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Manhattan’s sales, rental markets hit new highs

Busiest March for home-sale contracts since 2007

One year ago this month, New York’s real estate industry — and the city as a whole — effectively shut down with few deals being made as Covid-19 cases skyrocketed.

But a lot can change in a year.

The week ending March 25 saw 341 contracts signed in Manhattan, according to UrbanDigs’ weekly look at the borough’s real estate market. That’s a 400 percent increase from the same time last year — not a surprise, as the city was in lockdown at the time.

But the number of contracts signed in Manhattan this month is the most of any March since 2007, and there are still a few days to go. As of March 25, some 1,224 contracts were signed. If that pace keeps up, the number would be nearly 1,300 by the end of the month.

While the number of new listings was slightly below last week’s levels (383 last week versus 455 the week before), it was also a significant increase from the same time last year — 471 percent.

Fewer listings were also removed from the market, suggesting that sellers are willing to keep their properties listed if it means they can make a deal. If demand continues at the current levels, the borough’s years-long trend of a supply glut could reverse itself.

“As unbelievable as it sounds, if this trend continues, Manhattan could find itself facing a supply shortage in the near future,” John Walkup, the co-founder of UrbanDigs, wrote in this week’s report.

Demand is also up in the rental market, which has seen a surge in the number of leases signed in March. According to the report, more than 1,000 lease deals were made last week, the first time that’s happened since 2019.

“While landlords still have many units to lease, the general decrease in inventory, due to more leases signed versus new listings, suggests that the worst market conditions for landlords in recent years may be coming to an end,” Walkup said.

Source: The Real Deal

 

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“We are recovering”: Manhattan home sales finally increase

First quarter sees first year-over-year gain since pandemic hit

“It’s the first time in the past four quarters that sales have exceeded year levels.”

Manhattan’s residential market appears to be on the rebound.

The borough saw 2,457 home sales close in the first quarter, a 2.1 percent increase from the same period a year ago and a 28.7 percent jump from the previous quarter, according to a Douglas Elliman report by appraisal firm Miller Samuel.

The small year-over-year increase isn’t one to glance over: It’s the first in the past four quarters, noted Jonathan Miller, the report’s author.

The other boroughs have boomed since the summer, but Manhattanites’ wealth and mobility made the island a “laggard,” Miller said. This quarter’s report shows that sales in the borough are now moving — or moved, at least — in the right direction.

The median sale price was $1,075,000, up by 2.4 percent from the fourth quarter of 2020 and by 1.4 percent from a year earlier. But condos and co-ops lagged the broader market as their median sale price decreased by 4.7 percent and 3.8 percent, respectively.

Listing inventory is up 18.2 percent year-over-year. “That’s important,” Miller said, “because inventory was the third-highest in history last summer, but because of the gradual increase in sales and reduction of inventory from panic sellers who pulled their listings from the market, inventory is now relatively consistent with history norms.”

The spike last summer was attributable in part to pent-up demand following the spring lockdowns and ban on home showings.

Co-ops and condominiums that sold from January through March spent an average of 138 days on the market, up by 13.1 percent from the previous quarter and by 20 percent from a year ago.

New-development units that sold spent an average of 261 days on the market and traded an average discount of 8.6 percent from the final asking price. The number of closed sales fell by 2.1 percent from the previous quarter, but rose by 9.2 percent from the first quarter of 2020.

“We haven’t recovered, but we are recovering,” Miller said. As sales rise and inventory falls, the quarter’s results are a big step in that direction and better than expected at this point in the post-Covid rebound, he said.

Source: The Real Deal

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New York’s wealthiest look for exits as state readies hefty tax increase

New York’s top business leaders are gearing up for a potential mass exodus as Gov. Andrew Cuomo and state lawmakers prepare to raise their taxes.

With the state budget set to increase the personal income tax on the wealthiest New Yorkers as well as hiking corporate taxes, some executives who fled the city for Florida temporarily due to coronavirus pandemic lockdowns are considering permanent relocation, according to business leaders briefed on the matter.

Wealthy business leaders who have historically resisted moving at least some of their resources to Florida or other less-taxed states explained to CNBC that they are now seriously reconsidering as working from home becomes the norm, allowing more flexibility.

Tracy Maitland, president of investment advisory firm Advent Capital Management, said that while he still loves his home base, he’s not ruling out departing.

“It’s a consideration,” Maitland told CNBC in an interview Wednesday. “I love New York and I was born and raised in New York. I’m going to do whatever I can to try to steady the ship. If I can’t, then I’m going to have to make a decision,” he added.

Florida does not tax personal income. Miami Mayor Francis Suarez told CNBC that he has been in touch with some of New York’s biggest firms, including since details of the tax hikes were announced this week.

“We have been,” Suarez said when asked if he’s heard from New York-based business executives in recent days. “I can’t give names but if you’re looking to know if we’re talking to the biggest firms in New York, we are.”

