MIAMI –– Is bigger really better? It’s true to Florida buyers. Many wealthy buyers are moving to the Sunshine State for higher ceilings -- and a lower tax bracket.
Luxury Florida homes have wealthy Americans making the move from high tax areas like New York, New Jersey and California, cutting their tax bill and increasing the size of their homes. It's a movement many are calling “tax migration.”
Jay Parker, CEO of Douglas Elliman Florida brokerage, one of the largest residential brokerage firms in Florida and Manhattan, said New Yorkers are the new “foreign” buyers.
“We have really created the perfect storm. The age of our population, the tax benefits of moving to South Florida. Someone that wants lifestyle, amenitization, really an experience in their living environment. Larger units, higher ceiling space,” Parker said.
The Tax Cut and Jobs Act — passed by Congress and signed by the president in December 2017 — capped the federal deduction for property, state and local taxes at $10,000. As a result, high-income earners are fleeing their home states and looking to the Florida real estate market for a better quality of life.
New York Gov. Andrew Cuomo on Monday blamed Trump's tax law on the number of people leaving the state, saying it had contributed to the state's deficit.
“There is only so much you can take and that is what is happening right now. Remember I’m a native and I am kind of like, OK, I’m getting over this. I am looking for a better place and I really believe that South Florida, and Florida in general, is a great place to buy,” said Dan Newman, a California resident and investor moving to Florida.
Multimillion-dollar mansions combined with lower property fees and no state income tax is the pitch luxury real-estate agents like Katrina Campins is telling potential buyers.
Campins says she is seeing more and more multimillion-dollar home sales in Florida.
“When they move here, many of them are buying $10, $20 million houses, sometimes $30 million houses, and it is actually a bargain because they are saving so much on state taxes and city taxes that the house is almost free by the time you calculate everything,” Campins said.
Miami is also attracting Hollywood A-listers as well as rich foreigners.
“You are seeing more and more celebrities, ultra-high net [worth] individuals which are sort of pseudo-celebrities, make their way down to South Florida,” said Parker.
Parker said the demographic has expanded. It’s not just the empty nesters or retirees. It’s young families moving -- a noticeable difference compared to 15 to 20 years ago, he said.
According to data released by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate, luxury purchases are on a steady climb in South Florida. Brokers say the overall housing market in Miami is seeing the first annual rise in market-wide sales in more than five years, both on the coastal mainland and the beach.
According to the sales data, the number of home sales rose about 11 percent, to 3,518 in the fourth quarter of 2018, for the Miami coastal mainland, compared to 2017.
In Fort Lauderdale, the median price for a luxury condo jumped almost 26 percent to almost $1.6 million in 2018, compared to the year before. The median sales price in 2017 was at $1.2 million.
Parker called the movement a “slow drip.”
“People that are moving here, they are moving quickly, they are moving consistently. They are looking for opportunities, they are evaluating the market and I think all of these things combined really are very favorable to us in the state of Florida,” said Parker.
But Parker said it's not like New York is losing ground to Miami -- it's still the hotting market in the country.
"I still believe New York is still positioned to be the most important real-estate market in the country, if not the globe. It is just an opportunity for us now to expand our luxury market and to become a safe haven," Parker said.
Realtors say the influx of American buyers is not a temporary trend -- they believe it will last. But many are uncertain if the region, already dealing with traffic woes and overcrowding issues, has the infrastructure to take in more people.
“We may need to figure out the traffic situation. Because you are beginning to see that we really need better transportation here, because there is a lot of people moving here,” Campins said.