By Alyssa Mammano
While the Luxury Loyalists of yesterday are looking to downsize their mansions, a new generation of wealth is entering the real estate market: The New Aristocracy. Inundated with inherited prosperity from their Baby Boomer and Gen X relatives, affluent Millennial homebuyers have deemed security, technology and boundless square footage to be among their top priorities, according to a report declaring “The Rise of the New Aristocracy.”
Luxury Portfolio International® partnered with YouGov to study more than 500 high-net-worth American real estate consumers. In the next three years, these target homebuyers are looking to purchase luxury homes with more high-end finishes, automated technology and enough space to house multiple generations under one roof. Having grown up in wealthy households, these new-to-the-market investors have a keen eye for aristocratic superlatives and a profound understanding of their wants and needs in a home.
The study hones in on a comparison between what they call “The New Aristocracy” and an earlier generation titled “Luxury Loyalists.” Baby Boomer and Gen X consumers of the Luxury Loyalist era are looking to downsize from their enormous mansions to more sensible listings. Thirty-eight percent are narrowing their search results to homes between 3,000-5,000 square feet. At the other end of the spectrum, twenty-three percent of Millennial Aristocrats are in pursuit of properties 20,000 square feet or more.
Each generation’s objectives align with their juncture in the timeline of life. While Luxury Loyalists are looking for relief from the maintenance of their empty nests, The New Aristocracy are looking for nests to fill. A transfer of wealth also plays into the transition. Many more Aristocrats stand to inherit the fortunes of their Loyalist predecessors than was the case for Loyalists at a comparable point in their lives. Sixteen percent of Aristocrats expect to receive $10 million or more from their family members, as opposed to seven percent of Loyalists. Twenty-six percent of Loyalists will receive no inheritance at all. And the transfer has already begun.
Business-minded Loyalists hope to groom their offspring to one day assume the corner office and perpetuate the family enterprise. Half a trillion dollars in gifts of $1 million or more have already been transferred with the intent to prime the younger generation, as well as to evoke their happiness. These gifts are given with the resolution to prepare their heirs to manage large sums of money. By passing on some of their fortune now, Loyalists can help the Aristocrats navigate their inheritance before the vast majority of the estate is transferred. For self-indulgent reasons, they are looking to share in the joy of their endowment, as well.