Affluent people are relocating to states like Florida, Texas, North Carolina, and Tennessee, drawn by the allure of more space, favorable weather, and reduced taxes – a trend that’s notably pushing up housing costs in Miami and affecting even those with substantial incomes.
What’s Happening?
The pandemic has led to a reshuffling of wealth distribution, with even the most affluent opting for states offering larger residences, more favorable weather, and minimal or nonexistent personal income taxes.
This trend was highlighted in Bloomberg’s feature on Florida’s Indian Creek, an island frequented by the ultra-rich.
Moving To Where?
Wealthy or middle-class Americans are moving away from pricier, higher-tax states like New York and California, opting for more economical, lower-tax states, including Florida, Tennessee, and North Carolina.
High Earners on the Move
The movement of high earners is particularly noticeable. A July 2023 SmartAsset study utilizing tax-filing data from 2020-2021 noted a trend of individuals with over $200,000 migrating to states like Florida, Texas, North Carolina, and Tennessee while leaving places like New Jersey, Massachusetts, and New York.
A Billionaire’s Paradise?
Bloomberg’s coverage of Florida’s “Billionaire Bunker,” Indian Creek, also spotlighted cities like Austin, Dallas, Nashville, and Charlotte as primary destinations for wealthy movers.
Big Savings Await Those Who Move
The financial incentives to relocate are hard to ignore: a New York City resident earning $150,000 could save around $50,000 by moving to Miami. Someone with an income of $650,000 or more might pocket savings of up to $200,000 with the same move, according to SmartAsset.
Newcomers Flock to Sunshine State
Beyond the wealthy, Florida, Texas, and North Carolina are attracting a diverse population. From 2021 to 2022, Florida led the country in new arrivals, welcoming 738,969 people, as reported by Census data in October.
Texas came in second with 668,338 newcomers, followed by California with 475,803 and North Carolina with 341,582. Interestingly, these four states also feature among the top 10 states people are leaving, though the order varies.
Big Business Shifts
Significant business relocations are underway to these states. Citadel’s CEO, Ken Griffin, made headlines in June 2022 by moving the hedge fund’s headquarters from Chicago to Miami, pointing to Chicago’s violence as a critical factor.
Moving Headquarters
Indxx, a financial market indices and data provider shifted its headquarters from New York to Miami, praising Miami’s favorable tax environment for corporations and individuals.
$80 Million Savings
Bloomberg reported that in 2021, investment firm AllianceBernstein transferred 1,000 jobs from New York to Nashville, aiming to cut costs by $80 million annually. The following year, asset management firm Allspring Global Investments moved from San Francisco to Charlotte, emphasizing North Carolina’s “business-friendly environment” in a press release.
Tech Giants Flock to Texas
Texas has attracted top companies like Oracle and Tesla to Austin. The state is often praised for its business-friendly tax policies, which are especially beneficial for new and small businesses.
There’s no personal income tax in Texas, and the most common new businesses, sole proprietorships, are fully exempt from the franchise tax, the state’s primary business tax.
$107 Million Miami Estate
Even company leaders who are billionaires are moving personally. Griffin invested nearly $107 million in 2022 for a waterfront estate in Miami’s Coconut Grove, marking the city’s first home sale at over nine figures.
Real Estate Prices Soar
The wealth migration is significantly impacting real estate prices, particularly in Miami. Last year, Amazon’s Jeff Bezos bought two properties on Indian Creek in Miami for $147 million, an area also inhabited by Jared Kushner, Ivanka Trump, and businessman Carl Icahn.
Tesla’s Elon Musk has reportedly been living in Texas, having left California.
Living Costs on the Rise
This wealth redistribution contributes to rising living costs in traditionally more affordable states. In Miami, for instance, the median home price skyrocketed from $343,500 in January 2020 to $590,000 in November, marking a 72% increase, as per Redfin data.
Evolution into Luxury Markets
Housing expert Jonathan Miller told BI that Miami and Southeast Florida are evolving into “more luxury markets,” a trend he believes is here to stay. He empathized, “I don’t see that as a fluke or an anomaly.”
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