There’s good news and not so good news. The number of millionaires in the US continues to grow (that’s good), but the rate of growth has substantially slowed (that’s not so good!).
According to Chicago-based Spectrem Group, the number of millionaires in the US grew by just 2% last year, reaching 9.2 million households (excluding equity in primary residences). That compares with an 8% increase in 2006, 11% in 2005, and a whopping 21% in 2004. See the accompanying chart.
The slowdown in individual’s accumulation of wealth is also evident at the $5 million and above level. The number of people worth $5 million or more increased 2% last year, a BIG drop compared to 23% in 2006 and 26% in 2005.
What’s going on this year? It’s a pretty safe bet that given the liquidity woes, see-saw financial markets and the general uncertainty in the economy – recession? stagflation? – we are likely to see less wealth creation in 2008, 2009. Look for the number of US millionaires and multi-millionaires to be flat or decline slightly in the short term.
What impact will this have on the luxury housing market? It may lead to a bit more softening in the bottom half of the luxury market, where some buyers and sellers (especially those who s-t-r-e-t-c-h-e-d to buy as much house as possible) are already feeling the pinch. This means you are going to have to be better than ever to compete for the business which does remain. You must polish your skills, get creative, and add real value for affluent buyers and sellers.
