Above, from left: Riezl Baker, Jennifer Hoff, Scott Durkin, Louise Phillips Forbes and Kate Reisinger. Photo by AJ Canaria.
When it comes to finding success in the luxury real estate arena, understanding the nuances of the market(s) you’re working in is critical. And while luxury markets differ from one area to the next, setting yourself apart from the competition is one strategy that will never go out of style as market shifts continue to influence luxury real estate trends.
Reaching and connecting with today’s affluent consumer is more important than ever for those looking to succeed in this profitable market segment, a topic discussed this past September at RISMedia’s 36th Annual CEO & Leadership Exchange.
Moderated by Kate Reisinger, chief operating officer of Leading Real Estate Companies of the World®, “The Changing Dynamics of Marketing Luxury Real Estate” session featured panelists Scott Durkin, former president and CEO of Douglas Elliman Real Estate; Riezl Baker, REALTOR®/founding principal at Luxury Lake Oconee Real Estate Group; Jennifer Hoff, head of the Institute for Luxury Home Marketing for Colibri Real Estate; and Louise Phillips Forbes, a licensed associate real estate broker at Brown Harris Stevens.
Conscious conversations
“After 35 years, we’ve ridden a few rollercoasters, but it’s an interesting thing to talk about,” said Phillips Forbes, who kicked off the conversation with a glimpse into the New York City market.
“A vertical market does not recover in the same way from a global pandemic as the tri-states, and so we had half a million people leave New York City—and yet our market did not decline—although there are incredible opportunities today,” she explained.
In fact, her team did $92 million in the first quarter of 2024, nearly $50 million in the second quarter and was on track for a significantly stronger third quarter at the time of the event.
“Buyers are going to get into this market no matter what, because everybody wants to own a piece of the rock,” added Phillips Forbes, who says she approaches everything she does with the mindset of being an educator rather than a salesperson, coming from a place of service as she works to educate buyers, sellers and other brokers as well.
“Sometimes I’ll be lucky to get a broker that’s a rockstar that I can partner with, but sometimes I don’t get that privilege,” she explained. “When I’m sitting on the other side and there are five bids, that person remembers how I treated them, and that is a powerful thing.”
Going above and beyond the call of duty, Phillips Forbes shared an example with the audience in which a client was looking to spend no more than $1M on the purchase of a convertible one-bedroom.
“Through giving him the legwork of what (his) money will buy for $800,000 to $1M, and then stepping up, we’re in contract for $1.58M,” said Phillips Forbes, underscoring the importance of having conscious conversations with clients rather than simply assuming you understand their situation.
“I just think that there are all kinds of ways, and sometimes it’s time to educate. But also, when I’m doing my analysis for understanding what’s happening in the market, I sometimes have to go all the way back to 2009 to understand the bottom of our market, to figure out what things are worth today. And so I think it’s just the willingness to put that time in,” she added.
Attracting affluent buyers
Next, Baker talked about the transformation she’s seen within the Georgia market—from a quiet retirement community to a luxury destination for both retirees and young families who have moved to the area full time in the wake of the pandemic and the subsequent work-from-home environment.
“These are individuals who are seeking an upscale lifestyle and young families who seamlessly want to blend leisure and work,” said Baker, who explained that property values have skyrocketed, especially over the past five years.
“With the market change, the clientele also changes. High price tag equates to high expectations,” she added. “But one thing that remains constant and doesn’t change is that luxury clients always expect luxury service. Luxury clients are accustomed to getting the best in everything they have or do, and they expect that from the REALTOR® and in every real estate transaction.”
To that end, Riezl and her brokerage are constantly innovating in order to elevate the level of service they provide their luxury clients and attract affluent buyers to the community.
Designed to elevate every step of the listing process, Riezl pointed to the recent launch of “Luxury Leo” as the firm’s strategic response to the changing market.
“As we know, marketing luxury property goes beyond just taking beautiful pictures and glossy brochures. It goes beyond just doing a property tour. So what we do is we create videos that tell the story of a listing,” she explained. “For example, if a house has an incredible kitchen, and that’s the highlight of the house, we don’t just do a tour of the kitchen. We’ve done cooking shows with a seller to really showcase that kitchen. It’s really elevating that whole process and making your presentations better.”
