If your only mental image of a luxury real estate buyer is an old man in a Porsche, it’s time to expand your client base.
The average millennial millionaire in America already owns three properties, boasts an average real estate portfolio worth of $1.4 million and is set to inherit even more in the years to come, according to Coldwell Banker’s latest report on millennial wealth.
Released last month, the report found that millennials will overtake boomers as the largest living adult generation and inherit more than $68 trillion in wealth from their predecessors by 2030. Millennial millionaires, in particular, are going to be a strong force for the real estate market. Today, the average millionaire is already between 34 and 37 years old, has a net worth of between $1 and $2.49 million and will inherit even more from their parents.
“There is already a large and growing population of millennial millionaires, and there will be even more created over the next decade according to projections,” Craig Hogan, vice president of luxury for Coldwell Banker said in a statement. “The big question is, ‘What will this generation do with their wealth when the Great Wealth Transfer takes place?'”
While millennial millionaires currently make up 2 percent of the country’s millionaire population and 0.2 percent of its general population, the ones with wealth and real estate buying power will only continue to grow. Baby boomers, or people born between 1946 and 1964, are currently the wealthiest generation in history. As they age and start to transfer that wealth onto their children, what is known in economic circles as the Great Wealth Transfer will only increase the wealth of current young millionaires.
And, naturally, that will also affect real estate buying trends. At the moment, 92 percent of millennial millionaires have already purchased properties and 80 percent have bought a single-family residence. The majority (44 percent) live in California with New York, Florida, Massachusetts and Texas closely following as states with high numbers of wealthy millennials.
According to the report, there is also a high number of millennials who are not wealthy today but will become so after inheriting money from their parents. And while it is not clear how many will keep family homes and how many will sell them, analysts predict that, as wealthy millennials age, many will want to play the real estate market with both earned and inherited wealth.
“I think today’s millennials have a real traveler’s spirit, as compared to previous generations,” Coldwell Banker luxury ambassador Danny Hertzberg said in a statement. “If they inherit properties from their parents, I would think they would be looking to sell them and look for more vacation homes in nontraditional markets where their dollar goes a little further yet still offer the lifestyle they want.”