Moving

America’s Priciest Neighborhoods Are Shifting to Florida

(Bloomberg) – Miami’s Star Island has long lived up to its name. From Shaquille O’Neal to Rosie O’Donnell, the exclusive enclave, accessible only by a closed bridge, has attracted the rich and famous for decades.

And yet Ken Griffin’s move south from Chicago has transposed the neighborhood into a new stratosphere, transforming it into a microcosm of shifting US demographic and residential trends.

A typical home on the island is valued at $40 million, up from $23.5 million in December 2019 — making the area America’s most expensive neighborhood, according to Zillow Group Inc. data. The gulf has never been wider between its closest competition: Port Royal in Naples, Florida, and Beverly Hills, the star-studded Californian oasis.

Some of this is a direct result of Griffin, the founder of hedge fund powerhouse Citadel. He bought five properties on the island for a total of $194 million.

Griffin’s machinations are part of a broader shift among America’s ultra-rich and powerful in the wake of the Covid-19 pandemic. Their moves away from places like New York’s Upper East Side and San Francisco’s Nob Hill to warmer, less dense regions of Florida and Texas have pushed up real estate prices in some places while leaving other neighborhoods behind. And when wealthy executives bring their businesses with them, so do the simply rich.

A Bloomberg analysis of home values ​​in the country’s most expensive areas highlights some of these changes. While a broader housing boom drove up prices nationwide and added an estimated $12 trillion in new U.S. housing wealth since the pandemic, the Miami area more than doubled its million-dollar zip code count from late 2019 through 2022 . It’s a similar story in places like Park City, Utah, or Flagstaff, Arizona, with house price increases of more than 90% in some affluent neighborhoods.

While parts of New York and California, traditional hubs of wealth, still top the list of most expensive areas, values ​​in some boroughs have actually fallen since 2019, Zillow data shows.

Even as rising interest rates slow the nationwide housing boom, the changes represent a broader reset for America’s most expensive home as state and local officials grapple with how to restore the allure of hollowed-out cities. Some of the ultra-rich – including Griffin – are raising concerns about rising crime. Others are lured elsewhere by lower taxes. Regardless of the rationale, these patterns and the corresponding increases in housing costs are changing regions, changing business decisions and contributing to affordability challenges for underprivileged residents.

“The pandemic really has been like a tectonic plate shift,” said Maria Elena Lagomasino, chief executive officer of WE Family Offices, which works with ultra-high net worth families. It operates in Miami’s Brickell neighborhood, an area so financially heavy it’s dubbed Wall Street South. For them, migration of wealthy people to the area is only “in the early innings”.

Read more: Citadel’s Ken Griffin Raises Billions to Make Miami Wall Street South

Florida — a pandemic destination due to its sunny climate, relatively lax Covid rules and no state income tax — is home to 38 of the $50 million U.S. neighborhoods with the largest percentage price increases over the past three years, Zillow data shows. These areas have all more than doubled home values.

That’s no surprise to Dina Goldentayer, who has been a luxury real estate agent in Miami Beach for nearly two decades. During a tour of the area’s most expensive neighborhoods, she said the vibe had changed since she arrived in her early 20s, lured by the party atmosphere and work as a cocktail waitress in South Beach.

“Miami Beach used to be where you would come for a few days to party, sunbathe and get out,” said Goldentayer, executive director of sales at Douglas Elliman. “Now it is the place to live. It’s the lifestyle, the weather, the economic policies, the political policies. Everyone wants to come here.”

Her business is still thriving, though it’s not as hectic as it was at the height of the pandemic, when super-rich buyers – “whales,” as she calls them – got a call to decide if they wanted a property or not. Last year, her home sales were about $475 million, compared to about $750 million in 2021 — but before the pandemic, a good year would be $100 million to $200 million.

“There used to be a whale in town every other week who wanted to buy something; now there’s one every day of the week,” she said. “And when states like California impose their mansion tax or Massachusetts impose a millionaire tax, that just means more business for me.”

Star Island has always been one of the nation’s most expensive neighborhoods, a gated community where all homes overlook the ocean, with spacious mansions that attract celebrities and billionaires. But the generosity has spread to other neighborhoods that meet different needs.

