The Luxury Institute conducted research among wealthy consumers in the United States with a minimum household income of $200,000 per year and a minimum net worth of $5 million.
A nationwide in-depth survey of 506 ultra-wealthy U.S. consumers was conducted in Quarter 2 2014.
Respondents were recruited and screened to include only those age 21 or older with a minimum gross annual income of $200,000 and a minimum net worth of $5 million.
According to the latest (2010) Federal Reserve Board Survey of Consumer Finances (SCF), this criteria represents the top 1.2% of U.S. households (1.5 million households).
The survey data have been weighted with respect to the demographic variables shown in this table to better reflect the profile of consumers in ultra-wealthy households according to the 2010 Survey of Consumer Finances.
MOST RECENT PROPERTY PURCHASE:
- A majority (63%) of these consumers report paying for their most recent property in all cash transactions.
- Pentamillionaires 35 and under reported the highest average purchase price of all age groups – $7.8M – and are the largest percentage of all age groups paying cash – 80%.
- In a dramatic age gap, wealthy buyers 45-64 paid an average of $2.7M for their most recent home purchase while buyers 65 and older spent just $1M.
- Significantly more women – 70% – reported paying cash than men – 57%
NEAR-TERM PLANS TO PURCHASE:
- 38% of pentamillionaires surveyed say they are considering the purchase of residential real estate for personal use in the next 12 months, up from 34% observed in the 2013 survey.
- Driving the increase in this year’s survey are female pentamillionaires. In 2013, 31% reported they were considering a home purchase. In 2014, the number grew to 46%.
- Far more wealthy consumers (21% vs. 7% in 2013) are considering a purchase in order to own a green or eco-friendly home.
- On average, respondents expect a purchase to increase in value by 15% in the next 5 years. Those with a net worth exceeding $10 million had the highest expectation for residential property appreciation – 18%.
NEXT RESIDENTIAL PROPERTY SEARCH:
Lifestyle vs. location:
- 75% of wealthy consumers under 35 have the freedom to choose a property based on their lifestyle.
- 86% of older consumers (over 65) still report that location is the most important.
Social media generation gap:
- When it comes to the choices they make in their next property search, there is a significant generation gap in social influence between younger and older pentamillionaires. Over 50% of consumers under 35 reported that social media and online reviews influence their choices while less than 10% of consumers over 65 reported the same.
Strong desire for a turn-key property:
- Instant gratification is important to 58% of wealthy consumers with a “turn-key” property that is fully built, equipped and move-in ready is more important today than it was in the past.
- The number is even larger among younger consumers, with 72% reporting that a turn-key property is important.
Trends in desired home amenities:
- Safe rooms grew in importance with ultra-wealthy consumers over last year’s survey, particularly those under 35 – 37% – and those whose net worth exceeds $10M – 30%.
- More women than men reported that multi-car garages are more important than in the past.