The Stackable Boomer: The affluentials
At the very top of the Pyramid of Boomerdom, breathing the freshest air and enjoying the very best views, are the Affluentials. The Affluentials make up roughly 25% of the Boomer segmentation pyramid, but boy-oh-boy did they get the best poker hand.
Through some combination of luck, timing, and intelligence they have managed to find their place in the wealthiest segment of the largest demographic wave to sweep through North America, ever. With the money and power to change the world around them, they have done exactly that, creating and destroying entire industries and governments based on their beliefs and desires.
When Affluentials decide to move to Multi-Family Housing (MFH) it’s not because they have to, it’s because they want to, and because it sounds like a lot of fun. Their existing home equity is high enough to provide all kinds of downsizing options, and this happens to be the one they chose. It’s the beginning of a glorious new stage in life that will, like all the glorious stages before, require a wine fridge, six-burner gas range, two dishwashers, heated bathroom floors, multi-car parking, and wrap-around balconies.
Hanni Lammam, Vice-President of Development and Acquisitions at Cressy Developments Ltd. in Vancouver, Canada, has successfully built homes for these wealthy Boomers. He was quoted in the Vancouver Sun newspaper saying (I’m paraphrasing), “Vancouver’s single-family home prices have jumped so incredibly high, many Boomers are selling the house, cashing in and choosing to move laterally – not really downsizing. It’s more like a second coming – a chance to reinvent their lifestyle.”
Depending on the market, these buyers are spending more than a million and in some markets multiple millions to get the condominium they need to live comfortably while they are in town; don’t forget they likely have multiple homes. They will be highly discerning: they will want to know if the marble countertops are from Italy or China.
I sat beside a classic Affluential couple on a plane to Palm Springs, and I overheard their conversation about the custom house they were building there. They were flying in to reprimand the interior designer for ordering reproduction Murano glass light fixtures when they specifically had asked for authentic Murano glass fixtures. “She doesn’t know that we’ve been to Murano. Remember that church, what was it called, Santa Maria…?” They could only stay the one night in Palm Springs, as they were off to Europe for a holiday, and then a conference in Cabo San Lucas. They were dressed in white from head to toe, and yes, as they prepared to get off the plane, I caught a glimpse of their carry-on luggage with that familiar LV pattern repeating across the surface. Classic Affluentials, although perhaps an extreme case.
The Affluentials immediately “understand” the idea of paying condo fees or HOA fees and don’t mind the added expense, as they would just rather have someone else looking after all the upkeep and maintenance; it’s one of the main reasons they left the single-family home.
The Affluentials are strongly influenced by lifestyle. They travel a lot, they eat out frequently, they patronize the arts. They are buying a better, more exciting life as much as they are buying a home, although they want the home to meet their needs precisely.
If you are involved with building MFH for Boomers, the Affluentials are the low-hanging fruit. They want all the bells and whistles: upgrades that can make these homes extra-profitable. They want quality and are prepared to pay for it. They want it all and they want it now. And we, as an industry, are delivering. Most cities we’ve looked at have a handful of these projects either in-market or sold out. If the development team has combined all the factors correctly to meet the demand, they have been selling these homes with some degree of ease.
One sales leader I spoke to who has been working exclusively on a condominium project for the Affluentials made an interesting point. She explained to me that while yes, these people have the money to buy whatever they want and need, they are hyper-aware of value. It’s not that they are bargain hunting or scared of premium prices, as long as it is very clear that they are getting a premium product and premium service in exchange for their investment.
In the next post, we will take a look at another segment of the Pyramid of Boomerdom: the demographic segment we like to call the Reluctants. This is where the meat is: the biggest opportunities for real estate developers in the short and medium term, with the largest potential ROI. Stay tuned for more.
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