The Venetian Islands — a chain of six man-made islands connected by the Venetian Causeway, including the islands of Di Lido, Rivo Alto and San Marino — have turned into “the land of the rich bachelors,” Goldentayer said. Within a short walk (or scooter ride), the affluent can visit one of 10 different nearby gyms (including a Barry’s) and then grab a bowl of acai (Pura Vida is a popular spot). For families looking for bigger homes but don’t have the budget of a Ken Griffin, there are places like Palm Island with an average home value just under $10 million.

The gains have been varied, not only in the ultra-elite areas like Star Island, but also in parts of Florida not traditionally known as havens of wealth. Prior to the pandemic, there were no zip codes in the Tampa area, where the median home listing price exceeded $1 million. Now it’s four.

Bruce Ring, who specializes in the sale of waterfront homes for Lenson Realty Inc. in Palm Beach County, says the market rebounded in late 2020 as properties sold for double what they fetched just a few years earlier had. He said his clients have relocated because of newfound openness to remote work and changes in state and local tax deductions.

“One guy told me that the taxes he doesn’t pay in Massachusetts are essentially being paid on his new home in Florida,” Ring said. “For them, not doing it would cost them more than doing it.”

The shifts have political implications as wealthy residents bring their dollars and donations to new areas. Griffin, for example, was once one of Illinois’ top political donors before moving Citadel from Chicago. He has provided financial backing to Florida Gov. Ron DeSantis, a potential Republican presidential nominee for 2024. The nation’s growing culture wars have also come into play; DeSantis said “people vote with their feet” in a reelection campaign last year and has since blasted states like New York and Illinois for being soft on crime. Meanwhile, California Gov. Gavin Newsom, a Democrat, ran political ads in Florida to promote his state as a haven from restrictive Conservative politics.

California continues to be home to some of America’s most affluent neighborhoods, with the Silicon Valley town of Atherton being the most expensive ZIP code in the country, with an average home value of $7.4, according to Zillow. But that’s actually down about 3% over the past year — a reflection of a tech boom that has created spectacular fortunes but is now simmering.

San Francisco itself, meanwhile, is struggling to recover from the pandemic as tech companies enable flexible working and hollow out the downtown area, while an ongoing homelessness crisis and headlines about rising crime dull some of its appeal. Property values ​​in neighborhoods like Cathedral Hill, Mission Dolores, South of Market, Nob Hill, Lower Haight and Mission are down more than 10% since 2019, Zillow data shows. The average homeowner in these neighborhoods has seen their property fall in value by more than $280,000.

New York faces similar challenges. A Quinnipiac University survey released this month found that four in 10 residents do not feel safe in the city, while the shift to hybrid work has left downtown office towers partially empty. It is also home to one of the highest income tax rates among US states, and progressive state legislators have proposed a unique wealth tax.

Also Read: Remote Work Costs Manhattan More Than $12 Billion A Year

In Manhattan’s Upper East Side in particular, the number of homes for sale has increased since the pandemic, said Brian Meier, associate broker at Christie’s International Real Estate NYC. According to Zillow, values ​​in this neighborhood are down 8.8% over the past three years.

The city continues to be home to strong demand for luxury real estate — the townhouse market in Brooklyn, for example, is thriving because people want more outdoor space and a neighborhood vibe, Meier said. Basically, wealthy people will always feel the need to be in the financial center of the world.

“It’s the cultural capital of America and one of the cultural capitals of the world,” Meier said. “I speak to a lot of buyers who left New York in 2020 and they’re already talking about coming back, whether it’s a second home or a primary home.”

Still, newcomers keep coming to Florida, said Tim Savage, owner of Gulf Coast International Properties, a luxury real estate firm in Naples. The city, where values ​​in neighborhoods like Royal Harbour, Coquina Sands and Old Naples have more than doubled in the last three years, used to be particularly popular with Midwesterners, but now people from all over the US flock to he said.

Savage is selling a $99 million beachfront property within walking distance to downtown. It is a high price for the Naples market and the buyer could convert the property into various lots or one large house. He said he had received two offers for it by the end of January.

“I don’t see the underlying fundamentals of why we’ve seen shoppers coming here despite the easing of Covid restrictions,” he said. “Once that switch was flipped, I don’t know how you put it back in the box.”

To contact the authors of this story:
Alexandre Tanzi in Washington [email protected]

Felipe Marques in Miami [email protected]

Michael Sasso in Atlanta [email protected]

Amanda Albright in New York [email protected]

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