“Clearly, the toxic climate in New York has led businesses to look to Miami as an attractive place for long-term expansion and relocation,” Suarez said. He noted that he’s received a “very receptive” response to his pitch to New York executives and pointed to moves by Blackstone and Starwood Capital into Miami. Blackstone recently signed an office lease in Miami while Starwood moved its headquarters to the city.

JetBlue, which is currently headquartered in Long Island City, New York, is looking at shifting some staff to Florida.

“We’ve hit a critical mass of interest and excitement in Miami and with these big players coming here, people are beginning to understand that this is very real,” Suarez said.

In the budget passed by state lawmakers in Albany and heading to Cuomo’s desk for signature, New York City’s executives would likely see combined local and state personal income tax rates that are higher than those on wealthy California residents.

A spokesperson for Cuomo’s office did not return a request for comment before publication.

Within the more than $200 billion state budget, the top tax rate gets bumped to 9.65% from 8.82% for single filers who make more than $1 million. Those who make between $5 million and $25 million would be taxed at around 10.3% and for those making more than $25 million the rate would be at 10.9%. Wealthy earners are expected to get hit with those new taxes in the next tax season, with the rates expiring in 2027.

As New York executives consider their future living options, the wealthy across the country are facing the threat of the federal corporate tax rate going up under President Joe Biden’s administration. The president has said he wants to raise the corporate tax rate to 28% in order to pay for his infrastructure plan. Biden has said he’s willing to negotiate on the corporate rate. New York business leaders seeking tax relief via the elimination of the cap on the state and local tax deduction (SALT) have lobbied Biden’s advisors and Sen. Majority Leader Chuck Schumer, D-N.Y.

Those who declined to be named in this story did so in order to speak freely about ongoing private conversations.

A Wall Street executive who has had stints at investment firm Evercore and other similar offices told CNBC that a few friends who already reside in Palm Beach, Florida, are contemplating making it their permanent residence.

An executive at an investment firm noted he’s “thinking about it” when asked whether he’d leave New York altogether.

A media executive who runs a massive public relations firm in New York explained that more than a dozen people he has spoken to are seriously considering leaving the state permanently with taxes for the rich on the rise.

“Moving to Florida is an active and serious conversation with my peers,” this person said. “If my kids weren’t here I would move tomorrow.”

Other locales are also getting a look these days.

A corporate restructuring attorney said he’s considering moving to Washington, D.C., believing he could save money on property taxes there. Property taxes in Washington are drastically less than they are in New York, according to a 2019 study by USA Today.

Kathryn Wylde, president and CEO of the Partnership for New York City, with hundreds of members who represent businesses across the city, told CNBC that business leaders are hearing from employees and potential recruits about the need to set up offices in states outside of New York in order for them to avoid paying higher tax rates.

“What I’m hearing is that those nonresident taxpayers are now demanding from employers that they set up an operation where they can be domiciled so that they don’t have to pay some New York taxes,” Wylde told CNBC in an interview. Wylde’s group sent a letter to Cuomo and state Democratic leaders last month, encouraging them not to raise taxes. The letter did not appear to have much of an impact.

The partnership’s executive committee includes JPMorgan CEO Jamie Dimon, BlackRock CEO Larry Fink, Citigroup CEO Jane Fraser and Blackstone CEO Steve Schwarzman.

Wylde pointed to a conversation she had with an asset manager, which she declined to name, who told her that a potential recruit refused to live in New York City due to the tax increases and this executive is now planning to open offices in Florida.

New York state law says that “if you are a nonresident, you are not liable for New York City personal income tax.”

Source: CNBC

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South Florida’s Real Estate Market Is Now Officially In Super-Boom Mode

If you’ve looked at the temperature gradient maps of the continental U.S. over the past few weeks, it’s not hard to see one main reason why Miami and South Florida’s real estate markets are on fire.

With partial lock downs and restrictions on indoor dining, entertainment, sports, and gatherings still in effect in many states (with no clear end in sight), any place that offers the opportunity to do anything outside without wearing snow boots and chipping ice is worth paying a premium for right now. The average daily high in Miami over the past two months has hovered around 76 degrees with mostly clear skies.

Add to that an open economy, fewer masking requirements, relatively low COVID-19 case counts, a booming remote work scene, stable politics, and no state income tax, and it would be easy to think that South Florida’s recent real estate boom could have been predicted. Yet, few if any did. Like everything over the course of the pandemic, it all happened so fast. South Florida realtors and developers also have learned to be leery of the bubbles since they know what it’s like on the other side.

This time, however, South Florida’s real estate resurgence has all the signs of a boom that’s here to stay for a while as the country’s other major metropolises like Manhattan and San Francisco struggle with a long-term re-pricing in the other direction.

