The new Lead of Luxury Markets: Millennials

There’s been a new and significant shift in the luxury real estate market: Millennials are now responsible for nearly 60 percent of purchases for homes 3 million dollars and above, according to a new report by Engel & Völkers, a multinational real estate firm. This change has seen those born between 1981 and 1996 take the top spot from baby boomers (born from 1946 to 1964). Most of these luxury millennials are buying their second home and prefer locations near recreational attractions, like bars, restaurants, theaters, spas and gyms. They also prefer neighborhoods with amenities, including pools, dog parks and children’s playgrounds. Although baby boomers will continue to influence the economy, they are now empowering the younger generations, like Millennials and Gen-Xers, with the financial means to lead the future of the luxury segment of real estate. 

It comes without question that many will wonder how, exactly, these many Millennials are able to afford 3+ million dollar properties. Talking with several real estate agents in my network, the question mostly traced back to the same answer: inheritance. The wealth left behind by the decreasing population of Baby Boomers is without a doubt being inherited by their children and grandchildren, one agent said. “Many of them [baby boomers'] own large acres of land, which has seen exponential price increases not only in the last four years, but in the last fifty.” An interesting study would thereby look into this observation to ascertain whether this is the case. It’s no secret that Millennials are not seeing the same economic growth previous generations did. A Bloomberg article from 2021 reported that 40 year old Millennials at the time were only 80 percent as wealthy as their parents at the same age. “Millennials in the U.S. at 40 are doing worse financially than the generations that came before them,” the article stated. “Fewer millennials own homes than their parents did at their age. They have more debt — especially student debt. They simply aren’t as wealthy.” So there’s more to this shift than the Engel & Völkers report is able to look into. Nonetheless, real estate agents need to adapt to this new shift and tackle the opportunities it presents.