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A LOOK AT WEALTH 2019 MILLENNIAL MILLIONAIRES2 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 3 S ometime this year, millennials are projected to overtake baby boomers as the largest living adult generation in America. By 2030, millennials will hold five times as much wealth as they have today, and are expected to inherit over $68 trillion from their predecessors in the Great Transfer of Wealth. 1In order to help luxury real estate professionals better understand this influential group of current and future homebuyers, the Coldwell Banker Global Luxury program has partnered with WealthEngine to analyze key aspects of the millennial millionaire lifestyle, including wealth creation, philanthropy, property investments, spending trends and more. “There is already a large and growing population of millennial millionaires, and there will be even more created over the next decade according to projections,” says Craig Hogan, vice president of luxury for Coldwell Banker Real Estate LLC. “The big question is, What will this generation do with their wealth when the Great Wealth Transfer takes place? We want Global Luxury Property Specialists to be ahead of the game. If you want to have a future in luxury real estate, its imperative that you learn how to connect with them in authentic ways and create lifelong clients.” WEALTH MILLENNIALS and 5 times as they have today. wealth as much millennials will hold By 2030, WealthEngine, “The 2019 Millennial Wealth Report.“ WealthEngine and the Coldwell Banker Global Luxury program analyze how the youngest millionaires think, act, spend, give and live. 4 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 5 MILLENNIALS BABY BOOMERS THE MILLENNIAL BOOM * The United States Census Bureau uses the birth years 1982 to 2000 to define millennials, but has acknowledged that “there is no official start and end date for when millennials were born.” For the purposes of this report, WealthEngine is using the birth years 1982 to 1996 to define millennials, or ages 2337 in 2019. According to Pew Research Center, millennials* are on the cusp of surpassing Baby Boomers as the nations largest living adult generation. “Millennials are expected to overtake Boomers in population in 2019 as their numbers swell to 73 million due to immigration and Boomers decline to 72 million,” Pew stated. 2Millennials also now make up the largest group of homebuyers in the nation. 3 2 Pew Research, “Millennials Projected to Overtake Baby Boomers as Americas Largest Generation” 3 National Association of REALTORS , “2019 Home Buyers and Sellers Generational Report” POPULATION CHANGE PROJECTIONS 2016 2019 71 73 74 72 MILLION MILLION MILLION MILLION6 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 7 THE GREAT WEALTH TRANSFER WealthEngine defines millionaires as those who have a net worth (assets minus liabilities) of over $1 million. “We focus on net worth as opposed to income, because it is a more accurate accounting of spendability,” explains Moira Boyle of WealthEngine. “Its considered a better gauge of wealth because a persons income is subject to all kinds of obligations that can leave little or nothing once bills are paid.” According to WealthEngine data, there are approximately 618,000 millennial millionaires. Millennial millionaires make up approximately 2% of the total U.S. millionaire population and 0.2% of the general U.S. population “roughly the same volume as the total millionaire population during the countrys last millionaire boom in the early 1980s,” notes Moira Boyle. The difference between the millionaires of the early 1980s and the ones being created today is that many of them stand to inherit even more wealth from their baby boomer parents, who are considered the wealthiest generation in history. This event has been called the “Great Wealth Transfer.” Over the next few decades, it is estimated that $68 trillion will be passed down from aging Boomers to their beneficiaries. 4While the inheritance component is hard to quantify with the current data available, there are still many millennials who are not considered wealthy today, but will be in the future. “Will they sell the luxury properties they inherit from their parents, or will they keep them?” asks Hogan. “You can be assured that the Coldwell Banker Global Luxury program will be watching to see what they do with their newfound wealth.” 4 WealthEngine, “The 2019 Millennial Wealth Report.