Homing in on the Affluent
The affluent seem to have a great support system among our readers, and probably that support includes a great deal of wishful thinking and ungrudging envy.
Following publication of recent major stories containing details of the homes being built for such entertainment luminaries as Merv Griffin and Aaron Spelling, measurable public reaction decidedly favored what some felt were very ostentatious plans.
Letters and response received here contained the same general opinion--”they earned it, let them spend it the way they want.” Some balanced their reaction with the thought that the affluent usually support many charities and other worthwhile causes.
Others, with enmity, suggested that the rich and famous ought to have a lot more consideration for the thousands of homeless in the city’s streets and byways and could easily provide immediate financial aid for that cause.
This very apparent affluent market in real estate will be a prime topic at this week’s four-day Pacific Coast Builders Conference in San Francisco, expected to attract more than 8,000 conferees to the nation’s oldest and largest regional builder’s conference/exhibit. The subject becomes an added priority in an industry already beset by the spreading limited-growth movement.
The lead program will offer the first presentation of data from a research report entitled, “Selling the High Priced Spread, the Affluent Market in the United States,” delving into sociological, cultural and marketing issues.
Discussion of the report will deal with clearer identification of the affluent market, what to build for it and how to design, merchandise and market the product for that growing audience.
“At the beginning of 1988, there were 1 million millionaires in the United States, and California is the fastest producer of millionaires in the country,” according to Brooks Roddan, senior vice president of Bryan Hardwick Associates, realty marketing and communications firm, which conducted the study.
(Other data shows that there are at least 81,000 persons in the nation whose fortunes exceed $10 million and 11,410 are Californians.)
“When you consider the affluence of this market, together with the escalating price of land, especially in metropolitan areas, it is easy to understand why so many developers and builders are very interested in this market,” he said.
The study of affluent Americans reveals a new niche for the traditional classification of wealth--the rich, the middle-income and the poor. It adds a category that is “ below the rich and above the upper-middle class,” but this growing, affluent new class may be the most potent in the country.
This affluent group is dubbed the “meritocracy,” an entirely new class of wealth that is quite different from the aristocracy or old rich found primarily on the East Coast. Having worked hard and fast for their money, the meritocracy feels entitled to the finer things and wish to express their affluence in the acquisition and enjoyment of the privilege that comes with wealth as opposed to the old rich who generally feel embarrassed by their wealth and seek to disguise it.
The new rich, particularly the Californians, figure they have earned it, they deserve it, they want to spend it--lots of it, on a house of their own taste and size. Actually, the report points out, meritocracy is a working class, of executives, individual entrepreneurs and professionals. Their households are located mainly in metropolitan areas--83% of all affluent homes are in metropolitan areas--and California leads the nation as the home of choice for the highest percentage of America’s affluent.
Californians who fit this new classification have homes with market values of at least $400,000, or who can afford to buy such a dwelling or have a net worth of that amount.
An estimated 90% of the nation’s millionaires today are married and are members of a family-oriented, traditional household, contrasting with the national average of 59% of all households being married couples.
The new rich crave privacy and demand quality, manifested in appreciation of gourmet cooking, fine restaurants, designer clothes, innovative architecture and, of course, big and unusual homes on prestigious sites--near a golf course or country club, or waterfront or on a knoll. “The area must be seen as attracting others like themselves,” the report says.
They want their homes to be distinctive, using special design considerations, outwardly strong traditional design, with current technology and such interior amenities as wine cellars, electronic stereo systems, collectibles and fine art.
They want private guest suites, separate master suites, separate domestic quarters, long driveways, well-landscaped grounds, lots of security for the home and immediate area. When they are vacationing, they prefer “private balconies, patios, superior sound attenuation and partitioned water closets.”
They also want their homes to be excellent investments with good value for possible sale.
They believe travel is a social right, not a privilege, and they have an “uncommon appreciation of the value of time and its finite nature” because their present standard of living depends upon it and they want to maintain that status quo.
When advertising to catch the eye, interest and money of the newly affluent--who spend more time working, entertaining and traveling than the non-affluent--advertisements must have obvious quality, must get their messages across in 3 to 4 seconds of reading time, and must appear in many newspapers and magazines because these readers peruse twice as many publications as the average reader.
The study also notes that the affluent are influenced very much and are susceptible to word-of-mouth recommendations from their peers.
The research report will be presented and discussed at the initial educational session of the 30th annual PCBC at the Moscone Center Wednesday morning.
Participants will be Allen Khedari, president of Columbia Residential Development, builder of Beverly Hills homes priced upward from $3 million; Sue Kelley of Showplace Interiors, San Diego; architect Robert Earl; Ruth Ryon, real estate columnist and writer for The Times, and Bryan Hardwick, moderator.
The four-day conference is sponsored and produced by the California Building Industry Assn. and will include presentation of the coveted Gold Nugget Awards for excellence in design and planning among western home builders.