The 2-story “Beach House” at the Ocean House in South Beach, Miami just closed for $15,060,000 over … [+]

Examples of South Florida’s super-charged market are everywhere. More eye-turning than what buyers are willing to pay right now, however, are what the market reveals about buyers themselves and the factors driving them.

“Properties like The Beach House are going into bidding wars as soon as they hit the market,” says Marulanda, out-of-town rush for the last remaining scraps of luxury, waterfront real estate south of Palm Beach. As much as the single-family market is absolutely killing it and stealing the show, there are a lot of people coming from cities right now who are used to being in condos and their families sometimes don’t feel as secure and comfortable without having the assets that a building has.”

Open space, bright light, and landscaped views make The Beach House feel like a single-family home … [+]

Courtesy Of Lifestyle Production Group

One of two sunrise terraces with Atlantic Ocean views at The Beach House

Courtesy of Lifestyle Production Group
The list of other top-tier sales over the past eight months, including dozens of celebrity buyers, goes on and on. Ivanka Trump and Jared Kushner recently snatched up a $31M waterfront plot on tony Indian Creek (a.k.a “Billionaire’s Bunker), complete with 13 private police and a marine guard, not far down the street from Tom Brady and Giselle Bündchen’s new $17M digs. Among their 29 other neighbors on the island are Julio Iglesias, investment titan Carl Icahn, supermodel Adriana Lima, and local real estate billionaire Jeff Soffer.

As recently as 2019, the possibility that so many domestic buyers would be vacuuming up the highest ends of South Florida real estate would have been almost unfathomable. During most of South Florida’s previous real estate booms, as much as 80% of buyers for most high-end properties were foreign, predominantly from Latin America (LATAM), Russian, and Asia. Since the beginning of the pandemic, however, those numbers have flipped to 70% domestic, amplified by the fact that many foreign buyers still can’t travel to the U.S.

That hasn’t stopped some in the global UHNW crowd from getting in on the action sight-unseen, however. Earlier this year according to confidential sources, two recently minted Thai billionaires reportedly bought one of the most expensive houses in South Beach, having made their fortunes over the last twelve months manufacturing hundreds of millions of facemasks and PPE for governments, hospitals, and frontline workers around the world.

Farther north in Palm Beach, an undisclosed Russian just laid claim to buying the most expensive home in Florida ever, paying $140 million in cash for a 21,000 square foot spec house built on three connected beachfront lots previously owned by former President Donald Trump. It reportedly went under contract 24 hours after being listed.

South Beach, Miami Beach, North Beach, and the Islands have become one of the most coveted stretches … [+]

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Beyond the anecdotes and record smashing, however, the real estate data are harder to ignore, no matter how cynical one might be about the Monaco-esque 1% vortex that South Florida is rapidly becoming.

For example, average for-sale prices for single family homes in South Florida’s four primary counties skyrocketed year-over-year, according to ONE Sotheby’s report, including Miami-Dade (42%+), Palm Beach (20%+), Martin (20%+) and Broward (12.5%). Sales of homes over $3M have increased for seven consecutive months, and 17% of all single-family homes across all price levels closed in January sold above list.

“Since June 2020 the market has performed at levels we’ve never seen. “There’s been a ‘reset in pricing’ over 75% in some sub markets, specifically with single-family homes. Buyers are primarily 40 to 60 years old, mostly hedge fund, private equity, and finance people who have cash in hand. But now we’re also seeing a tech movement like we’ve never seen before and it’s all snowballing. If something is on the market right now and it does not sell, it’s overpriced.”

Fort Lauderdale and Palm Beach are also experiencing skyrocketing single-family home price … [+]

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Total active single-family home listings in Miami-Dade, Broward, and Palm Beach counties hit a twelve-year record low at the end of 2020, with only 9,495 homes on the market across all price ranges, compared with a recent peak of 20,646 in 2015. Year over year, single-family home sales above $5M have surged 225%, 67% of which occurred in Miami Beach, Coral Gables, and Fort Lauderdale with an average closing price of $10.4M.

Even the condo market is getting tight (gasp!) due to the scarcity of single-family homes, particularly in low-density boutique buildings where in-house amenities like pools, gyms, spas, and business and social lounges offer more opportunities for space and distancing. Most newer developments are now 90% to 100% occupied or sold, and condo transactions in Q4 2020 accounted for almost 50% of all residential sales, an almost 100% increase since the beginning of the 2020 and leaving only 690 standing units for sale in Miami and Fort Lauderdale. As a result, new buildings that are still just piles of dirt and weeds and years away from delivery are pre-selling out within 30 days of launching.

Florida’s new motto: Come for the sunshine, low taxes, and open economy and stay forever

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In some respects, it would be easy to see South Florida’s real estate boom as largely circumstantial, which historically makes a lot of people here nervous because circumstances change, particularly in highly elastic real estate markets like Miami. The pandemic era’s rapid shift in consumer preferences just happened to smash head on into record low mortgage rates, a national permissibility to work remotely, millions of new Millennials and Baby Boomers looking to buy up or down, and a global pandemic. And voila! A boom.

