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It has been a year of unprecedented change that’s caused the wealthy to relocate to markets with newly acquired appeal, according to Coldwell Banker’s “A Look At Wealth: New Affluent Trailblazers” report.
Shattering traditional migration patterns and demographic factors, the “affluent trailblazers” of 2020 are moving away from cities and prioritizing family wellness, privacy and space. With research gathered from WealthEngine, Wealth-X, other third-party sources, as well as Coldwell Banker Global Luxury Property specialists, the brokerage identified three primary groups of luxury homebuyers that have emerged this year: Explorers, New Suburbanites and Resorters.
“They’re doing things that are different from what you maybe would expect from the traditional luxury homebuyer and influencer,” David Marine, chief marketing officer at Coldwell Banker, told Inman about these buyers.
“Like many of us, they’re actually choosing housing locations and where to purchase real estate based on lifestyle factors, like family and health, rather than, ‘I want to live in this area because this is where my business is,” Marine said. “It’s interesting that the affluent are being impacted in much the same way that a lot of the everyday type of person now who is looking and considering moving for different reasons outside of being close to work.”
2020’s new affluent trailblazers
The report characterizes explorers as a younger demographic (typically under 39 years old), married with at least one child, and with a net worth of between $1 million to $5 million. This group is looking to explore the exurbs or other hidden gems that may be more affordable and rural, offer better schools and provide more open space.
New suburbanites are bringing new life to the ‘sleepy suburbs’ of old, preferring suburbs with ample space, private backyards, home offices and good schools. Many also want a taste of city culture with restaurants and retail that offer open, green spaces.
These buyers tend to have a higher net worth of about $5 to $10 million, and are a slightly older demographic than explorers, between the ages of 39 and 54, often married with children. Many in this buyer group have the flexibility to work from home with jobs as business owners and senior managers, but may still need to be within commuting distance of cities for their work.
As their name indicates, the third emerging group of luxury buyers this year is migrating to resort destinations to enjoy outdoor recreation and luxury amenities. Most members of this group are choosing location based on their passion, and may be permanently moving to a favorite vacation destination or converting a second home into a primary residence.
Resorters are typically in the highest wealth bracket of $10 million and over, are usually slightly older (above 54), and are married with adult children. Most are established business owners with management that operates onsite in their absence, giving them freedom to work remotely. These buyers “place a premium on privacy and freedom” and are fans of luxury toys like cars, boats and other collectibles.
Where they’re moving
The emergence of these three luxury buyer groups in 2020 has led to a rise in some surprising luxury markets, largely unmapped by buyers in recent years.
Explorers, for instance, have found new appeal in Fredericksburg, Texas; Truckee, California; and Rock Hill, South Carolina. New Suburbanites, on the other hand, are moving to Winnetka, Illinois; Westfield, New Jersey; and Brentwood, Tennessee. Cities that have gained renewed popularity for Resorters in 2020 include Aspen, Colorado; Boca Raton, Florida; and The Hamptons, New York.
“It’s not a surprise to me as someone who has lived most of their life in New Jersey,” Marine said. “But, probably to a lot of people, [a surprise hidden gem] is Westfield, New Jersey … You’ve heard of Hoboken, as a trendy, close-to-the-city-type of town, but Westfield is actually one of the nicest towns in New Jersey that has a commuting distance to the city as well as the suburbs area. It’s really a great little hamlet, if you will, that’s on the eastern side of New Jersey, and it’s got a great school system and a lot of attention there.”
Why they’re relocating
COVID-19 has given luxury buyers several incentives to move, according to Coldwell Banker’s report. The rise of teleworking is foremost among them, with a significant portion of the nation’s workforce transitioning to remote work during the pandemic.
According to a Pew Research survey conducted in late March, 40 percent of adults between the ages of 18 and 64 worked remotely as a result of the pandemic, and according to a study by the Brookings Institute, higher-income workers are much more likely to be teleworkers.
The opportunity to spread their wealth further has also inspired wealthy buyers to move to lower-cost areas and out of luxury hotspots in New York and California, particularly as the economy has wavered this year amid the pandemic. In addition, record low interest rates have also enticed wealthy buyers.
Swift major life changes and transforming residential preferences have also made buyers pull the trigger this year. In light of the pandemic, many people have decided to move closer to family or move in with a significant other more quickly than anticipated, leading to migration among 2020’s affluent trailblazers.
With many families accommodating working and schooling from home, buyers are also looking for segmented homes that can easily make space for a home office or home gym, and have plenty of outdoor space for recreation.