Competitive Landscape: Douglas Elliman

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Competitive Landscape: Douglas Elliman

The typical Douglas Elliman customer is aged between 38 and 53 years and is likely White or Caucasian. They have an active lifestyle and are interested in fitness and wellness. Douglas Elliman's top competitors include Sotheby’s International Realty, Corcoran Group, and Compass.

Demographics

Age/Generation

  • The most active luxury real estate buyers are those aged between 38 to 53 years.
  • The most active luxury real estate sellers are those aged between 54 to 72 years.
  • The average age of luxury home buyers is 41.8 years.
  • About 1.75% of luxury real estate buyers are of the Silent Generation (aged 72 and above).
  • About 33.33% of luxury real estate buyers are Baby Boomers (aged 54 to 72).
  • About 49.12% of luxury real estate buyers are of Generation X (aged 38 to 53).
  • About 15.79% of luxury real estate buyers are Millennials (aged 22 to 37).

Gender and Marital Status

  • The majority of luxury real estate buyers are "married and/or families with some multigenerational groups in the mix."
  • The percentage of recent home buyers that were married in 2018 was 63%.
  • About 18% of recent home buyers were single females and 9% were single males.

Race

  • Although data specifically for luxury home buyers is unavailable, 85% of recent home buyers in 2018 identified their ethnicity as White or Caucasian.
  • About 29% of first time home buyers were non-White or Caucasian, but only 14% of second-time home buyers were of a race other than White or Caucasian.
  • About "25% of Generation X home buyers identified as a race other than white/Caucasian, making them the most racially and ethnically diverse population of home buyers in 2018."

Income

  • The majority of luxury real estate buyers have an income of between $500,000 and $1,000,000.
  • The average income of million-dollar home buyers is $431,000.
  • About 56% of million-dollar home buyers inherited $1 million or more.
  • The average investable asset of million-dollar home buyers is $5 million.
  • The majority (93%) of millennial millionaires have a net worth between $1 million and $2.49 million.
  • The future luxury real estate market is expected to be powered by new affluent families described as the "New Aristocracy", which are families earning over $250,000. The U.S. added over 745,000 affluent households to the number of households earning over $250,000 in 2017.
  • According to Luxury Portfolio, "the New Aristocracy as well off young people aged between 25 to 40 who are increasingly expected to power the U.S. real estate markets in the coming years, partly due to inheritance and to their own success. They are usually married, have young children and have inherited or expect to do so in the next few years.

Psychographics

  • Luxury home buyers have an active lifestyle and like to live in residences that give them easy access to local culture and recreational facilities.
  • Affluent older millennials are also buying more expensive second homes than they otherwise would have bought because they can use "Airbnb or VRBO (Vacation Rental By Owner) to rent them out more frequently and at higher price points."
  • Affluent millennials see owning luxury real estate as a rite of passage. It is a means of announcing that they have made it and are accomplished.
  • About a third of luxury real estate buyers are cash buyers.
  • Many of those buying entry-level luxury properties are working in tech, startups, and creative fields. A significant number are also remote workers and digital nomads.
  • A study found that most luxury home buyers wanted detached, single-family homes and most favored contemporary interior designs. However, about 27% of luxury buyers still favored traditional interior designs.
  • Almost 50% of luxury buyers prefer homes in the suburbs, while 15% wanted a property in the urban area.
  • More than 20% of buyers prefer scenic waterfront property.
  • Fitness is important to luxury real estate buyers, with 76% saying that a gym/fitness room is an essential or 'nice to have' feature in a home. About 66% and 70% said the same for an outdoor pool and Spa/Jacuzzi/Hot Tub respectively.
  • Privacy and security are also important to the group of consumers, with 91% saying that a monitored security system is essential or 'nice to have' feature in the home.
  • Emotional reason is the top reason 37% of high-net-worth individuals (HNWIs) globally purchase real estate properties and 35% view it as a wealth indicator.
  • Younger luxury property buyers "look for high-end amenities that encourage wellness, plus access to both nature and commercial centers with restaurants and shops."
  • Luxury home buyers are also keen on sustainability. In fact, 45% of luxury home buyers state that it is essential that a luxury home incorporates the highest efficiency HVAC.