In other ways, however, South Florida’s resurgent real estate market was inevitable, as anyone who’s lived here for years will attest. It just happened to be accelerated by COVID-19 in longer-term, more structural ways that no one could have predicted. Most out-of-town buyers were already moving to South Florida from high housing cost, high tax, high density states like New York, Connecticut, New Jersey, Illinois, and Massachusetts seeking a lower cost of living, better weather, and a healthier quality of life. Now they’re just coming like a tsunami. Cash in hand. For good.

“People are coming here for all the reasons they have always migrated South,“Lifestyle, the weather, the beaches, the low tax environment. But this time around the main differentiator is that people are not only coming for the lifestyle, they’re coming to live. When you come to live, you have other requirements like schools, arts and culture, restaurants, country clubs, office space, all of which are in very high demand right now.”

Fast forward a decade and all bets are on that the rest of Miami and South Florida will start to … [+]

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The biggest question on most people’s minds at this point is how long the current boom will last.

“The US Federal tax reform act of 2017 will be the main driver if what we’re seeing right now continues,” says Craig Studnicky, RelatedISG’s CEO and President. “There’s a reasonable argument that Trump punished certain “Blue” states, like NJ, NY, Connecticut, Massachusetts, Illinois, and California, which resulted in a mass exodus to places like South Florida. Then COVID-19 acted as an accelerator in 2020. The pandemic will eventually pass, which likely will slow down the pace of in-migration. But unless the tax reform act of 2017 is repealed, this boom is sustainable as long as the underlying tax expense and planning incentives are in play.”

By the numbers, all of this is great news not only for South Florida’s real estate market and developers, but also for the long-term sustainability of the region’s economy. At this point in-migration into Florida shows little sign of ebbing, and financial firms like Goldman Sachs, Blackstone, Citadel, and Elliott Management as well as several venture capital firms are reportedly not far behind. At the same time housing inventory has nowhere to go but down. New ground-up condo and developments take years to launch, design, and build. So, in the interim, prices have nowhere else to go but up.

As one broker recently told me, “It’s a great day to be a real estate agent in South Florida.”

Source: The DeFortuna Team

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Miami home prices set a new high – for the fifth month in a row. New median: $470,000

The price of a Miami house hit a record in January for the fifth month in a row while Broward prices remained stable.

In Miami-Dade, the median sales price for a single-family home hit $469,500, up more than 25% from January 2020 and up more than 3% from the December median of $454,900. In both counties, condos remained a relative bargain.

Miami-Dade’s single-family prices have been on an upward march since September that will likely continue as inventory continues to shrink.

“We are seeing strong pending sales, which is an indication to us that there are still a lot of buyers who want to be in this market,” Porter said by email.

The issue, said Porter, is simply one of high land values and limited choices.“Our peak price in 2006 for a single-family home was $374,000. This price difference is reflective of the fact that we have no land left to build.

“Our condo market has just been catching up from the last 12 years since the recession. The median price of a condo in 2007 was $260,000. Fast forward to today, the median price of a condo at the end of December 2020 was $270,000, which is just 7% over where we were 12 years ago,” she said.

The current sales flurry is driven by three types of buyers, Porter said: Millennials, first-time homeowners and junior-level executives working remotely.

Florida sees 660 new residents per day while 16 other states — including California, Conneticut and New York — are losing residents, according to U.S. Census Bureau and the Pew Research Center. “This growth will keep pressure on our inventory as well as pricing,” Porter said.

Despite rising sales prices, interest rates are giving buyers some power, Porter said, with Fannie Mae’s interest rate at 2.14% for a 30-year mortgage.The total number of home sales increased year-to-year by 19.1%, from 1,857 in January 2020 to 2,211 in January 2021. Condo sales grew by 28.1% while single-family home sales grew by 9.1%. Miami-Dade has 11.3 months of supply of condos but only 3.1 monthly of supply for houses. A balanced market consists of six-to-nine months of inventory.

MIAMI DADE

The median sales price of a condo rose by 14.3% year over year, from $245,000 in January 2020 to $280,000 in January 2021. The median price of a single-family home soared by 25.2%, from $375,000 to $469,500.

Condos closed at 94.3% of the listing price, up from 93.4% last year. Houses closed at 96.8% of the listing price, up from 95.6% in January 2020.

Cash buyers comprised 33.1% of total sales, down year-over-year from 33.8%. Still, the percentage of all-cash buyers was well above the national figure of 19%.

Source: The DeFortuna Team

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Miami’s Hot Luxury Real Estate Market Shows No Signs Of Cooling Down

Miami’s luxury hot luxury real estate market shows no signs of cooling down. Everyday boldface names in the media announce they are moving to Miami. From out of favor politicians to film stars to mid-list celebrities to Wall Street billionaires Miami is the current must-have address.

