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A $40,000 Volkswagen with an unpronounceable name taken from a nomadic tribe in North Africa.
Global positioning systems in cell phones.
A second home.
The luxury market is poised for a comeback.
Waylaid by 911, the technology sector's implosion and a persistently soft economy, the luxury market is about to get a boost from affluent households and the second home market stands to benefit, according to "The Road to Affluence 2010: A Demographic Profile," recently released by the Conference Board's Consumer Research Center.
"What we're seeing from this report ... is that the housing market, luxury goods market stand to benefit from rising affluence, both in the purchase of second homes, vacation homes, and home furnishings and other similar industries," Lynn Franco, center director, told RISMedia in an interview.
The number of families earning at least $100,000 will climb from 15 million to 20 million by the end of this decade, and those affluent families currently represent 14 percent of all homes in the U.S. -- up from 9 million households in 1990.
Affluent households' spending power will top $3.5 trillion by the end of this decade, driven in part by recent years' appreciation in home values that have helped offset losses in the financial markets -- a strong reason America's affluent remain in good financial shape.
Baby boomers, 78 million strong and well-educated, are helping drive the rise in affluent households by extending the length of their peak earning years.
Older affluent boomer households -- headed by those 55 to 64 -- are estimated to increase by more than 60 percent over the next several years. This older segment will top 4.2 million in 2010, nearly doubling from the less than 2.7 million number today, and its spending power will increase from $455 billion to more than $750 billion.
"Given the large number of affluent households, a rapid increase in the number of high-end affluent households is expected in the coming years," says Franco.
Boomers are credited with driving the second home market and related booms in the condo and investment home markets.
By comparison, Generation X is comprised of slackers who are dragging down the affluent household market's highest end.
"The overall number of affluent households headed by members of Generation X will expand only moderately from the current level of 4.3 million to only 4.7 million in 2010," says Franco.
"As the 48 million members of Generation X enter their prime earning years, their smaller size in relation to the boomers will actually slow the rise of the high-end affluent market -- households with earnings of at least $250,000," she added.
Household affluence should rise again, however, as the larger Generation Y -- 72 million strong -- enter their prime earning years -- assuming the economy doesn't flounder at a time when the youngest wage earners are at the height of their careers.