“ TRILLION $ 688 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 9 WEALTH BUILDING The vast majority (93%) of millennial millionaires have a net worth between $1 million and $2.49 million. Most (about 45%) are between the ages of 34 and 37. About 15% of millennial millionaires are business owners, “which is exciting because of the potential real estate commitment being tied to the community where their business is located,” notes Hogan. 45 % 15 % NET WORTH $1M - $2.49M AGES 34 - 37 BUSINESS OWNERS 93 %10 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 11 CALIFORNIA VS. NEW YORK CALIFORNIA VS. NEW YORK 12 % 11 % 61 % 57 % $ 100K - $ 500K $ 100K - $ 500K $ 500K - $ 1M $ 500K - $ 1M Have investable assets between Have investable assets between Have investable assets between Have investable assets between 76 % 63 % 8 % 10 % $ 1M - $ 2M $ 1M - $ 2M $ 2M - $ 5M $ 2M - $ 5M Have a real estate portfolio between Have a real estate portfolio between Have a real estate portfolio between Have a real estate portfolio between INVESTABLE ASSETS REAL ESTATE PORTFOLIO $ 100K - $ 500K 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 $ 500K - $ 1M $ 1M - $ 5M $ 5M - $ 10M $ 10M+ Up to $ 250K $ 250K- $ 750K $ 750K- $ 1M $ 1M- $ 2M $ 2M- $ 5M $ 5M- $ 10M $ 10M+ 0 100,000 200,000 300,000 400,000 500,000 600,000 In general, millennial millionaires are showing a strong foundation of investable assets and real estate. # of Millennial Millionaires # of Millennial Millionaires12 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 13 MILLIONAIRES VS. MILLENNIAL MILLIONAIRES Millionaires Millennial Millionaires 76 % 1 22 % 42 % 51 % 84 % 94 % 80 % 2.4 $919K 67 % 1 14 % 20 %56 %93 % 92 % 80 % 3 $1.4M Marital Status Children Business Owner College Education Charity Participation Net Worth $1-2.5M Homeowner Single Family Home Average No. Properties Average Real Estate Portfolio14 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 15 ATTITUDES TOWARDS HOMEOWNERSHIP Millennials have grown up in a time of rapid change in terms of technological advancement, globalization and economic disruption which gives them a unique set of priorities and expectations that are different than those of previous generations. For instance, they tend to put off significant milestones like marriage and children. Because this generation was significantly impacted by the Great Recession, they have been slower to accumulate wealth than previous generations and thus have been slower to take on mortgage debt. This delay of home ownership has led some to label them as the “Rent Generation.” However, this picture is not entirely accurate. Just because millennials are delaying marriage doesnt mean they want to stay single forever. In fact, 67% of millennial millionaires are already married, compared to 40% of the general millennial population. Both millennials and millennial millionaires have one child on average. About 63% of millennials have purchased property, with 57% purchasing a single- family dwelling unit. Not surprisingly, home ownership is even higher among millennial millionaires, as 92% of them have purchased property. A vast majority (80%) also bought a single-family dwelling unit. The average real estate portfolio of millennial millionaires is worth $1,367,022, distributed across about three properties on average. 92 % $ 1.4M 80 % Millennial millionaires who have purchased property Millennial millionaires who have bought a single-family dwelling Average real estate portfolio of millennial millionaires Some real estate agents in major luxury markets have privately lamented that younger generations of millionaires arent interested in fixer-uppers. However, 77% of millennial millionaires say that they are interested in home improvement. This appears to be at least anecdotally true, especially in high-cost cities on the West Coast. Jade Mills, a Coldwell Banker Global Luxury Ambassador and Beverly Hills leading real estate professional, has observed that some affluent millennials cannot afford new construction properties, so they have resorted to choosing a desirable area and doing some work. “It used to be that West Hollywood was affordable,” she says. “But now that it has gone up in price, rather than not purchase at all, millennials are purchasing property that needs work as long as they are in the area that they want to be in.” HOME IMPROVEMENT16 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 17 Miami-based Danny Hertzberg, a Coldwell Banker Global Luxury Ambassador and a member of the top-producing The Jills-Zeder Group from Coldwell Banker Residential Real Estate in Florida, theorizes that what affluent millennials view as home improvement and what other generations view as home improvement may be two different things. “What Ive been