According to the latest Related ISG Miami Report single-family home active listings recently hit a 15-year record low. As of January 2021, in Miami-Dade, Broward, and Palm Beach counties, there were 8,597 single-family listings compared to 13,992 a year ago.

The market is becoming even more competitive as condominium sales which fell last Spring and Summer have now turned around. Listen to Craig Studnicky, co-Founder and CEO of Aventura, Florida-based International Sales Group, and President of RelatedISG.  “What I see changing now from the height of sales in 2020 when single-family homes were in demand is now luxury condominiums are back in favor.”

“Now we are seeing a better balance with condominiums accounting for about 50 percent of luxury sales. Condo sales have roared back as we have become more comfortable living with the virus and the safety standards of wearing masks, using hand sanitizer, and social distancing,” explains Studnicky. “As a result, buyers are now wanting condominiums especially as demand for single-family homes increased while we saw significant inventory declines,” he adds.

The split in sales between condominiums and single-family homes looks like this.  In Q1 and Q2 of 2020, 70 percent of transactions in Miami-Dade, Broward and Palm Beach counties were single-family homes. At the same time condominiums comprised only 30 percent of sales. Compare that to Q3 and Q4 of 2020 when condominium transactions trended up to 46 percent of sales while single-family homes were at 54 percent.

Trump’s tax reform of 2017 had lured luxury buyers from the Northeast to Florida as their primary residence before COVID. That motivator among other reasons is bringing new residents to the Sunshine state. “We are seeing more interest from California than ever before.” Studnicky said. Another sector of buyers deciding to call Florida home are first-time buyers. “The historic low-interest rates have also attracted Millennials to purchase condominiums,” Studnicky. observes.

Ron Shuffield, President & CEO, Berkshire Hathaway HomeServices EWM Realty has spent decades in the South Florida real estate brokerage business. He’s seen many markets come and go over the years. Ron explains the continuing market fundamentals moving into 2021. “One of the elements that is still impacting our market as we transition into 2021 is the number of people who continue moving to Miami to escape high taxes and flee dense city centers in the midst of COVID-19,” Shuffield explains. “The ability to work remotely has additionally influenced where buyers are choosing to live; thus, in turn, positively impacting sales in our market.”

A big mover in the luxury residential Miami market came as a surprise to Shuffield. “The biggest surprise to me is that the $5 million-plus single-family home market in Miami is exploding. In Q4 of 2020, for example, we saw a 332% increase in the number of homes sold, when compared with the same period in 2019,” Shuffield notes. “Before COVID there was not a lot of demand north of $5 million,” Studnicky confirms.

Both Shuffield and Studnicky agree single-family home prices will continue to rise. With interest rates low buying now makes sense. On the seller side now would also be a good time to put that home on the market. As always, no matter the price point homes priced well and move-in ready sell quickly.

Watch for Miami’s demographics to skew younger according to Shuffield.  “Companies which are increasingly giving their employees the green light to work from anywhere have truly opened the door for this younger generation of buyers to move into the Miami market.”

That’s more good news for Miami.

Source: Forbes

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As Wall Street Heads South, Florida Braces for a Gold-Plated Makeover

Lockdowns showed many wealthy finance workers they didn’t need to be in the main office, and they’re flocking to sunshine and low taxes.

Construction cranes pirouette above the skyline in Miami. Porsches are selling briskly in Coral Gables. Over in Palm Beach, along Worth and Hibiscus avenues, the Gucci set is counting new neighbors. The scent of fresh money hangs over Florida these days like the sweet smell of orange blossoms. In the midst of a deadly pandemic—and in truth, largely because of it—an optimism has taken hold among the state’s boosters.

Locals are buzzing again that the Miami area might finally realize a long elusive dream of becoming Wall Street South. Several prominent financial companies, including the mighty Goldman Sachs Group Inc., are considering moving some business there, or are relocating outright. And in these days of working from home, Florida’s low taxes, year-round warm weather, and emerald golf links are already luring some Wall Street people down from New York.

To David Greenberg, a former board member of the New York Mercantile Exchange who helps run a family investment office in Boca Raton, news that Goldman may move its asset-management division here was a watershed moment for the Sunshine State. “There’s no way to put that genie back in the bottle,” says Greenberg.

Maybe. This sultry home of tourism, cruise ships, and retirees has been trying to diversify its economy for generations, with mixed success. Such traditional business hubs as Wall Street, Hollywood, and Silicon Valley didn’t sprout overnight. Gaining critical mass takes time. Even as Miami’s Brickell neighborhood transformed into Florida’s version of Manhattan a decade ago, the state has attracted only a smattering of mostly small to medium-size hedge funds, family offices, and banks looking for a convenient hub for Latin American wealth management. In research firm Z/Yen’s Global Financial Centres Index, the Miami area doesn’t even make a cameo.

