Superior quality and a brand’s reputation are more important than price for high-earning millennials who are searching for luxury real estate, says a new survey by Engel & Völkers.
The company says it surveyed more than 1,000 millennials and the youngest members of Gen X (born between 1982 and 1999) who have an annual household income of more than $100,000 and the greatest earning potential. It calls this group HENRY (High Earners Not Rich Yet).
The goal was to find out their definitions of luxury, the key factors that influence their purchasing decisions and how brands, specifically real estate professionals, can reach them.
The report says for HENRYs, luxury isn’t necessarily tied to price point. In defining the characteristics that make a brand luxury, 80 per cent of respondents cite superior quality and 64 per cent cite excellent reputation/word of mouth, while only 47 per cent cite premium price.
When it comes to real estate specifically, only 38 per cent of HENRYs consider sales price to be an indicator of a luxury home or property. The top three indicators of a luxury home or property as identified by HENRYs are finishes, neighborhood/location and amenities.
When choosing a real estate agent, the three most important factors cited by HENRYs are referrals from friends and family (59 per cent), reputation in the local neighborhood (53 per cent) and local neighborhood expertise (50 per cent).
The study also found that social media influencers are extremely important in reaching HENRY buyers. Sixty-seven per cent of respondents follow influencers on social media, while 58 per cent follow influencers to learn about new products and ideas. Topic experts are the most followed category of influencers among HENRYs (65 per cent), surpassing celebrities.
Eighty-four per cent of HENRYs say that influencers have impacted their decision to make a purchase, and 80 per cent would consider hiring an influencer for their specific expertise, such as a fitness instructor, real estate agent or interior designer. Ninety-eight per cent of respondents rely on social media or a review-based website when choosing a service provider.
“With HENRYs poised to become the next generation of wealth, luxury brands must start planning as to how they will service this distinctive demographic,” says Anthony Hitt, president and CEO, Engel & Völkers Americas. “HENRYs define luxury in terms of quality, and they make purchasing decisions based on brand reputation and word of mouth. As such, authenticity has never been more important, and real estate agents should position themselves as trusted advisors and sources of insider information before, during and after the transaction. These consumers are going to seek out agents they feel are knowledgeable and trustworthy – and ones that they can relate to or even aspire to on certain levels.”
Hitt adds, “We hear the phrase ‘be a digital mayor’ often in our industry, but that’s not enough anymore. While you have to have the neighborhood knowledge, you also have to have a niche or distinguishing factor that blends this knowledge with entertainment or aspirational value that will make you a center of influence – building your following and referral base as a result.”
