Staggering Wealth Growth Drives Luxury Real Estate's New Power Players, Coldwell Banker Global Luxury Report Reveals

Coldwell Banker Real Estate and the Coldwell Banker Global Luxury program released the "Real Estate's New Power Players" report, part of the annual "A Look at Wealth" series. The luxury real estate market is seeing yet another dynamic year. Staggering wealth growth – driven by rebounding stock markets, cryptocurrency gains and higher 401(k)s – combined with soaring home prices and low interest rates meant buyers borrowed and saved more while reinvesting cash, leading to the emergence of a new set of Power Players redefining the meaning of luxury.

The report reflects that luxury real estate's latest movers and shakers have had tremendous influence on the market over the last 18 months. Nearly three times as many individuals with a net worth of $5 million and up own real estate in the $1 million to $5 million range compared to numbers in 2019, an 180% increase of luxury property ownership in a three-year period.

About 71% of those with a net worth over $5 million now own properties in the $1 million to $5 million range. In fact, luxury homes purchased from January through August 2021 in the $1 million to $5 million range jumped 142% for single-family homes and 129% for attached properties compared to the same period in 2019.

The growth in the volume of wealth has also been extraordinary; between 2019 and 2020, it rose by over 21%, and escalated to 79% when compared to January through August 2021 during the same eight months of 2019. Data from the end of August 2021 already shows that the volume of real estate wealth in the luxury property market is greater than both the full years of 2019 and 2020.

Coldwell Banker Real Estate gathered the latest wealth research and data generated by WealthEngine, Wealth-X, and other third-party sources and combined it with anecdotal evidence from Coldwell Banker Global Luxury® Property Specialists in the field to identify luxury's affluent Power Players dominating the shifting wealth archetypes in the current market. The four core groups identified are having a major impact on the luxury real estate landscape in 2021:

• Baby Boomers: Representing 51% of the Power Players, Baby Boomers, those aged between 57-75, are speeding up their retirement plans and moving into the home of their dreams. Many Boomers have leveraged the equity of their primary residences and sought out dream homes in more remote locales, like the rural countryside or resort towns. There are 2,020,854 Boomers who own more than three properties — the most out of any age group.

• Golden Millennials: Golden Millennials, those aged 35-40, represent 60% of all millennial-owned luxury properties today. Holding more focus on values and the desire for sustainability and authentic living, this age group has shown a greater propensity for secondary cities and suburban locations that can offer them enough space for work, school and access to amenities. The influence of Golden Millennials will be important to watch as their wealth and real estate portfolios grow.

• Second Homeowners: Largely attributed to the pandemic, many consumers desired a "get-away" residence, resulting in a rise in second-home purchases. Their influence on the overall luxury property market is one to watch; nearly 70% of those with a net worth of $5 million and up own two or more properties.

• Urban Repatriates: As COVID-19 restrictions ease, a resurgence of the nation's cities is prevalent. Luxury attached property values in 2021 increased an average of 14% compared to 2020 and 2019. Of the 184 U.S. cities reviewed by Wealth-X, there are 1,647,110 properties owned by the affluent with a net worth of $5 million and up in downtown cores as of August 2021.

With suburban settings, resort markets and secondary cities still booming, and major metropolises surging back, Coldwell Banker Global Luxury® also identified the top markets where Power Players are moving:

Baby Boomers

• Scottsdale, Arizona
• Sarasota, Florida
• Lowcountry, South Carolina (including Hilton Head, Bluffton and Beaufort)

Golden Millennials

• Atlanta, Georgia
• Chicagoland, Illinois
• Seattle, Washington

Second Homeowners

• Monterey, California
• Coeur d'Alene, Idaho
• Park City, Utah

Urban Repatriates

• San Francisco, California
• Boston, Massachusetts
• Brooklyn, New York

Shifting the priorities of all generations, the pandemic formed new hotspots in the luxury real estate market. As these Power Players continue to make moves in the high-end housing landscape, new definitions of luxury will emerge as they refine how and where their wealth is spent.

"In 2021, we've seen a continuation of trends we began to see in 2020, from renewed focus on family, health and wellness, to what we have seen this year with surging stock markets, soaring home prices and increased savings – all of these variables created a perfect equation for a profound shift in the volume of wealth. These factors propelled the market to new heights, altering the definition of luxury along the way," said Michael Altneu, vice president of luxury for Coldwell Banker Real Estate.

"The emergence of new Power Players flush with cash has been transformative in many markets around the country as affluent buyers flocked to sleepy rural towns, resort markets and the suburbs, and are now contributing to the resurgence of major cities. As interest rates remain low, paired with all-time high demand and the return of international buyers, the luxury market will continue to experience low inventory levels that we anticipate will have a lasting effect in the years to come," said Judy Zeder, co-founder and broker-associate of The Jills Zeder Group, Coldwell Banker Realty.

A Look at Wealth is a collaboration between the Coldwell Banker Global Luxury® program and Wealth-X, WealthEngine and the Institute for Luxury Home Marketing. Released once a year, A Look at Wealth is a supplement to The Report, which combines industry research with anecdotal insights from local market experts affiliated with the Coldwell Banker® brand.