But Covid-19 may just be the catalyst for a shift. For months, New York stock traders, portfolio managers, and investment bankers scattered across the U.S. Many headed south to spacious homes with private pools. Now, as the vaccine rollout begins and firms look toward a post-pandemic world, some are realizing that their employees don’t want to return to their old lives in Manhattan high-rises.

It’s easy to see why the Wall Street South idea resonates: Bankers can enjoy an outdoor lifestyle and also justify their existence, because there are so many rich clients milling around. South Florida is one of the most ostentatiously wealthy places on the planet, home to two of America’s three richest ZIP codes.

The 2017 tax overhaul, which capped the federal deduction on state and local taxes at $10,000, only increased Florida’s tax advantage over areas such as New York and New Jersey. And while Miami isn’t cheap—in fact, rents are far out of proportion with service-sector-driven median income—the price per square foot of a condo in the Brickell district is about a quarter of the cost in Manhattan, according to appraiser Miller Samuel Inc.

Doug Cifu, chief executive officer of electronic market-maker Virtu Financial Inc., says his company’s decision to open a new office in suburban Palm Beach Gardens is simply “rational.” He expects employees to save an average 10% to 11% on taxes, and much more on housing. “In terms of the quality of life, from my perspective, it is far superior in Florida now than it is in New York, and I don’t see that changing in the near to medium term,” he says.

There have been a series of pushes over the years to expand Florida’s footprint in industries beyond tourism. Its airports and seaports have transformed it into a major force in global trade; it’s become a hub for Spanish-language media and entertainment; and there’s a booming health-care industry that caters to one of America’s oldest populations. At the same time, tourism’s slice of the Florida economic pie has kept growing. Disney World opened in Central Florida in 1971, the cruise industry blossomed into a Miami-based behemoth in the 1980s and ’90s, and Art Basel Miami Beach became a key attraction starting in 2002. Hospitality, arts, and entertainment account for about 6.1% of Florida’s gross domestic product.

The lack of critical mass for finance firms may itself have been a deterrent for companies coming to the area, says Sean Snaith, an economist with the University of Central Florida, who now sees it likely that more moves will be announced. Says Jenni Morejon, CEO of the Fort Lauderdale Downtown Development Authority: “There has to be a tipping point, and once one or two of these companies plant their flag down here, then it does start a cycle.”

In a matter of months, firms including Paul Singer’s Elliott Management Corp. and Tom Barrack’s Colony Capital Inc. have put in motion relocations to Florida, while Blackstone Group Inc. and Citadel are setting up offices there. Other workers who flocked to the state as a Covid haven are simply choosing to stay, a move investment banking honcho Ken Moelis has already blessed for employees at his firm, Moelis & Co.

Kevin Couper, a senior vice president at Wealthspire Advisors, arrived from California in July after being asked to help open and manage the company’s new office in Boca Raton. At first, he was attracted by Florida’s relatively relaxed coronavirus restrictions, but says he’s come to appreciate the easier lifestyle and his increased disposable income. “I was very used to a higher cost of living, higher income tax,” says Couper, 34, who has also lived in New Jersey. “Here, both went down, cost of living is less—at least where I am—and rent, too. Everything has been better.”

Miami Mayor Francis Suarez has been on a quest to diversify even further beyond Wall Street South, tweeting prolifically about luring technology companies to the region—a sort of Silicon Beach. Suarez is pushing to increase money available through the Miami Downtown Development Authority to finance and tech businesses moving into the urban core, potentially raising grants from a current $150,000 per business or boosting the pool of funds so that more can benefit. The incentives can seem paltry if you’re a multibillion-dollar hedge fund, but movers say they’re glad to be courted, accusing governments in the Northeast and California of taking them for granted. “It’s just trying to capture the moment,” Suarez says.

The Florida Department of Economic Opportunity’s own projections are modest in their assumptions about finance job growth. The department forecasts 432,668 finance and insurance jobs in the state by 2028, a 5.7% increase and less than the projected 13.2% jump in Florida jobs overall. Wall Street-type employment—involving securities, commodities contracts, and other financial investments—is expected to climb 12.8%, but it’s still a relatively small sliver, at 56,227 positions. In the Miami metro area, it’s expected to hit 22,795 jobs.

Workers hoping they can move to paradise and keep their Manhattan paycheck may also be disappointed. The average salesperson peddling securities, commodities, and financial services makes $149,880 in wages in the New York metro area, compared with $88,220 in metro Miami, which includes Fort Lauderdale and West Palm Beach, according to data from the Bureau of Labor Statistics. Financial and investment analysts make about 43% less in Miami than in New York, the data show.

There are also challenges to living in the Sunshine State, as the pandemic has made clear, including the crash of its unemployment website and a chaotic vaccine rollout. It’s also one of the parts of the world that stands to be most affected by sea-level rise, a deterrent for risk-averse corporations.