Primary/Secondary/Investment Property

  • The majority of luxury real estate buyers surveyed said that they were in the market for a larger new primary home.
  • About 48% of those with an intent to purchase a luxury second home are aged 40 years or under. They also make up 49% of those looking to sell a luxury second home.
  • Those in the market for a second luxury home usually have more than one home. In fact, "14% of buyers and 18% of sellers have five or more homes."
  • Although data for just luxury home sales is unavailable, primary residence buyers accounted for 70% of all home sales in the US in 2016, the latest data available. Vacation home sales accounted for 12% of sales, while investment accounted for the rest.

Use of Media

  • Luxury real estate agents use social media to market properties, build relationships with potential buyers, and drive traffic.
  • Luxury real estate agents use a combination of print and digital media as well as signages and events marketing to reach potential buyers.
  • Deloitte notes that "luxury brands are increasingly using social media platforms to engage with young consumers, while trying to keep their brand value intact."
  • According to Deloitte, the HENRYs (High-Earners-Not–Rich-Yet) are heavily influenced by social media and use social media to form buying decisions.
  • About 44% of recent home buyers in 2018 started their real estate search online, while 17% first contacted an agent.

Frequency of Purchase Outside Home Market

  • Data on the percentage or frequency transactions made by real estate purchasers outside of their home market was unavailable.
  • About 20% of real estate purchases in the luxury Miami real estate market is made by foreigners.
  • Globally, luxury second home buyers are quite diverse, with 40% based in the Asia-Pacific region, 28% in North America, and 22% in Europe.
  • About 29% of international homebuyers bought home in the US.
  • Among Canadians who bought a home in the US, 42% bought home in Florida.
  • "Santa Fe, New Mexico, is the “hottest” luxury second-home market, reaching sales volumes of million-dollar-plus homes not seen since pre-crisis years."

Competitive Landscape

Corcoran Group

  • Cocoran Group is the biggest Douglas Elliman competitor in luxury real estate in Manhattan in terms of the number of agents. As of 2016, Corcoran had 1,128 agents while Douglas Elliman had 2,010 agents.

Compass

  • Compass is the third biggest real estate company in New York, with 810 listings valued at $2.21 billion in 2019.
  • The company relies on its over 12,000 agents to market its real estate listings, in addition to digital and print media adverts.
  • The company invests in "premium ad units and advertised on over 250 different Media Properties in the last year across multiple Media formats."
  • Compass marketing message "frequently verged into braggadocio" in the past with the company emphasizing that they were going to win and be everywhere. Recently, however, the company has toned down its marketing message and is now about building a community that its agents can be proud of.
  • Some of its marketing messages read "Discover the Empire State's Most Exquisite Homes"; "Helping Everyone Find their home"; "Tap into the country's most sophisticated real estate platform"; "We are a Human Driven Company and You're What Drives Us"; and "Beyond the Doorway: Extraordinary Exteriors."
  • The company spent under $100 million in advertising in the past year.

Sotheby’s International Realty

  • Sotheby’s International Realty is the fourth biggest real estate company in New York, with 286 listings valued at $1.98 billion.
  • The company's marketing effort includes "digital and print advertising, client relationship development, Sotheby's lifestyle magazines, and certain sponsorship agreements" such as museum sponsorship.
  • They work with "relevant and influential media partners on prominent, highly-visible platforms, leveraging its exposure, innovation and international impact to showcase the listings their network represents to a broad audience of consumers that value the unique properties."
  • Media partners they worked with in 2018 include The New York Times, Washington Post, The Wallstreet Journal, The Financial Times, among others.
  • The company revealed that in 2018 they "produced and distributed more than 2,000 original pieces, including 373 videos, viewed over 28 million times. More than 15,000 visitors who viewed this content registered to bid in our auctions and a similar number requested estimates for consignments."
  • Some of the company's messaging include "International is Our Middle Name"; "Like No Other"; and "For Making the Right Choice".
  • The company spent $23.9 million on marketing in 2018. The company spent $1.5 million less on marketing in 2018 compared to 2019.

Research Strategy

Douglas Elliman is a real estate company that operates in the residential market and the luxury market. For this research, however, we focused more on the luxury segment. For each requested data, we assumed that the typical Douglas Elliman customer is a luxury real estate buyer and provided data on luxury real estate buyers, where possible. Where data on luxury real estate buyers was unavailable after an extensive search of media, industry, and government sources, we tried to provide data on real estate buyers in the US in general.

To identify the main competitors, we used data on listings and value of listings to select the top competitors of Douglas Elliman and provided the requested data for the selected competitors.
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