Miami Has a Lot in Frequent With San Francisco

Daily SF NewsJune 29, 2023

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Miami Has a Lot in Frequent With San Francisco

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It’s a large coastal metropolis that has been losing residents to other parts of the US for years, and was already losing population when the pandemic began. The main cause seems to be increasingly unaffordable living space.

This description applies to several cities. That Miami is included might come as a surprise. In the general imagination, it is one of the great boomtowns of the present. The popular notion is not entirely wrong: In 2020 and 2021, many incredibly wealthy people moved to the area; Employment growth has been strong; and Miami has had some notable success in attracting technology and financial companies. But when billionaire investor Peter Thiel said in May that Miami had become too expensive to consider moving its operations there from California, he had something in mind.

Despite significant differences in taxes, politics, and weather, the Miami metropolitan area of 6.1 million shares distinctive characteristics with the major metropolitan areas of the east and west coasts. It’s alive. It’s diverse. It’s cosmopolitan. It’s also becoming increasingly expensive to live there, in part because the area is being built at about the same rate as New York and Boston, relative to the number of residents.

One reason for this is geography. With the Atlantic Ocean on one side and the vast wetlands of the Everglades on the other, Miami never had much room to spread out. When Albert Saiz, an economist at the Massachusetts Institute of Technology, began measuring the “geographical determinants of housing supply” a decade and a half ago, he found that among major US metropolitan areas, Miami, Fort Lauderdale and West Palm Beach rank second, third and third was seventh, how much land within a 50-kilometer radius of the city center was under water, was on too steep a slope, or was unbuildable for other reasons. (The three areas have since been combined into a single Miami-Fort Lauderdale-Pompano Beach metropolitan area.)

The less than plentiful supply of buildable land in the Miami area is now almost fully developed. In 2013, the Census Bureau noted that it is the ninth-largest metro area in the country on a population-weighted census-district-by-census-district basis(1) and the most consistent in the sense that neighborhood density has remained high, even 50, 60 or 70 miles from downtown Miami. The construction of new housing in the Miami area, as well as in other metropolitan areas on the coast, therefore requires construction in already developed neighborhoods.

Tall residential buildings are part of South Florida’s DNA, and Miami and surrounding cities have continued to construct new buildings in and around their downtown and other business districts. But for a variety of reasons — scarce land, high construction costs related to hurricane threats, continued caution after the last real estate crisis that hit Miami hard, and a steady influx of ultra-rich buyers from Latin America and elsewhere — these new buildings are likely to be even greater than buildings in other regions that tend towards super luxury. According to real estate agent Redfin, the average selling price per square foot in Miami over the past two years has been about 50% higher for new homes than for existing homes. Statewide there was virtually no difference, and the only metro area I found with a significantly larger price difference than Miami was New York.

Meanwhile, in the Miami metro area, it’s just as difficult to densify existing single-family neighborhoods as it is elsewhere, as the area fits into the coastal development pattern that housing researcher Issi Romem once described as “nests of dense development in a dormant suburban interior.” Some states have been pressuring cities and suburbs to break out of this single-family home rut, but Florida seems to be pushing in the opposite direction: Gov. Ron DeSantis’ administration has filed a lawsuit to stop a north Florida city from zoning finish only for single family homes. Last year, Miami Beach turned down a new Frank-Gehry-designed residential tower in what might have been a coincidence but felt a bit like a sign of the times, while the notoriously development-shy beach city of Santa Monica, Southern California, agreed.

One consequence of this limited housing supply has been a steady exodus of Miami-area residents to more affordable areas. The Census Bureau tracks domestic migration by county, and its statistics show that Miami-Dade County has lost an average of about 40,000 net people per year to other parts of the U.S. over the past decade, with Broward County (Fort Lauderdale) trending more negatively in recent times Palm Beach County still saw net inflows from within, but not nearly enough to offset Miami-Dade’s losses.

Recent estimates by Placer.ai, a location analytics firm that managed to identify population trends later confirmed by the Census Bureau, suggest that Greater Miami experienced a net emigration of 1% of its population during the year, about 60,000 People, The twelve months ended in March, with the largest net inflows going to the Orlando and Port St. Lucie, Florida metropolitan areas.

That doesn’t mean the Miami metro area is shrinking. Broward and Miami-Dade counties have had slightly more births than deaths in recent years (Palm Beach County has not), and the region attracts many people from outside the US. It was the near halt in immigration at the start of the pandemic that led to a population decline from April 2020 to July 2021, but this has since normalized. Migration in and out of the Miami area follows a pattern similar to that seen in New York, San Francisco, Los Angeles and other coastal cities a decade or so ago, with international inflows largely or completely offsetting domestic emigration.

California data from the 2010s is also a reminder that people inbound are wealthier than those outbound, although Miami-Dade and Palm Beach counties really took that to new levels early in the pandemic. The median adjusted gross income of the 45,160 federal income taxpayers who relocated to Miami-Dade County between 2020 and 2021, according to the Internal Revenue Service (which is not the case), was $229,662, while that of the 59,292 emigrants was just 66,354 US dollars was published more recent data), while in Palm Beach County the 44,354 new taxpayers averaged US$242,684 and the 38,649 eliminated US$96,395.(2) In terms of total net income inflow, Miami-Dade and Palm Beach had among the largest no real competitors US counties in 2020-2021, and Broward was also a top performer.

Swapping poorer people for richer ones can, of course, have a positive impact on state and local finances, although Florida’s lack of a state income tax limits the bounty. And unless the transition also significantly boosts the incomes of local residents left behind, it becomes politically problematic for a region where the median household income was just $63,814 in 2021, compared to the national median (as measured by the American Community Survey of the census bureau). from $69,717. The combination of low incomes and rising home prices has pushed the Miami metro area to second from bottom in the Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor for April, with listing website RealtyHop ranking the city of Miami second to last for housing affordability place ranks June.

The two least affordable metro areas ranked by the Atlanta Fed are Los Angeles and San Francisco, two places with persistent housing problems and, in recent years, many other problems. There has long been a debate as to whether the problems, particularly in San Francisco, are primarily due to poor governance or an inadequate housing supply. Miami might help us figure out the answer.