by Pam Danziger, Unity Marketing

Transcription

1 by Pam Danziger, Unity Marketing

2 Toll Brothers' Houses 10,000 8,769 8,601 9,000 8,000 6,627 6,687 7,000 5,066 4,430 4,911 4,743 4,184 5,397 6,000 5,000 Toll Brothers, the home builder and real estate developer, is cleaning up in the high-end housing market. Avg per year ,965 2,642 2, Source: Toll Brothers Annual Report 2014 & Unity Marketing 3, ,000 3,000 2,000 1,000 - With $3.9 billion in revenues in 2014, up 46% from previous year, in February Toll Brothers improved its guidance, promising to deliver more homes (5,200-6,000) at a higher- average price ($725,000 to $760,000), after a gangbuster 1Q2015 reporting a 76% jump in profits on 33% increased revenue from previous year. Homes Closed Unity Marketing,

3 35% New Homes Sold in 2014 by Price 45% 30% 39% 31% 40% 25% 35% % Chg Sales 15% 10% 5% 0% -5% -10% 2% -8% 16% 4% 4% 11% 18% 9% 14% 5% 30% 25% 15% 10% 5% 0% Pct Total Homes Without a doubt, Toll Brothers is targeting the fastest growing segment in the new housing market. While new home sales overall increased only 2% from 2013 to 2014, sales were up 31% in the $750,000 and above new home segment. Percentage Change in Homes Sold by Price & Share of Total Homes Sold by Price Source: Census Housing & Unity Marketing % new homes sold 2014 But behind the numbers, what appears as a market on fire isn t necessarily raging, but rather doing a slow burn. Unity Marketing,

4 Number of New Homes Sold # New Homes ('000) % Chg Previous Year 1,400 30% 1, %10.8% 20.3% 16.6% 1, % -5.3% 1.9% 10% 0% Overall sales of new homes fell sharply from 2006 and didn t start to recover from the recession free fall until % -26.2% -37.5% -22.7% -13.9% -10% - -30% Yet with 437,000 new homes sold in 2014, today it remains below levels from And while the new home market has seen ups and downs since 2002, today s new home sales remains half that of 2002, when 973,000 were sold ,086 1,203 1,283 1, SOURCE: CENSUS HOUSING & UNITY MARKETING -40% -50% The high-end segment of the market accounts for only about 5% of the total, or 21,000 new homes. With Toll Brothers adding 5,000-6,000 new homes in that price range per year, we need to ask. Unity Marketing,

5 Slow rate at of household formation. Last year fewer than half-million new households were formed, less than half the rate of 1.3 million new households from the previous two years. Further, most of these new households are renting, rather than owning. Baby Boomers downsizing as they reach retirement. Some 10,000 or so Boomers will be retiring every day through 2029 and with retirement comes new housing needs. Boomers bought their homes in the 80s and 90s, when bigger was better and McMansions the then American dream home. But many Boomers will have to tap the equity in their homes to finance their post-retirement lifestyles. Net/Net: They will be leaving behind a mounting inventory of big, expensive homes that the much smaller GenX cohort can t absorb. Changing preferences and priorities in homes. The Millennial generation, as large in size as Boomers, but delayed in getting married, setting up new households and investing in home ownership, brings a whole new standard into the housing market. Many of them grew up in the Boomer McMansions that will be coming on the market, which may well not be the kind of home they want. The Tiny House movement is more than a reality television show and the Not So Big House popularized by Sarah Susanka offers an environmentally- and financiallyresponsible way to live for the responsibly-minded Millennial generation. High-end home market faces headwinds from changing demographics and shifts in customer housing preferences and priorities. Unity Marketing,

6 New Houses Sold (in '000) Year Total <$250,000 Source: Census American Housing Survey $250,000- $299,999 $300,000- $399,999 $400,000- $499,999 $500,000- $749,999 $750, , , , , A rising tide lifts all boats, and up till the Great Recession, the high-end realestate market was enjoying high waters. But the tide has turned. Yes, there was a rebound from , but the high-end real estate market, with few regional exceptions, looks to be settling down into a new normal. Real-estate professionals catering to the carriage trade will have to work harder, work smarter and simply be better than the rest to capture what will be an increasingly competitive and challenging market. To support real-estate professionals succeed in a new normal more competitive high-end housing market, this Unity Marketing Trend Report, Marketing Real Estate in New-Luxury Style, reveals eye-opening statistics and powerful analysis of the high-end consumer to demonstrate how to thrive selling to a new more value-oriented, luxury home customer Success in luxury real estate begins with understanding the needs and desires of luxury home buyers. Let SOM '14 39% 16% 11% 9% 5% Unity Marketing be your research partner for the affluent housing Unity Marketing, 2015 market. 6

7 Introduction 8 Demographics of Luxury 12 Affluent Incomes 16 Top 10% Wealth 19 Top 10% Wealth & Income 21 Best Demographic Prospects Luxury Homes 25 More Demographics 26 Luxury Home Investment 31 Key Thoughts/Take Action 34 Purchase Behavior Luxury Homes 37 Millionaire s Home Values 39 Headlines: Second Home Hot 41 New Luxury Home Boom? 45 Millennials on Road to Affluence 46 Millennials Luxury Home Aspirations 47 Key Thoughts/Take Action 53 Luxury Home Buyer Consumer Psychology 54 Five Personalities of Luxury Home Buyers 58 Luxury Home Buyers & How to Recognize Each 60 Selling to the Five Luxury Home Buyers 62 Importance of Brands, How to Use Brands 74 Final Thoughts/Take Action 76 To understand the luxury home real-estate market, you need three perspectives: Demographics of customers who can afford to buy luxury homes Purchase behavior of those qualified buyers Consumer psychology which reveals how to talk and communicate with each special luxury home buyer segment based upon their special needs and desires in their homes. This report provides all three. Plus, it includes a special section devoted to the next generation of luxury home buyers the Millennials and their aspirations about the homes they have in their future. Unity Marketing,