Generational trends: a national perspective
Scaling up to the national level, Durkin provided a glimpse into the changing dynamics of luxury real estate to a larger degree.
“Nationally, it’s interesting, because we’re seeing the same pent-up demand. If you think you need to wait until these rates are going down, you’re going to be in a big traffic jam,” cautioned Durkin, who pointed to double-digit increases year-over-year in the past four months.
“That’s huge for us, because these rates haven’t gone anywhere,” he added. “We’re still going to get those homes sold and work with those buyers, but there’s still a distressful amount of inventory that we just don’t know what to do with. We think maybe there will be some movement, (although) we’re not sure, but we’re very happy with what we’re seeing.”
While Durkin noted that nothing was going to keep the firm and its agents down, Reisinger asked him to shed some light on another important and timely topic: generational trends among today’s affluent clients.
“The millennials were all about walking to town, having a green lifestyle and not buying anything bigger than what that buyer told you right now. The Gen Z buyers are much freer with the money, and the family has money,” explained Durkin. “We always say in real estate that when people are dumping property, someone else is buying it up, and it just remakes them into new billionaires.”
Drilling down further, Durkin talked to the importance of multigenerational households. “They’re recreating their lifestyle in two or three markets like Palm Beach or Aspen, New York, Beverly Hills, the Hamptons—and they’re not just having a weekend home. They’re having a real home.”
Durkin went on to explain the importance of living in proximity to family and friends among affluent consumers in today’s post-Covid world.
“We’re also seeing that it’s important, especially for the affluent, to have everyone close by and have a plan if something goes wrong. And they’re very private, too,” he said.
Drilling into the data: preparing for the future
The driving force behind luxury real estate education, Hoff rounded out the conversation with a look at some of the data supporting the current trends driving the luxury market.
“There’s a lot of variance when we talk about luxury, and what that means in specific markets,” explained Hoff, who shared some key data points with the audience:
- Luxury threshold: $500,000 in St. Louis; $2.5 million in Eagle County, Colorado
- Average days on market: 2 in Cincinnati; 117 in Fort Lauderdale
- For the 20,000 households in Eagle County with an average annual income of $99,000, 3% of properties below $700,000.
- In Eagle County, 55% of properties are between $1.5M and $3.5M, and 42% are over $3.5M.
“There were some luxury markets, enclaves really (Vail would be one), where it was a destination for winter, but since Covid, a lot has changed. After Covid, what happened is second homeowners came and they wanted to live there full-time,” she added—underscoring just how much the luxury arena has changed in the last five years alone.
Looking toward the future, Reisinger asked Hoff what she’s predicting for the luxury market into the end of 2024 and beyond.
“Ultra-luxury prices will continue to grow, and the other thing that may be exciting is that all of the reasons why the boomers are holding onto their homes is a luxury that doesn’t matter,” she said.
“They’re buying other homes in cash, or they want their children to live with them, so we’re predicting that the supply in the luxury (market) will be better than the supply in the traditional market. It doesn’t mean it’s going to be abundant, but it will be better.”
Wrapping up the conversation, Reisinger asked each panelist for their best advice for leveling up in the luxury space:
Baker: “Know your clients deeply. Luxury clients are discerning, and they have high expectations, so it’s important that you anticipate their needs. And, most importantly, you have to listen to what motivates them. You also need to stay true to your values and integrity—and never compromise quality.”
Hoff: “Thinking about doing things differently is really how you need to level up when you start getting those (luxury) listings. And if you’re not selling at that level, set a goal for yourself to sell at that level, because the number of transactions you need to have is much lower to make the same amount of money.”
Durkin: “The best thing to do is don’t wait. You should be contacting your entire sphere. You should be getting them ready. You’ve got people that have been out in the market with their homes on the market, and they have such fatigue right now. They want an offer. That gives you a really wonderful chance of getting a great deal and also not waiting in line.”
Phillips Forbes: “I never wanted to be a million-dollar listing. I wanted to be a service. And so I want to invest the exact same thing for half a million dollars. But then enlist partners. Then you get the support of that junior agent who gives you everything because you trusted them. I would also say that cash is going to be king for all markets for a bit longer. And don’t assume that your clients know everything.”