Those issues haven’t stopped a boom in the parts of the economy most affected by the wealthy. “We’re seeing a level of interest the likes of which in my 20-plus years here I’ve never seen before,” says Ken Himmel, CEO of real estate developer Related Urban. More than 70% of Related’s new 360 Rosemary building in West Palm Beach is leased. The firm is constructing another office tower there and buying Phillips Point, home to offices for Morgan Stanley and Goldman Sachs and popular for its convenience to Palm Beach’s barrier island mansions.

Ken Gorin, CEO of luxury-car purveyor the Collection, says his Miami-area dealerships notched their best month ever in December. He attributes about 10% of the sales to migration. Just recently, he recalls, a finance-industry transplant had come in for a Porsche Macan for his daughter. By the time the transaction was over, the customer had also made off with an Aston Martin sport utility vehicle for his wife and a McLaren 720S Spider for himself. “This is now people moving from California, people moving from New York—and it’s new,” he says. “It’s very exciting. And sales are way up.”

Private schools are sensing a shift, too. At Pine Crest, an elite school with campuses in Boca Raton and Fort Lauderdale, interest has increased notably since March, due in part to the pandemic, remote-work arrangements, “and the attractive cost of living and quality of life in South Florida,” says Christine Dardet, a spokeswoman. A 2019 analysis by Webster Pacific showed tuition at top schools in the New York metro area averages $54,000, vs. $39,000 in the Miami metro.

Among locals, there’s also wariness. Couper of Wealthspire laments the possibility of transplants driving up house prices and increasing traffic. Lorenzo Canizares, a 73-year-old retired labor organizer in West Kendall, is concerned about more serious consequences: the prospect that wealthy financiers will take advantage of the state’s tax structure to the detriment of long-term residents. “When people like that arrive here, everything seems to go up, and it makes it very difficult for people here,” says Canizares.

For all the excitement, it’s unclear whether small outposts for financial companies will spur a dramatic transformation. Goldman Sachs is looking for at least 50,000 square feet of office space, according to the Palm Beach Post, a fraction of the 2.1 million square feet at its headquarters on Lower Manhattan’s West Street. Related’s Himmel says that finance moves would be a big deal for a relatively small office market such as West Palm Beach, but will do very little to cut into New York’s dominance in the industry, which is sustained by its unrivaled concentration of talent.

There’s also the question of whether multitudes of finance workers are willing to uproot their lives. Throughout recent history, U.S. millionaires have been less likely to move than the general public, and many ultra-wealthy people remain based in the region where they built their business, according to The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich, a 2017 book by Cornell University sociologist Cristobal Young. Many careers are built upon social networks in a place, and few mid-career professionals are willing to give up their home-field advantage, he wrote.

Other people may fall somewhere in the middle. Jason Ader, CEO of SpringOwl Asset Management, relocated to Miami from New York with his wife and daughter in October, lured by the tax advantage, a business-friendly environment, and a more open economy during the pandemic. He still plans to keep a foot planted in the Northeast, where four of his children live with his ex-wife and his business is based. “I don’t know how I’m going to feel when I’m missing out on meetings and business lunches,” says Ader, 52. “Of course, none of that is even happening right now.”

South Florida saw some of its most astounding growth in the immediate aftermath of the 1918 flu pandemic, according to Paul George, the resident historian at HistoryMiami Museum. The population of the City of Miami roughly quintupled to about 150,000 in the half decade through 1925, aided by post-World War I relief, he says, setting in motion the state’s long—albeit volatile—path to 2021. “We turned around after that pandemic was over and began to really look ahead, and this place boomed,” George says. “It was like we were being discovered for the first time in a mass way in South Florida.” —With Lananh Nguyen, Sridhar Natarajan, and Alex Tanzi.

Read next: Tech Companies Cut Pay of Workers Moving Out of Big Cities

Source: Bloomberg

 

 

 

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2020 Home Prices Up 13 Percent Annually in U.S.

Pending Sales Rise 38 Percent in December

Property broker Redfin is reporting this week that the median U.S. home sale price increased 13% year over year to $319,000 during the 4-week period ending January 3, 2021

“The economy faces new challenges in the next few weeks, which are likely to see continued political instability and rising coronavirus cases,” said Redfin chief economist Daryl Fairweather. “Still, it’s unlikely that either will have a meaningful or long-term impact on home buying demand, which, already extremely strong, is now bolstered by even lower mortgage rates. Migration and progressive economic policies will shape the housing market in the months to come. The recent migration of Americans to affordable places like Atlanta,  Phoenix and suburbs across the country has contributed to what will be a major change in fiscal and economic policy starting on January 20. While more government spending could lead to moderate mortgage-rate increases, it will also likely include programs to make homeownership affordable to more people.”

