Luxury Market Research - Affluent Consumers Plan Fewer Purchases of a New Home
Over 80% of the survey respondents reported that they had made a general effort to reduce or defer expenditures Almost 70% of the homes were expected to be the purchase of an existing home rather than building a new home.
In the Spring 2009 survey of the wealthiest 10% of all U.S. households, plans to acquire a new primary residence during the next 12 months were reported by only 2.9% of the affluent consumers. Almost 70% of the homes were expected to be the purchase of an existing home rather than building a new home.
Plans to acquire a vacation home were indicated by 2.3% of the affluent market. About 60% of the vacation homes were expected to be the purchase of an existing home rather than building a new vacation home.
Equal to the potential acquisition of 325,000 primary residences and 258,000 vacation residences, these intentions represent a continued decline from the record lows established in the Fall 2008 survey.
The record highs in this series of studies, which began in Spring 2002, were 9.6% for primary residences in the Fall 2003 survey and 10.5% for vacation homes in the Spring 2005 survey.
The incidence of primary residence acquisition plans is highest among those age 50 to 59 (3.7%) and those with income below $200,000 (3.6%). For vacation home acquisitions, the intentions are highest among those with an income above $200,000 (4.0%) and those with a net worth of $6 million or more (6%).
The survey respondents indicated a negative 12 month outlook for business conditions and personal household income. They also reported declines in their net worth, as a result of substantial declines in the value of their home and their investments/savings during the past two years. Together, these factors have contributed to a general attitude toward reducing or deferring expenditures in all areas.
The intentions to acquire a new primary residence or a new vacation home are consistent with the overall mood of the affluent market. Over 80% of the survey respondents reported that they had made a general effort to reduce or defer expenditures during the past 12 months, would make a conscious effort to do so during the next 12 months, or had both done so in the past and would continue to do so in the future.
The survey is representative of the population of the most affluent 11.2 million households in the U.S. that account for almost 40% of total personal income and two-thirds of the personal wealth of all Americans.
The 640 men and women included in the national survey have an average annual household income of $290,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.4 million. This survey of the affluent market has a maximum margin of error of five percentage points at the 95% confidence level.
These surveys track how affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market, personal household income, and their spending plans for different products and services that include major appliances, home computers, furniture/furnishings, home entertainment equipment, casual and upscale dining out, entertainment, recreation, domestic and international travel, designer and non-designer apparel, collectibles, fine jewelry, and political and charitable contributions.
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ABOUT THE AUTHOR
The American Affluence Research Center, led by AARC President Ron Kurtz, provides marketing research and mailing lists of affluent consumers to prominent companies targeting the affluent market, commonly referred to as The Luxury Market. AARC is an independent, private research organization dedicated to providing reliable marketing information about the values, lifestyles, attitudes,investments, and purchasing behavior of the most affluent segments of the U.S. population through both custom and multi-client surveys.