Luxury Consumers Continue to Invest In their Homes
Furniture World Magazine
Over the past twelve months, approximately 6 million luxury consumer households, or nearly 20 percent of the total affluent market (households with income among top 25 percent of households or $75,000 and above), either bought a new or existing home or purchased a second/vacation home. By comparison, the National Association of Realtors reports that just over 10 percent of existing homes across the country were sold in 2004.
The signs of a luxury housing boom are everywhere. Toll Brothers, leading builder of luxury homes (average price $665,000) just reported nine month revenue reached $3.81 billion, up 57 percent over same period previous year. That comes on top of a reported 40 percent increase in fiscal 2004 to $3.89 billion. RELO, the largest network of independent residential real estate firms in the U.S, says their member firms’ sales of luxury homes ($1 million and above) rose 31 percent in 2004 to reach $42 billion in sales. And the Census Bureau reports that the number of million dollar homes in the nation’s housing stock has doubled in the past three years, while homes valued just below the mill! ion dollar mark ($500,000 to $999,999) have increased even more (120 percent) during the same period.
Unity Marketing’s latest survey among luxury consumers (1,153 luxury consumers with average income $141.9k and age 42.6 years) found that two-thirds were active in the home market in the past year, either buying a new, existing or vacation home or expanding, remodeling or redecorating their existing home. And even more luxury consumers (69 percent) have major home plans in the coming year, including about 17 percent who plan on buying a new, existing or vacation home.
“Despite rising gas prices and the threat of a housing market slow down, the luxury consumers feel well cushioned,” said Pam Danziger, president of Unity Marketing and author of Let Them Eat Cake: Marketing Luxury to the Masses — as well as the Classes. “The luxury consumers’ confidence is on the upswing and fully 63 percent expect their personal financial situation to improve over the next twelve months. Given the strong activity in home buying and major home-related improvements, Unity Marketing predicts a strong and growing demand for all-things luxury for the home.”
Typical Luxury Consumers’ Home Is Not All that Luxurious — Lots of Room for Major Home Improvements
While the typical luxury consumer lives in a home nearly two times larger than the national average (3,153 sq. ft. vs. 1,708 overall) and has a lot nearly three times larger (1.2 acres vs. .35 overall), a surprisingly small share of luxury consumer homes are equipped with the features typically associated with a luxury home. For example, while the majority of luxury consumers’ homes have fireplaces (65 percent) and home offices (64 percent), only 34 percent have a whirlpool, spa or Jacuzzi, while 27 percent have a luxury bathroom with top line features and only 26 percent have a gourmet kitchen with top line appliances. The story is the same outdoors, with only 38 percent having luxury patio furniture; 28 perce! nt having outdoor shelters, like gazebos, tens, awnings, and 22 percent owning outdoor garden or landscape water features.
“That presents a significant opportunity for home improvement spending,” explained Danziger. “If they don’t move up, we expect many of the luxury consumers who stay put to invest in major home improvements that will bring their already large and high-priced homes up to true ‘luxury’ levels. That will mean lots of homeowners redoing bathrooms and kitchens and enhancing the outdoor garden and patio living areas.”
Unity Marketing’s Luxury Consumer Tracking Study for the second quarter 2005 focused on the luxury consumers’ home. Data about their major home purchases and home improvement plans are included, along with data about the indoor and outdoor features of their luxury homes. Also investigated in the latest tracking survey was the percentage that owned various status luxuries like sports cars, art and antiques, jewelry and watch collections, furs, fine musical instruments and others.
In addition to the home-related data and luxury consumer confidence insights, detail purchase information is collected on these categories of luxury:
Art, Wall Décor & Antiques
Electronics and Photography, such as computers, televisions, home entertainment centers, cameras, PDAs, etc.
Home Decorating Fabrics, Window & Wall Coverings
Furniture, Lighting and Lamps, and/or Floor Coverings, including rugs
Outdoor, Lawn, Patio & Garden Products, such as lawn furniture, patio accessories, plants, grills, etc.
Kitchenware, Cookware & Housewares
Kitchen Appliances and Bath & Building Products, such as cabinets, bathtubs, etc. for home remodeling
Linens & Bedding
Tabletop, Dinnerware, Flatware, Servingware, Decorative Accents
Automobiles and/or recreational vehicles, such as boats, RVs, etc.
Clothes & Fashion Apparel
Fashion Accessories, such as handbags, wallets, suitcases, shoes, etc.
Fragrance, Cosmetics and/or Beauty Products and Skin Care regimes
Wine & Spirits
Experiential and Luxury Services:
Travel and vacations
Dining and restaurants
Personal and health services, such as beauty treatments, spa, massage and cosmetic procedures, health club, country club, etc.;
Home services, such as landscape, housecleaning, home remodeling, home decorating, party planning and catering, etc.
Unity's luxury sample includes 1,153 affluent consumers, tracked in three segments (near-affluents: $75,000-$99,999; affluents: $100,000-$149,999; and super-affluents: $150,000 and above) with the average income of $$141.9k and age 42.6 years.
This is a semi-custom research service with subscribers adding specific product categories and their brands and the brands of five key competitors to the survey. In addition, subscribers can add up to six personal questions to the survey through the year. See more information about subscribing to Unity Marketing's Luxury Tracking Study, or call Pam Danziger at 717-336-1600.
Unity Marketing publishes its Luxury Tracking Study quarterly with the next due in September 2005. For more information, visit http://www.unitymarketingonline.com/reports2/luxury/luxury3.html or call Pam Danziger at 717-336-1600.