Research & Statistics

Have you met the HENRYs?


If not, let us introduce you. The HENRYs are High-Earners-Not-Yet-Rich households who represent an increasingly important consumer group with strong spending power today and the potential of becoming wealthy. Not defined by age or occupation, they are identified by income. HENRY’s represent a growing group of homebuyers who, in many cases, can afford high-end homes.

Defined as consumers with combined household incomes between $100,000 and $250,000, HENRYs come in all age groups (no, they are not all young). They are excellent prospects for luxury home purchases, beginning at the entry level of luxury and moving up. About 25 million U. S. households fall into this category. That’s about 20% of total households. More important, HENRYs make up about 90% of the affluent consumer market.

HENRYs

HENRY’s are also a key market segment for luxury Realtors. In almost any spending category, the affluent top 20 percent account for about 40 percent of total consumer spending, as measured by the Bureau of Labor Statistics. While this group may not be buyers and sellers of homes in the double digit millions, they are often buying in the top 10% of the market. And – they may get richer!

Here are a few characteristics of HENRYs which Unity Marketing has identified:

  • They appreciate a high level of service and want to work with pleasant people
  • They respond to stories. What stories are you telling about your listings?
  • They are executives and managers and they don’t leave their smarts at the office. They are careful buyers and their bragging rights come from making a good deal. So, think VALUE and remember that a good deal isn’t always lowest price. 
  • They buy premium products. Is your service premium or standard?

How do you find them? How about using one of your Institute for Luxury Home Marketing member benefits to acquire target lists of HENRYs in the geographic areas you serve. You can select by income, education level, family size and other criteria. Then, farm the list with a market update report, and other information rich materials. HENRYs represent great potential in the high-end market for SLREPs (Successful Luxury Real Estate Professionals)!


Is the 80/20 rule really true?

You’ve heard the statistic – 20% of Realtors do 80% of the business.

MLSIs this true or is it just another sales myth that’s bandied about in the real estate business? A recent blog post by Ted Jones, Chief Economist for Stewart Title reports on a study by the WAV Group that provides some insight to this question.

The research company surveyed about 150 Multiple Listing Services regarding listings and closed transactions for the first half of last year. The accompanying charts show the percentage of agents who had listings in that time period, as well as the percentage with closed transactions.

Certainly some people subscribe to the MLS for reasons other than listing or selling residential properties. This includes commercial Realtors that keep tabs on the residential market, appraisers, or others that use MLS data. However, the 39 percent who had no closings in the first half of 2014 and the 43 percent who had no listings is still remarkably high and indicates that about 40% of MLS subscribers are not listing and selling (for whatever reasons).

Add to this, the fact that another 50% only had from one to ten closings in a six month period, bringing to 89% the total of those who had from zero to ten closings in half a year and you can conclude that the remaining 11% of the agents are doing a high percentage of the business. It’s pretty much the same with listings. Only nine percent of MLS members had ten or more listings in the first half of 2014.

Our conclusion? If we are talking about numbers of transactions, the 80/20 rule may not be far off the mark in real estate.


Golden Visas - Real Estate Investment, Residency & Citizenship

There is an interesting article on WealthX today looking at the current trends in countries offering residency or citizenship to “immigrant investors” and in particular the shift among the Chinese from the US to the EU. The full article is worth a read. Here are some highlights:

  • In recent years 80%-90% of foreign investment visas in the US, Portugal, Canada and Australia are taken up by People’s Republic of China (PRC) nationals, but this is starting to change.
  • The US, UK, Australia and Canada are limiting some of their programs while they deal with the backlog of applications, or make them more expensive.
  • The US’ EB-5 visa requires investment of between US$500,000 and US$1 million in return for a conditional green card. There are just 10,000 of these visas issued annually and a cap on each nationality.
  • This year Canada stopped accepting applications for its immigrant investor program and the federal entrepreneur program, of which around 90 percent of applications were from China.
  • Investor programs for residence, like in Portugal, Spain, Greece, Hungary, UK, Canada, US, Australia, where the investor receives only Permanent Resident (PR) Status, are more popular in China. Under these programs it is legal for them to invest abroad and obtain PR, while applying for immediate citizenship is against the law in China.

Just for fun, here are the details on the Greek program that affords residency to real estate investors: 

Greece


Living the Multinational Lifestyle

RiseThe number of high net worth individuals in the world is increasing. Fewer of them have inherited wealth and more of them are entrepreneurs and business owners. The world has "shrunk." They are increasingly mobile, increasingly multinational, and they're looking for more than just tax shelters.

If you'd like to better understand who's buying where and why, Barclay's recent research report Wealth Insights: The Rise of the Global Citizen? (PDF) provides some interesting insights into the increasingly multinational lifestyles of the affluent.