seeing is that affluent millennial buyers are gravitating toward new construction modern product with open floor plans,” says Hertzberg, a millennial himself. “However, they still want to personalize their spaces. So they might buy something that is turnkey in the traditional sense, but they will change out the countertops or the hardware or install a specific type of flooring to make their home feel like their own. Home improvement to a millennial buyer is paneling the walls in reclaimed wood, not necessarily taking on big renovation projects.” Silicon Valley top-producing team Karen Yang and Christopher Fling of Coldwell Banker Residential Brokerage in Los Altos have found that millennial buyers tend to shy away from fixers in their marketplace. “I cant tell you how many times we hear our millennial clients sheepishly admit that they are not really handy,” says Yang. This is especially true of younger millennials. Adds Fling: “Moving into a house that is not renovated, or a house that needs work? Theyre just not into Both younger and older millennial millionaires in Silicon Valley share the view that real estate is key to wealth creation. Even younger millionaires in their 20s who know their life is going to change and probably only plan on living in a property for two to three years. They have the intention of hanging on to the property afterwards and converting to a rental property, according to Fling. “They know that wealth building begins with that first primary residence.” it.” As millennial millionaires age and shift priorities toward marriage and family building, however, this may be less true. They become more interested in buying the biggest house in the best location they can, even if it needs fixing, says Yang. “And they have the funds to do it, too.” WEALTH CREATION “Home improvement to a millennial buyer is paneling the walls in reclaimed wood, not necessarily taking on big renovation projects.” Danny Hertzberg 77% of millennial millionaires are interested in home improvement18 | COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 COLDWELL BANKER GLOBAL LUXURY / WEALTH ENGINES MILLENNIAL WEALTH REPORT 2019 | 19 WHERE THEY LIVE Consistent with the general millionaire population, the majority of millennial millionaires are concentrated in California (44%). After that, New York, Florida, Massachusetts and Texas are the states with the largest populations of millennial millionaires. The high concentration of millennial millionaires in California follows another trend: the Golden State also has the highest percentage of business owners (23%) and the highest percentage of real estate investors. In California, its almost at 25%, which is an indicator for increased real estate purchasing. Conventional wisdom has held that millennials prefer to live in densely populated cities and the data mostly bears that out. Most of the top ZIP codes are primarily concentrated in California, in Silicon Valley: Fremont, Cupertino, San Jose, Sunnyvale, Burlingame, Hillsborough and San Mateo. This suggests a strong tech connection that is associated with wealth creation. “Theyre 26 years old, only a few years out of school, and they have just gotten a big equity play of $5 million because of what they can do at their desk behind a computer,” says Yang. “They view real estate as a significant way to build wealth.” In terms of locations, millennials tend to prefer markets that are more affordable often in suburbs or second-tier cities, where their dollar will carry them further. Even if they have the money, they may still choose a nontraditional luxury neighborhood over the prestige of a traditional luxury neighborhood, if it means they can walk to the corner caf. “They want to live near gathering spaces,” says Yang. “They want to live near throwback downtowns, or districts that grew organically and they are willing to give up square footage and amenities to be able to live in those kinds of locations.” Hertzbergs findings in Miami mainly support this view. “Walkability is a really big thing,” he says. “They want to be able to walk to neighborhood coffee shops and bakeries. Certain brands resonate with them. Trader Joes, for example, recently came into our market, and all our millennial clients are very excited. Health and wellness is a priority for them, so they like to be close to fitness facilities and yoga studios. Location has always been a factor in real estate, but whats changed TOP TEN 10 7 4 3 2 1 6 5 9 8 “They want to live near gathering spaces.” Karen Yang Traverse City, MI Freemont, CA Cupertino, CA New Almaden /
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