breaking 2017
    • Luxury homes priced from $750,000 and up rose 6.3%

Sources: Q2 LuxuryPortfolio.com data, Realtor.com, NAR, Redfin

For specific market information about the Manatee, Charlotte and Lee counties or a deeper dive into the information provided on Sarasota County, please connect with one of our highly-qualified agents.

MSC Insights: Understanding Today’s Luxury Buyer was last modified: October 1st, 2018 by Samantha Emelock

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