The Affluent Homebuyer A Quest For Meaning White Paper
Luxury is transforming from the top-down. The high-end of the global real estate market is driven by savvy, affluent consumers who have learned to thrive in today’s new, post-recession reality.
The luxury industry itself has undergone a transformation and today, details that separate elite brands from one another are under intense scrutiny. This reality, marked by ever- growing bank accounts for the wealthy, supreme integration of technology and user experience, and a perceived lack of freshness, has created opportunity. Specifically it has opened the door for an emergence of disruptive brands to meet consumer needs with distinct offerings such as luxury homes by-the-night via Airbnb or Black Cars on-demand via Uber. At the same time, the emergence of private label brands, ranging from the indulgent Neiman Marcus cashmere collection, to the commonplace Whole Foods 365 brand are changing the way people evaluate how, where, and when to spend. Together, these trends are enabling today’s affluent consumer to have choices in all facets of their lives, that are plentiful, well- executed, and at times, available at a better value than traditional luxury brands have been.
QUALITY IS NOT ENOUGH Affluent and wealthy consumers have reached a point where “quality” has become an expectation in the world of luxury. It is a given. At the same time, traditional forms of luxury are losing their luster as consumers become familiar and ultimately bored with the “same old, same old.” More and more, the affluent today want something new and different and the once strong push to nd “the right products” is giving way to a search for something deeper, unique and more meaningful. For example, in the luxury auto space, buyers identify “a brand I have a lot in common with” as being a stronger influencer than one that is “high quality.”
THE IMPACT ON LUXURY REAL ESTATE If the affluent are selecting a car based on how well they relate to the brand, i.e. how personal it is to them and how connected they feel, are those same influences at play in their search for a home or a real estate professional? Yes, significantly. For the million-plus homebuyer, the number one most impactful trait they seek in their agent is trustworthiness. The second and third most important qualities are knowing the “details that distinguish the best” and “taking the time to understand my needs.” Just like with a luxury brand, a successful relationship with a real estate professional at this level is marked by a personal connection and deeper, more intimate relationships, as much as it is by expertise and high levels of service.
QUALITY HAS BEEN COMMODITIZED It is getting harder to nd differences in luxury brands and products in terms of functional quality and aesthetic beauty. FORGING A PERSONAL CONNECTION MATTERS Wealthy homebuyers prefer real estate professionals who cultivate a relationship that builds trust, and allows them to share truthfully about their needs and wants in a home. HOMEBUYERS WILL SEE MANY PROPERTIES, AND THEY ALL WILL BE GREAT Very few buyers at the million-dollar and above price point are looking to renovate completely (5%) or buy an older but completely renovated property (15%). Consensus forms around lots of privacy (55%) energy ef
FORGING A PERSONAL CONNECTION MATTERS Wealthy homebuyers prefer real estate professionals who cultivate a relationship that builds trust, and allows them to share truthfully about their needs and wants in a home. HOMEBUYERS WILL SEE MANY PROPERTIES, AND THEY ALL WILL BE GREAT Very few buyers at the million-dollar and above price point are looking to renovate completely (5%) or buy an older but completely renovated property (15%). Consensus forms around lots of privacy (55%) energy ef
HOMEBUYERS WILL SEE MANY PROPERTIES, AND THEY ALL WILL BE GREAT Very few buyers at the million-dollar and above price point are looking to renovate completely (5%) or buy an older but completely renovated property (15%). Consensus forms around lots of privacy (55%) energy ef ciency and environmental design (55%), a master with a luxury bathroom (54%) and walk in closets (51%), outdoor living/entertaining space (49%) and an open oor plan throughout the house (49%).
TYPICAL LUXURY EXPERIENCES LACK LUSTER What passed as a luxury experience even ve years ago today feels tired and uninspired. The principle of luxury that matters today is emotional connection, which starts with human interaction and transparency in the process.
HOMEBUYERS OF EVERY LEVEL SHARE COMMON NEEDS They all want someone they can trust, as well as, high quality products, artistic craftsmanship and impeccable service from their providers.
This search for meaning is not limited to nding a real estate professional, it is present in the home buying process as well. The following pro les show that, in fact, differences from the subtle to the dramatic can be found based on the buyer’s price range when comparing three markets, the $1 to $2 million buyer, the $2 to $5 million and the $5 million and above.
THE PRACTICAL EXPLORERS WEALTHY HOMEBUYER PROFILE #1
Luxury is not a core part of their vocabulary, so a purchase like a $1M to $2M home, may be seen as indulgent or extravagant.
Practical Explorers want to feel like they are making a smart decision. They have earned significant wealth, and have a relatively long experience with affluence, which ? makes them diligent shoppers who tend to nd a product/ brand they like and stick with it. Their passions focus on family- friendly activities and promoting personal wellbeing. Luxury is not central to their lifestyle.
KEY QUESTION: “WHAT ASPECTS OF A HOME MAKE YOU HAPPY?”
THE MEANING SEEKERS WEALTHY HOMEBUYER PROFILE #2
Meaning Seekers are looking for emotional connections in the things they buy & Their investment decisions are motivated by their values.
Meaning Seekers need to see themselves in the purchase. The purchase should reflect who they are, and their commitment to producing long- term good. Their passion reflects a desire to better understand the world they live in, and to improve themselves through experience and education.
KEY QUESTION: “DOES THIS HOME HELP ME LIVE THE BEST VERSION OF MY LIFE?”
THE POWER PLAYERS WEALTHY HOMEBUYER PROFILE #3
The pinnacle of consumer power, these ultra-affluent consumers can buy anything (although not everything) they want. They approach buying decisions with both rational and emotional considerations.
From a personal perspective, Power Players have a somewhat competitive relationship with luxury and their social circle. The need to cultivate a distinctive style is strong.
Luxury purchasing is far from an automatic response, but it has become engrained and is dif cult to shake. These buyers can prove very challenging to forge honest relationships with because they may fear appearing overindulgent about their consumption.
Power Players need to feel victorious. They are competing with their peers in a race for luxurious living. Their life tenet is being happy, ful lled and adding quality in everything they do. Their passions accentuate their luxury lifestyle.