As the real estate recovery continues across the U.S., the buyer profile will continue to evolve along with the market cycle. Institutional real estate investors acquiring distressed assets and foreclosures largely drove the first stage of transactions. As the standing inventory was depleted, the investment scenario continued with private individuals and foreign investment returning to the market. In several metropolitan markets, including Miami, these investors jumped into presale condominium construction staying ahead of the forecast rebound to capitalize on future appreciation.
During the next stage of the recovery, the lifestyle-driven consumer will return to the market. Bolstered by recent gains in the stock market and the pent-up demand as a result of delayed plans for retirement or relocation, second home purchasers will jump back into the market. This stage of the recovery is essential to the sustainability of the rebound, as end users become residents creating a revenue streams to support project amenities and services. With rising competition, attracting this consumer becomes a critical component of the development forecast.
Key points to consider:
1. Today’s luxury consumer has a new set of priorities and their psychographic profile has shifted dramatically as a result of the economic downturn.
2. Lifestyle-driven homebuyers often turn to the Internet as their first source for researching availability and developing a “short list” of considerations.
3. Real estate brokers will maintain important, but educated consumers will drive the conversation asking about specific projects rather than merely asking for recommendations.
4. Extensive project amenities and exclusivity are no longer in vogue. Look to the surrounding area for lifestyle amenities, entertainment and other attractions that support the overall homeowner lifestyle.
5. Walkability score and lower carrying costs are among the most compelling sales propositions with today’s emerging market.
The developer who successfully attracts the end user market offsets the risks associated with a purely investment driven purchaser. Paying higher broker commissions and increasing buyer deposits are the norm in today’s heavily investment driven market. Generating sales to end-user residents will result in a lower cost of sale and healthy financial forecast as the homeowners turn the building into a thriving community.