The luxury real estate market continues to boom worldwide. Particularly in Asia, low interest rates are fueling massive growth, leading to headlines such as “Property market on steroids.” At the same time, for the last few years, wealthy Asian buyers have been scooping up American luxury properties in places like California, New York, and Texas.
As real estate professionals, what does all this growth mean for us? For those of us who don’t specialize in luxury listings, how can we get our foot in the door? And what makes Asian and Pacific Islander customers different from Americans in terms of what they’re looking for in real estate purchases?
Recently, Realogy—in partnership with the Asian American Real Estate Association of America (AREAA)—hosted a fascinating discussion as part of Realogy’s Real Estate Expert Series on the topic: The State of the Luxury Real Estate Market.
• Jamie Tian, REALTOR® Rodeo Realty
• Herman Chan, Broker Golden Gate Sotheby’s International Realty
• Dyllan Nguyen, REALTOR® LIV Sotheby’s International Realty
• Jade Mills, Global Luxury Ambassador, Coldwell Banker Realty
The Fastest-Growing Demographic in the American Real Estate Market
The discussion kicked off with some impressive data points from Matthew about Asians and Asian Americans/Pacific Islanders (AAPI). AAPI are currently the fastest-growing demographic in America, with 23 million. They have 60% home ownership, along with the highest average house price. Their income is also higher on average. With those stats in mind, Matthew asked the panel what is particularly unique about the luxury real estate market for Asians and Asian Americans.
Jamie Tian, who in 2017 was named to REALTOR magazine’s 30 under 30 list, talked about the advantages of home ownership in America vs. China. In America, houses can be passed down from generation to generation, as a way to build generational wealth. Whereas in China, houses are purchased from the government as a lend lease. She also touched on the importance of education within the Asian American community, and how they are looking for good neighborhoods with excellent schools.
Jade Mills, one of the most successful real estate professionals in the world, with over $6 billion in sales over the course of her career (including high profile properties such as the Spelling Manor and Playboy Mansion), talked about the cultural differences she sees when working with AAPI clients. “Typical Clients from the United States have a tendency to buy from emotion. But clients who are making their purchase from Asia—often via Zoom from over 6,500 miles away—rely on data. They want to make sure their purchase will yield a sound return on investment. Jade says that means agents and brokers need to do all their homework ahead of time.
Buyers from Asia want to make sure they have all the information, historical data, and a sense of where the market is trending. They’re relying on their agent to serve as their trusted advisor to make sure the property is both a good investment, and a good fit for their family in the long term.
She recently had her first sight-unseen purchase, from an AAPI buyer. “They want the price to be substantiated by relevant market data, and they want the ability to pass this purchase onto their family for generations to come.”
What Are High Net-Worth Buyers Looking For?
Moving away from the focus on Asia, a question was asked about luxury home buyers in the general sense. What are they looking for in a property today?
Herman Chan, who has a massive media and online presence, talked about how his wealthy clientele—many of them San Francisco Bay area tech executives—want their houses to feel like a resort, with “all the trappings.” In-house beauty salon, movie theater, spacious dens, “Zoom rooms”—they want to have everything at their fingertips so they feel like they never have to leave. He also touched on the importance of security, to the extent that many high-end luxury buyers insist on having no 3D walkthroughs of their property online because that helps would-be intruders in their attempts to case out the property.
Dyllan Nguyen, one of the top sellers in the Denver region, said unlike the Bay area rich, his wealthy Denver clients are looking for cool, vibrant areas of Denver where everything is in walking distance. They value the availability of cozy corner cafes, curated wine shops, and dynamic neighborhoods. He said it amounts to a rejection of the prior generation’s flee from the city to the suburbs or exurbs. They have no interest in a suburban life of big box retail stores and strip malls. Instead, they’re flocking to cool and funky pre-war areas of Denver, with lots to do and see.
How to Get Your Foot in the Luxury Property Door?
One question from the viewing audience that sparked a lot of discussion was how traditional real estate professionals can get started with luxury property sales.
Jade, who is as much of an authority on luxury property as anyone in the United States, said the number one factor is honesty. “People will say, why do you think you are successful? I always say, I’m honest. Integrity is the number one thing you must have in our business. You must do for your client what you would do for yourself. You have to be their trusted advisor. You have to always be doing the right thing.”
As far as the nuts and bolts of how to get started, Jade advised that, “Knowledge is king. You have to know more than any other agent. You have to know everything because they believe you, you have credibility.” That credibility leads to referrals, which is the main way to get luxury listings. For those starting out, she said the trick is to get your first luxury listing. Once you do, make sure you advertise it, let everyone know. That is the best way to get started with luxury properties.
Quick Tips & Takeaways:
Knowledge is king for luxury property sales
- Know the microdata: about the home, neighborhood, schools, and area demographics
- Familiarize yourself with real estate tax implications, understand how 10-31 tax forms work
- Be the go-to resource for every aspect of transaction process, make it as seamless as possible
You need to create a connection with luxury clients
- If they’re flying first class while you’re in coach, that sends a message
- Many want to continue the lifestyle developed during COVID, remote, socializing in “pods”
- Understand their needs: have lenders ready to work with them, streamline entire process
New luxury real estate trends are emerging
- It’s not just NY and CA anymore. Now luxury areas are in secondary cities like Boise and Austin
- More competition in Southeast Asia. Places like Thailand and Malaysia are luring luxury clients
- Post COVID, luxury clients are rejecting condos in cities, opting for single family homes
Want to see the whole discussion? You can find it in our Webinar Archive here. Let us know what you think! Did you gain any insights into the luxury market? Are you starting to get more international clients? We want to know what you’re seeing in your community.
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*Please note this document was published prior to Realogy’s rebrand to Anywhere Real Estate Inc. on June 9, 2022.