Breaking into the luxury market

If you’re an agent looking to break into the luxury market, or you’re simply curious about the lives of the ultra-wealthy, then today’s edition is tailor-made for you.

We have two stories that offer tremendous insight into the current state of the luxury market, what ultra-rich buyers want, and which states they live in (…you probably won’t be surprised by that data).

Take it from us – we know the luxury market is ultra-competitive and it is very difficult to figure out a way inside. However, if you’re looking for a starting point, we think today’s newsletter is a helpful one

– James and David

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30-year mortgage drops for first time since March

The average contract interest rate for 30-year fixed-rate mortgages fell from 7.29% to 7.18%, marking the first drop after four straight weekly increases. That’s according to the Mortgage Banker’s Association report which covers more than 75% of all retail residential mortgage applications in the US. Here are other key data points:

• Refinance demand increased to 5% for the week, although it was still 6% lower than the same week one year ago.

• Applications for a mortgage to purchase a home rose 2% for the week, but they were still 17% lower than the same week last year.

Our take

This report shows that the housing market is one of the most interest-rate-sensitive parts of our economy. Just an .11% drop spurred a 5% spike in refinance applications! That rate drop came after Fed Chair Jerome Powell said that a rate hike was “unlikely”, and also data showed a slowdown in payrolls and wage growth. The next big piece of economic data will come from the monthly Consumer Price Index release next week. That could move rates sharply in either direction, depending on what it says about inflation. 

Millionaire homeowner households have quadrupled since 2017

The number of millionaire U.S. homeowners—as well as the number of millionaire homeowner households—has more than quadrupled from 2017 to 2022, according to Point2. Here are more eye-popping stats from their report:

• The total number of households that earned $1M or more reached 136,697 in 2022, which is more than quadruple the 30,000 households in 2017 

• Here’s how those millionaire homeowners break down by generation: 

  • 37.4% – Gen X 

  • 28.9% – Baby Boomers

  • 19.7% – Millennials

  • 10.2% – Gen Z

  • 3.7% – Silent Generation (adults born 1928-1945)

• Millionaire homeowners are 53.8% men and 46.2% women. 

• 75% are married, while 17.6% are single.

• The “typical” millionaire homeowner is a 50-year-old chief executive or physician who lives in San Francisco or New York, owns a $1.8-million, 10-room, five-bedroom home, and has three cars.

Our take

Wow, this report is one of the best reports on the typical luxury homeowner we’ve ever read. It’s packed with so many insights that we couldn’t fit here, although we certainly tried! Our main takeaway: today’s typical millionaire homeowner wants the biggest home they can afford. They want an average of 10 rooms, with more bedrooms and bathrooms than the average homeowner, and all the extras like meditation rooms, golf simulator dens, home theaters, you name it. If you’re a luxury agent, or just curious about the tastes of the upper crust, we encourage you to give the full report a look.

The most expensive zip codes in the country

Realtor.com recently released its report compiling the 10 most expensive zip codes in the country for homebuyers based on the median monthly asking prices. The data is based on 2023 numbers and only includes zip codes with an average active listing count of 25 or more. All ten are located in California or New York.

Here’s their list of locales, zip codes, and the median list price:

Our take

There are many things we could say about this list, but we have two important takeaways. First, if you want to break into this space, these types of lists certainly help narrow your focus. After all, one of our best decisions ever was moving across the pond to work in Beverly Hills. But if moving isn’t an option, you can create similar lists for your market. While the scale might be different, every metro has a pricey zip code. Get to know everything you can about the comps, sellers, typical buyers, new developments, property features, etc, and then use targeted marketing to situate yourself as the knowledge broker in that area. There’s no one way to break into the luxury space, but this is a good way to start.

Schematics

The news that just missed the cut

• How much you need to earn to buy a home in America’s top 50 metros

• Here’s why you should be skeptical of the rent study by StreetEasy

• Drew Barrymore’s Hamptons estate just listed for $8.5 million

• The plaintiffs are unhappy with the commission settlements

• The Drake-Kendrick Lamar feud is also a real estate battle

Foundation Plans

Advice from James and David to win the day

Did you know real estate agents follow up only 2.7 times, while calls convert to listings or buyer exclusives typically after six attempts? That just shows that most agents need to do more follow-ups. Keep these strategies and tactics in mind next time you follow up:  

Leverage local market insights – One of the worst approaches an agent can take is to simply check in with a generic message. To truly engage, leverage local market insights. It’s a great way to make a connection. We suggest using your local MLS to determine what’s happening in your market, and then sharing that information with potential buyers and sellers.

Showcase pertinent home sales trends – Another effective tactic is to highlight relevant trends in home sales, such as average days on market or list-to-sales price ratios. Ask yourself questions like, what are the trends in home sales right now? What’s the average amount of homes buyers are looking at? All this data is on the MLS, and you should share this valuable information.

Determine your potential client’s timeframe – It's important to recognize that if a prospect isn’t motivated to buy or sell, excessive follow-ups may be counterproductive. Understanding their timeline will help you to follow up appropriately and avoid turning them off by being too aggressive.

Understand your client’s financing options – To a surprising extent, so many home buyers think that they need to put 20% down. Many real estate agents have said the same thing. This is not true. Make sure you know all the financing programs in your area and be ready to share this information. You could be the agent who finally makes it possible for them to buy a home.

We obviously can’t emphasize enough the value of following up in real estate. To be inspired and to learn how to do it well, watch this.

To learn more about Estate Media, visit their website.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

That’s a wrap on this edition of The Blueprint! Whether it’s a question or comment, don’t hesitate to reach out. We love hearing from you.

As we head into the weekend, remember that each day is a gift and a new opportunity to lead the life you want and to become the person you want to be. The mistakes and missteps you’ve made in the past don’t define you. Live as intentionally as you can and be ruthlessly focused on the goals you’ve set out to achieve. You can do it!

Thanks for reading, and we’ll see you back here on Tuesday!

– James and David