Young Professionals Drive Houston Luxury Home Sales
It’s no secret that Houston’s high-end luxury homes market has had its share of obstacles due to sliding oil prices. As the oil money has dried up, the traditional pool of luxury home buyers is changing. Without $100-per-barrel oil to grease the machinery, inventory for high-end homes priced at $500,000 and higher hit a recent record of seven months of inventory in the first quarter. Inventory for homes priced above one million dollars hit 10 months of inventory, indicating a strong buyer’s market in Houston. Compounding problems for the luxury home market, aging boomers are opting to downsize and sell their luxury dwellings, which in part has led to the larger supply of homes. Traditional high-end buyers are pulling back, but there is one surprising group looking to step up to the luxury plate.
Young professionals are dipping their toes into Houston real estate
A recent survey found that younger generations, particularly well-off millennials, are beginning to drive flagging luxury home demand. After years of pent-up demand due to concerns about the stability of financial markets, younger generations are finally ready to dive into the real estate market. The survey notes that not only are younger wealthy consumers more likely to purchase in the near-term compared to more established boomers, they also planned to spend more. Younger luxury home buyer spent on average 2.1 million dollars on a home, nearly twice what older homebuyers in the same income bracket spent.
Millennials, who are defined in a recent report by the National Association of Realtors as individuals under the age of 35, constitute the largest generational group of home buyers. The vast majority are first-time buyers. The sheer volume of this demand is making itself felt on housing markets nationwide. In the luxury home market, in particular, younger buyers want homes that fit and support their active lifestyles. High-end amenities like media rooms, home gyms, and outdoor kitchens are in high demand, as are green and sustainable features. Young, affluent buyers are more than twice as likely to value LEED-certified properties. In Houston, this gradual demographic shift can be felt in a variety of locals. River Oaks, Midtown, Upper Kirby, West University, and other traditional luxury hotspots are experiencing a generational shift.
Despite tepid local markets, younger Houstonians are eager to get into the city’s real estate market. As oil prices stabilize, demand from buyers under 55 should pick up. Houston, the nation’s fourth-largest metropolis, and a cultural and economic powerhouse in its own right is a far cry from the oil boomtown of the 1980’s. It’s booming population is young, highly educated, and diverse. Its infrastructure is improving. Its business climate is attractive. Its economy is diversified. And, it’s a great place to invest in Houston luxury real estate.
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