HENRY — an acronym that stands for “high earners not rich yet” — describes a niche subset of the population that represents the next generation of wealth. Today, HENRYs are comprised largely of millennials (and some of the youngest members of Gen X) who earn an annual household income of more than $100,000. As these top earners are well on their way to becoming tomorrow’s affluent consumer, real estate professionals are best suited to start paying attention to this influential demographic now.
Millennials tend to differ from previous generations when it comes to how they navigate their career paths, when they decide to get married and start families, and the premium they place on travel and experiences. It should come as no surprise, then, that the way in which millennial HENRYs make purchasing decisions, specifically when it comes to buying a home, also differs from generations past.
Inside the mind of the HENRYs
First, it’s worth noting that the American dream of homeownership is still very much alive and well for millennial HENRYs. According our recent study, 97 percent of millennial HENRYs either own a home or plan to purchase a home, while nearly three-quarters either already own or plan to own a second home.
However, HENRYs are changing the traditional definitions and attributes associated with luxury, and specifically as it relates to what a luxury home means to them. When asked what makes a brand luxury, 80 percent said superior quality and 64 percent cited excellent reputation/word of mouth, while only 47 percent said premium price.
The role of price in determining luxury diminishes even further when it comes to home buying: only 38 percent of HENRYs identified price as an indicator of a luxury home. Accordingly to an recent industry study, real estate professionals, on the other hand, overwhelming cited sales price (78 percent) as the top indicator of a luxury home. The top indicator of a luxury home as identified by 68 percent millennial HENRYs is finishes.
Location and amenities were ranked as the second and third most important factors in determining what makes for a luxury property, respectively, by both real estate professionals and millennial HENRYs.
What are HENRYs willing to pay for?
This tells us as real estate professionals that millennial HENRYs are willing to pay for what they want and value in a home, i.e. finishes, neighborhood, amenities, etc., but that luxury isn’t determined by price tag alone. Rather, for this demographic, luxury means a home that suits their unique preferences and needs, and beyond that, the lifestyle they want to achieve.
Whether that means living in a chalet at the base of a mountain year-round in Aspen, or a beachside bungalow on Hilton Head Island, HENRYs are precisely curating their lifestyles to reflect their unique preferences.
Luxury is more than just a property — it’s the enjoyment of life according to each client’s unique and personal definition of what luxury means to them.
How HENRYs conduct business
The way HENRYs select real estate agents and the value that HENRYs expect agents to bring to the table is also distinct. Perhaps most notably, two-thirds of HENRYs follow influencers on social media, 84 percent have made a purchase because of a social media influencer, and 80 percent of HENRYs would consider hiring an influencer for their topic expertise. The top platforms on which HENRYs follow influencers are Instagram (67 percent), Facebook (55 percent) and YouTube (38 percent).
Referrals have always been important for real estate professionals, but takes on a new significance in the age of social media where “word of mouth” recommendations are amplified across any number of digital channels and influencer marketing is proving to be extremely effective. Investing in building a brand online and showcasing market knowledge and local neighborhood expertise can go a long way for real estate professionals in attracting HENRYs as clients.
The traditional notion of the luxury real estate buyer is changing, and this divergence will only become more pronounced as HENRYs mature and accumulate wealth. Real estate professionals must understand the distinct ways that millennial HENRYs define luxury and approach the homebuying process, and perhaps most importantly, agents must adjust their own preconceived views on luxury and influence in order to best serve this demographic of emerging affluence.