NYC hedge-fund managers and Silicon Valley CEOs are flocking to Miami as 'tax refugees,' and it's sparking record, ultra-luxury real-estate sales in the area
- Tech CEOs and hedge-fund managers from New York, Silicon Valley, and other high-tax areas are relocating to Miami and other parts of South Florida.
- A top real estate broker in the area, Dora Puig, says they're "tax refugees:" People looking to establish residency in Florida, a no-income-tax state, after the tax reform that went into effect in January 2018.
- These wealthy families and individuals are buying up ultra-luxury real estate ranging from $10 million to $50 million.
- Puig says she's seen "record sales" in the Miami area.
Some of America's highest earners are ditching New York City, Chicago, and Silicon Valley in favor of a sunny, southern destination: Miami.
Dora Puig, the top-ranked real estate broker in Miami-Dade County by sales volume in 2018, says Florida has always been an attractive place to relocate because of its weather, location, and its lack of personal income tax. But since 2017, she's seen a spike in luxury home sales in Miami and South Florida, and they're not going to international buyers.
These buyers are Wall Street hedge-fund managers, tech moguls, and other high earners from places like New York City, New Jersey, Connecticut, Chicago, and Silicon Valley, and they're fleeing the effects of tax reform that went into effect in January 2018.
"Since the tax reform passed last January 2018, you've seen the top of the market speed up in terms of closed sales," Puig told Business Insider. She said she's seeing "a lot of record sales and sales over $10 million."
The tax law that President Donald Trump signed into law in December 2017, which capped a deduction for state and local property taxes at $10,000, hit homeowners in expensive cities like New York, San Francisco, and Chicago the hardest, as Business Insider previously reported.
Read more: Trump's tax overhaul has slowed Manhattan's real estate market even before going into full effect
But it's been a boon for Miami real estate. Luxury home prices went up 4% in Miami between the third quarter of 2017 and the third quarter of 2018, making it one of only three US cities that saw an uptick in prices in the luxury market, according to a Mansion Global report.
And in February 2019, a $50 million waterfront mansion broke the record for the most expensive single-family home ever sold in the Miami area, as Business Insider's Lina Batarags reported.
'Tax refugees' are dropping between $10 million and $50 million on ultra-luxury Miami homes
The demographic that Puig jokingly refers to as "tax refugees" is spending big money in Miami.
"This type of buyer is purchasing north of $10 million all the way to $50 million," she said.
The buyers are a mixture of young people and families, Puig says; many of them have businesses that are "a little bit more mobile, maybe that don't have manufacturing in New York or California. ... It's easier for them to pick up and come and re-establish their primary residence in Florida."
These buyers generally aren't shy about admitting their move is for tax purposes, Puig said.
"You tax people so hard in their state when they're top of the market and they make that much money, they're going to pick up and move," she said. "It's that simple."
Some are even relocating their entire companies along with them.
"I have tech clients that closed up shop in San Francisco and are bringing all their offices and their teams here," Puig said.
Out-of-state buyers want either waterfront mansions or highly amenitized condos.
One of the top spots wealthy transplants are flocking to in Miami, according to Puig, is Fisher Island, a highly amenitized and exclusive members-only island. It's also one of the most expensive zip codes in America.
"A lot of them are very concerned with privacy and security," Puig said. "If you've been to the island, it's gorgeous. It feels like you're in the Caribbean, yet you're literally a three-minute boat ride to South Fifth Street to all the restaurants, and a five-minute boat ride to Downtown Miami."
Puig sells luxury condos in buildings on the island including the 43-unit Palazzo Del Sol, which includes amenities such as hair and makeup salons, children's playrooms, a heated pool and spa with outdoor bar, valet parking, a butler-staffed aperitivo bar and lounge, and a multilingual full-service concierge.
"We've had several sales in there of people coming for tax purposes to establish residency here," Puig said of the building, noting that buyers have included "hedge fund and finance guys" from New Jersey, San Diego, and La Jolla.
Prices range from $6.5 million to $35 million, and in its sister building, Palazzo Della Luna, the $40 million penthouse is the priciest listing on Fisher Island to date.
This influx of affluent transplants isn't going to slow down anytime soon, according to Puig, who anticipates that 2019 will see an even bigger spike in wealthy out-of-state buyers as they feel the effects of tax reform.
"I think that if nothing changes with the tax reform, and in the state of Florida if we stay an income tax-free state, I'm extremely bullish on the super-luxury market for the next three years," she said.