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Financial services

Millennial millionaires not shying away from real estate investments

October 17, 2019

affluent millennial traveler The average millennial millionaire owns three homes. Image credit: Coldwell Banker


Millennial millionaires make up only 2 percent of the total millionaire population in the United States, but their wealth and influence will continue to grow ahead of the Great Wealth Transfer.

Coldwell Banker Global Luxury’s report “A Look at Wealth 2019 Millennial Millionaires” explores how this generation approaches homeownership and other investments. Many are turning to real estate to further build their wealth, and more than nine in 10 millennial millionaires are homeowners.

“There is already a large and growing population of millennial millionaires, and there will be even more created over the next decade, according to projections,” said Craig Hogan, vice president of luxury for Coldwell Banker Real Estate, Chicago. “The big question is, ‘What will this generation do with their wealth when the Great Wealth Transfer takes place?’”

The report is based on insights from the WealthEngine platform and consumers aged between 23 and 37 with a net worth of more than $1 million.

Real estate investments
Ninety-three percent of millennial millionaires have a net worth between $1 and $2.49 million, and almost half are between 34 and 37 years old.

By the year 2030, millennials are expected to have five times the amount of wealth as they do now. In a report from WealthEngine’s Research Lab, millennials are on target to inherit $68 trillion in what it is calling the “Great Wealth Transfer” (see story).

Millionaire millennials tend to have a strong foundation of investable and real estate assets. Ninety-two percent are homeowners.

Although millennials have been known as the “Rent Generation” because of delaying homeownership, millionaire millennials have an average of three properties, and 80 percent have purchased a single-family home.

On average, millionaire millennials have more valuable real estate portfolios than millionaires as a whole, $1.4 million to $919,000.

More millennial millionaires, 44 percent, live in California than any other U.S. state, followed by New York at 14 percent. More than three-quarters of millennial millionaires in California have a real estate portfolio worth between $1 and $2 million, as do 63 percent of millennial millionaires in the state of New York.

Traverse City Michigan Coldwell Banker

Luxury real estate listing in Traverse City, MI. Image credit: Coldwell Banker

Millionaires or not, millennials tend to gravitate to walkable, densely populated cities. Although most of the top zip codes for millennial millionaires are in Silicon Valley – indicating that the tech sector drives much of the generation’s wealth creation – the zip code with the most millennial millionaires is Traverse City, MI.

The popularity of this under-the-radar city echoes millionaire millennials’ habit of choosing non-traditional luxury markets for their vacation homes, according to Coldwell Banker. Although many purchase turnkey properties, 77 percent of millennial millionaires are also interested in home improvement.

Investment values
This generation of millionaires is also more charitable than others, with 56 percent donating to charities compared to 51 percent of all millionaires.

While philanthropy is typically seen in older consumers, millennials’ values are strong at a younger age than other generations, as they have shown monetary interest in causes early on, according to WealthEngine.

This growing generation also thinks carefully about where they spend their money and which organizations they give to. However, the millennial demographic is comprised of a wide range of vastly different individuals with different ideals and values (see story).

During a fireside chat at LuxeCX/AMCX 2019 on Sept. 25, an executive from UBS explained how millennials are making choices about their finances as they inherit and earn significant wealth. More than other generations, these consumers let a company’s sustainability or social impact guide them.

According to Marielle Schurig, vice president for wealth management at UBS Financial Services, returns come second to values. Ms. Schurig said that she has conversations with clients about companies’ environmental, social and corporate governance structures (see story).

“If you want to have a future in luxury real estate, it’s imperative that you learn how to connect with [millennial millionaires] in authentic ways and create lifelong clients,” Coldwell Banker’s Mr. Hogan said. “We want Global Luxury Property Specialists to be ahead of the game.”