As Barclay's puts it, "The Rise of the Global Citizen? report aims to explore the mobility of today’s wealthiest individuals, and to assess whether their choices of where to live, work, study, retire, invest and donate wealth are indicative of an increasingly international group. It also looks at key trends in the make-up of high net worth individuals, and how these are impacting mobility, financial planning, identity and philanthropic behaviour."

Check it out. It's worth a read.


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Many markets are seeing very tight hosing inventory right now.  According to NAR, the nationwide median days-on-market is just 78 days.  Generally speaking, prices are up, but year-over-year sales are down, in part due to the lack of available inventory.  

Here are the ten markets with the shortest days-on-market:

Median

Read the full NAR release: Recovery Broadens as More Markets See Price Increases


OPP Reports: Chinese Sales ‘Surging’ in the US

Based on recent data from NAR, OPP News reports a spike in US real estate purcheses by Chinese buyers.

 Chinese spending on US property sold by Realtors almost doubled in the year to March 2014, jumping from US$12.8billion to US$22 billion, according to the NAR.

The sales, which were boosted by the appreciation of the Chinese Yuan, accounted for almost one-quarter of dollar overseas sales, the NAR’s 2014 Profile of International Home Buying Activity states.

Although Canadians bought more US homes, Chinese buyers spent more than double on each home, with the average Canadian median value at US$212,500 compared with US$523,148 spent by the Chinese.

NAR-China[1]

One of the authors of the NAR report, Senior Vice President, Lawrence Yun, goes further, saying, “It’s just the beginning of a tidal wave."


Millionaire Households Shop Where?

If your first guess about the three favorite shopping locations for U.S. households with a $1 million or more in net worth includes high-end retailers, guess again. A new report by The Shullman Research Center reveals that an overwhelming 62% of millionaires say their favorite place to shop is Amazon. Coming in at second place, with a hearty 54% “approval rating,” is Walmart. Clocking in at third, with some 49% of the vote is Target.

TopShop

If you look at the information more closely, you’ll see that shopping preferences differ based on the generation. And although the Silent Generation (those 68 or older) represent about 7% of millionaires, the report is, well, silent on this group.

This information reflects the fact that millionaire households may have accumulated high net worth, but they are still frugal shoppers.

GenShop

*Top 10 of 100 shopping locations researched by The Shullman Research Center


Trend Watch: Growing Importantce of Transportation

Traffic Jam

With Baby Boomers and even more so with Millenials, transportation seems to be a growing factor in the classic "Location, location, location" value equation for real estate.   

This article on The Atlantic Cities site highlights a couple of new studies that look at where Millenials want to live and what they value when it comes to picking a place to call home.  It is interesting to see just how much the reported values differ from previous generations, and how little the traditional "suburbia" of the last 60 years appeals to this new and very large cohort.  

In the first study, here is what the Millenials said:

  • 54% would consider moving to another city if it had more or better options for getting around.
  • 66% said access to high-quality transportation is one of the top three criteria for deciding where to live.
  • Nearly half of those who owned a car said they would consider giving it up if they could count on public transportation options.
  • 86% said it was important for their city to offer opportunities to live and work without relying on a car.

Michael Myers, Managing Director at the Rockefeller Foundation sums it up like this:

"This survey reinforces that cities that don't invest in effective transportation options stand to lose out in the long-run. As we move from a car-centric model of mobility to a nation that embraces more equitable and sustainable transportation options, Millennials are leading the way."

The second studyqueried both Millenials and Baby Boomers and found that both group want many of the same things:

  • Better transportation options
  • Walkable communities
  • Technology-enabled cities
  • Housing that would allow “aging in place.”

The study also found that...

68% of respondents believe the U.S. economy is fundamentally flawed, and that the path to prosperity lies in building up local communities—not through recruiting companies but by concentrating on these same basic elements of desirable places to live.

Interesting trends to watch.


What’s up in Manhattan? Number of sales and prices!

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According to the just released EllimanReport: Quarterly Survey of Co-op and Condo Sales, the Manhattan market is going strong.

Highlights:

Most first quarter sales in seven years as listing inventory stabilized.
There were 3,307 sales, 34.6% above the same period last year, marking the highest first quarter total in years. Listing inventory was essentially unchanged at 4,968 after three years of declines.

Average price per square foot set a 25-year record.
The average price per square foot of a Manhattan apartment reached a record $1,363, 23.6% above the prior year level. Median sales price increased 18.5% to $972,428 from the prior year level, but remained 5.1% below the record set in the second quarter of 2008.

Days on market and listing discount tightened. 
The time to market a property was 17 days faster than the same period last year, falling to 115 days.  Listing discount decreased 2.6% from 4.3% in the same period last year.

For more information on the city’s real estate market, check out the EllimanReport and a recent article in The New York Times.