After two years of YOLO (“You Only Live Once”) property buying, a change in buyer mindset is upon us, according to The Trend Report 2022 published by the Coldwell Banker Global Luxury® program.
Between rising economic uncertainty, stock and crypto market volatility, climate change, and living through an unprecedented health crisis, wealthy buyers have begun turning toward opportunities that give them long-term financial security and quality of life this year. To get a better understanding of how this mindset shift is impacting the luxury property market, Michael Altneu, Vice President of Global Luxury, recently spoke to David Marine, Chief Marketing Officer of Coldwell Banker Real Estate LLC.
Michael Altneu
How do you interpret this trend towards stability?
David Marine
I am viewing the trend through the Coldwell Banker brand’s continued understanding of the emotional aspects of property buying. During the pandemic, people were buying for emotional reasons, but a home really needed to address their family’s immediate needs – whether it was for more space, access to nature, or the health and safety of their family. Of course, these folks were searching for stability during this most uncertain period of time. The pandemic also gave others a greater appreciation for life, and they decided to follow their dreams – maybe it was buying that big dream house they always wanted or picking up and moving to the beach. What’s different about today is that buyers are not looking at real estate to fulfill their short-term needs anymore, or looking at it to solve immediate problems created by the pandemic – they are looking at it with a long-term view. “How do I create generational wealth for my family?” “Where do I want to set down roots for the next 5-, 7-, or 10- years?” Real estate has always been America’s favorite long-term investment. In a way, we are getting back to our roots.
Michael Altneu
There was a pretty strong stat in The Trend Report, that nearly 4 and 5 high-net-worth survey respondents think that real estate is a safe investment. Was this surprising to you?
David Marine
No, not at all! Wealthy individuals, in particular, have been known to consistently embrace real estate as an asset. You see this in their survey responses. Over 75% of respondents said they are planning a home purchase within the next one to six years, with more than 40% planning to move in the next one to three years. Coldwell Banker has always emphasized the value of home to our agents. A home is a place to live and your most important life investment, but it’s so much more than that. It’s an investment in your livelihood, your sense of safety and security, and of course, your family’s financial future. Another statistic that jumped out at me: in 50 markets, luxury home prices have seen an average 60% appreciation since 2017 while luxury attached home prices increased nearly 41%. This just reinforces the long-term value of real estate as an appreciating asset, and this also speaks to stability.
Michael Altneu
Are there other ways that the search for stability is playing out in the market?
David Marine
The Trend Report identified a few areas. Affluent buyers are increasingly embracing multiple homeownership. They are doing so for a number of reasons right now, including: 1) real estate is considered a hedge against inflation, 2) diversification, 3) lifestyle, or 4) generational wealth considerations. The Trend Report also predicts that traditional centers of luxury – cities like New York, Paris, London – will also be in the spotlight again as these locations tend to hold their value over time, and have maintained their reputations as safe havens for both foreign and domestic investors. Climate migrations are another consideration as people could start to seek out homes in locations that are less prone to natural disasters, such as hurricanes, wildfires, tornadoes, hail or wind events, or severe winter storms. And during this era of stability-seeking, primary properties might be held for longer periods of time.
Michael Altneu
Obviously we are in yet another time of uncertainty right now. What can agents do to alleviate their clients’ concerns or even calm their own anxieties about the future?
David Marine
First, I think it’s important to arm yourself with information. That’s why we are focused on educating agents with this report – so they can understand their clients better and how their psychologies might have subtly shifted in response to a changing world or changing economic conditions. Secondly, view any challenges as opportunities. Some clients may want to sit tight for a while since they don’t need to sell or buy. Keep the dialogue with them going even if they aren’t ready yet. Others may want a property that brings them long-term financial or physical security – but what does that mean to them? Is it an investment property? Is it a legacy home? Lastly, stability is not just about properties, but also about people. Buyers and sellers are going to be looking for real estate agents they can trust in this uncertain environment. Be that source of trusted guidance and information during this time. You could earn a client for life.
The post What Happens When Affluent Buyers Shift Their Mindset Towards Stability appeared first on Coldwell Banker Global Luxury Blog - Luxury Home & Style.
