The luxury housing market is being driven by millennials, who are replacing baby boomers as the primary buyers, according to a new report from Engel & Völkers. 

The company says its findings represent “a significant shift and transfer of wealth and property” from the older demographic and has identified five key trends among luxury home buyers. 

The first trend is “peak luxury buyers” who are looking to purchase homes above the $3 million price point. Of these buyers, researchers found 59 per cent are millennials, with two-thirds working in jobs that allow them to work from anywhere. 

As a result, almost all of them either own or plan to buy a second home. Engel & Völkers recommends that real estate professionals stay active on social media to reach this group of buyers, who rely heavily on sites like Instagram and Facebook.

The “next generation luxury influencer” is a distinct subset of buyers curating their own personal brand of luxury and sharing it online, says the company. 

Researchers found more than half of these buyers are millennials who tend to invest in experiences and external markers of wealth and status. When working with real estate agents, they value local market and luxury expertise and are likely to spend more than $1 million on their next home.

The study also identified “international buyers” who are looking to purchase outside North America and millennials or Gen Z. They are real estate savvy, with 41 per cent owning more than one home and 23 per cent owning three or more, according to the report. Engel & Völkers recommends agents have knowledge of local and international markets and can be flexible with their schedules.

The report also identified “second home seekers” who, in the luxury market, are typically married millennials or Gen X with children in the household. 

A third will be looking to buy in a different region from where they currently live, and almost all want their residence to be convenient for recreational activities. 

Engel & Völkers notes that nearly half of these buyers are motivated to buy a second home sooner due to interest rates and say they value agents who can help them compare the advantages and disadvantages of different properties.

The final trend identified by the luxury brand is “emerging affluence,”  this group comprises first-time homebuyers making over $100,000 per year who are prioritizing the neighbourhood, walkability and proximity to restaurants and work. 

This group is more likely to have moved to a new city and started a new job within the past year, according to Engel & Völkers. The company says nearly half will reach out to a real estate professional for help before identifying homes they’re interested in online.

“Baby boomers will continue to have a lasting effect on our economy, empowering millennials with financial means to largely drive the buy side of the real estate market in the years to come,” says Anthony Hitt, president and CEO, Engel & Völkers Americas.

Hitt adds, “…It’s important to understand and adapt to the evolving preferences of new generations who are taking up more space in the market.”

REM Editorial Team