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HENRYs, or “High Earners, Not Rich Yet” individuals, are often not considered wealthy due to various financial obligations and lifestyle choices. Despite this, they represent a significant and influential demographic in the luxury real estate market. A recent survey suggests that 60% of HENRYs prioritize luxury real estate as a major investment, highlighting a strong market demand and significant opportunity for real estate agents, lenders, and others.
Understanding HENRYs and their impact on luxury real estate can help provide valuable insights into market trends and investment behaviors. The survey, conducted in partnership with Pollfish in July 2024, surveyed 1,000 respondents ages 18-54 in the U.S. to learn more about demographics and insights on luxury real estate purchases. It explores HENRYs’ engagement with luxury real estate by asking if they have purchased or plan to purchase a property valued at $1 million or more within specific timeframes, examining their motivations, investment priorities, financial strategies, and concerns related to the luxury real estate market. It also investigates the types of luxury properties they are interested in and the factors influencing their perceptions of the market. Here’s what you need to know.
Understanding HENRYs
HENRYs earn between $100,000 and $250,000 annually, positioning them as high-income earners. However, expenses such as student loans, high living costs, and saving for future investments like retirement prevent them from achieving “wealthy” status. That said, this demographic tends to prioritize a lifestyle that aligns with their high earnings, investing in luxury goods, premium experiences, and high-end real estate. They are usually millennials, which is why this survey specifically looked at the data of 25 to 44 year old respondents.
HENRYs often view luxury real estate as a lucrative investment opportunity, offering both personal use and rental income. This aligns with their broader goals of building wealth and securing a stable financial future.
Survey data on luxury real estate purchases
Data shows that HENRYs significantly impact and actively engage in the luxury real estate market. 55% of survey respondents have purchased a luxury property in the 25 to 44-year-old age group in the last 18 months, and 45% plan to buy a luxury property in the next two years. This strong market participation, as well as viewing luxury real estate as a top investment priority, suggests confidence and active engagement in the luxury real estate sector.
Plus, preferences for both urban and suburban living environments, along with a variety of financing options available, demonstrate the Henrys’ sophisticated approach to luxury real estate investment.
Investment prioritization and portfolio allocation
Luxury real estate remains a top investment priority for 60% of HENRYs, with another 28% viewing it as equal to other investments. Only a small fraction (5%) don’t prioritize it at all. These numbers underscore a strong and growing interest in high-end real estate and belief in long-term value and security offered by these properties, and 42% of respondents cite investment potential as their primary motivation for purchases.
Additionally, HENRYs are willing to allocate substantial portions of their investment portfolios to real estate, with 20% allocating more than 40% of their portfolio to these investments. 28% invest between 21-30%, and nearly 26% invest between 31-40% of their portfolio.
Motivations and influencing factors for HENRYs
While investment potential is the primary motivation for purchasing luxury real estate, other motivations include personal use (27% of respondents), rental income (11%), and using the property as a vacation home (15%). Coastal properties are the most desired (42%), followed closely by suburban mansions (47%) and urban penthouses (50%).
It’s important to note there are a variety of factors influencing the perception of the luxury real estate market. Market trends and data are the primary influences for 29% of respondents followed by current economic conditions (28%) and the desire for personal luxury experiences (21%). Additionally, 18% report their decisions are influenced by advice from their financial advisors.
Bottom line
HENRYs play a significant role in the luxury real estate market, with a large percentage buying or planning to buy luxury properties shortly. Viewing luxury real estate as a top priority investment, HENRYs are allocating a substantial portion of their investment portfolios to these purchases, underscoring this market’s importance in their wealth-building strategies.
Financing these purchases with a combination of cash and mortgage is the most common strategy (48%), but there’s also notable and growing interest in using jumbo loans (6%). With ongoing concerns about market volatility, financing, and mortgage rates, HENRYs continue to seek guidance from financial advisors and other experts to navigate investment and financing options.
That said, due to a strong desire to capitalize on the current luxury real estate market for both investment and personal use, HENRYs represent a significant and influential force, shaping trends and driving demand in the luxury real estate sector.
Methodology: A survey conducted on July 3, 2024, via Pollfish, targeted 1,000 U.S. respondents aged 18-54 with incomes of $100,000 or more. It focused on those who had recently purchased or planned to buy a luxury home valued at $1 million or more. The survey emphasized the 25-44 age range, reflecting millennial HENRYs, and results were weighted to align with U.S. census data on age and gender.
Disclaimer: Article content is intended for information only. It may not reflect the publisher nor employees’ views. Consult a mortgage professional before making financial decisions. Publishers or platforms may be compensated for access to third party websites.
Reviewed and edited by Albert Fang.
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Article Title: Why 60% of HENRYs Are Betting Big on Luxury Real Estate
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