Below are other key housing market takeaways for 400+ U.S. metro areas during the 4-week period ending January 3, 2021.

  • Pending home sales were up 38% year over year.
  • New listings of homes for sale were up 7% from a year earlier–the smallest increase since July.
  • Active listings (the number of homes listed for sale at any point during the period) fell 32% from 2020 to a new all-time low.
  • 38% of homes that went under contract had an accepted offer within the first two weeks on the market, well above the 25% rate during the same period a year ago.
  • The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, declined slightly to 99.3%–still 1.5 percentage points higher than a year earlier.
  • For the week ending January 3, the seasonally adjusted Redfin Homebuyer Demand Index–a measure of requests for home tours and other services from Redfin agents–was up 32% from pre-pandemic levels in January and February of 2020.
  • For the week ending January 7, 30-year mortgage rates fell to another new record low of 2.65%.
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Why Miami Is The Next Hot Tech Hub: ‘This Is Not A Retirement Decision’

As more entrepreneurs and investors relocate from traditional tech hubs to emerging startup ecosystems, Miami—with its tropical climate, diverse population and lack of state income tax—has suddenly become a tech hot spot.

In 2020, high-profile investors including Founders Fund general partner Keith Rabois and Blumberg Capital founder David Blumberg moved to South Florida. Soon after, Miami Mayor Francis Suarez began promoting the city as an emerging tech hub, and at the start of the new year, there’s increasing attention on the south Florida city in tech circles.

While Miami’s tech ecosystem isn’t as robust as San Francisco’s, for example, more startup founders and investors in Miami could boost the area’s tech scene, which raised close to $1 billion in venture funding last year, according to preliminary Crunchbase data.

Alpaca VC general partner David Goldberg moved to Miami in August 2020 after living in New York for about 17 years. He already had ties to Miami—although he grew up in the northeast, he attended college at the University of Miami—and he’d kept tabs on the city’s startup ecosystem while running his startup based in New York. When he started his firm in 2014, he “planted the flag” in New York, but started visiting Miami more often as he wanted to invest in emerging ecosystems.

Then last year, the COVID-19 pandemic hit and Goldberg reassessed.

“We reflected on our priorities, both personal and business, and Miami just became the clear choice of ‘Where can I have maximum work-life balance, but also I’m still young so I need to be in a place where I’m surrounded by hard-working, driven people,’ ” he said. “I’m in a (place) where my career is still a priority for me. This is not a retirement decision for me.”

While Miami has drawn tech investors and founders for years, the COVID-19 pandemic seemed to accelerate the rate of migration, according to Rebecca Danta, managing director of angel network Miami Angels. In the fourth quarter of 2020, the influx was like a “big wave,” she said.

Throughout 2020 Danta met recent transplants to Miami. She has also heard about more people in the tech world quietly moving to the metro area. That’s starting to become more obvious, she said. “They weren’t necessarily getting involved in the business community, and now people are saying ‘I live in Miami, you should too,’ and they’re being ambassadors,” Danta said.

Rabois has been vocal about the upsides of living in Miami, telling Fortune Magazine recently that “Miami is an incredibly beautiful city, cosmopolitan, has an interesting mix of New Yorkers, Latin Americans, and Europeans,” and noting that Florida also doesn’t have a state income tax.

What spurred the interest locally was a tweet by Mayor Suarez who responded to Varda Space co-founder Delian Asparouhov’s idea of moving Silicon Valley to Miami, asking “How can I help?”

Since then, Suarez has continued to promote Miami as an emerging tech hub, frequently posting messages on Twitter about new tech moves to the city. Suarez’s team did not make the mayor available for an interview in time for publication.

Suarez has generated buzz via Twitter, similar to how U.S. Rep. Alexandria Ocasio-Cortez has connected with constituents through social media like Twitter and Instagram Live, according to Goldberg of Alpaca VC.

“It’s been really interesting to see the style of how well that’s worked,” he said. “It’s almost like what AOC did with her constituency and just speaking their language. Mayor Suarez has been able to tap into that the same way.”

Miami provides the opportunity to be part of a growing startup ecosystem, Goldberg said.

“It’s not just working from Miami, it’s working from Miami and working in Miami,” Goldberg said.

“I would encourage more people to think about, ‘How do you come here and actually play a role in the ecosystem?’ and not just come here and work from the beach and be a Silicon Valley investor,” he said.

Goldberg doesn’t think Miami’s going to overtake Silicon Valley, but it could be part of a different tier of cities, like Austin and Nashville, that have their own tech ecosystems. There’s also an opportunity for Miami to collaborate with other tech ecosystems, like New York, Goldberg said. Miami and New York already enjoy some connection, and the two startup ecosystems could see a phenomenon similar to that in California, where Bay Area investors often invest in Los Angeles-based startups and vice versa.

Miami’s startup scene

Venture-backed companies based in the city of Miami raised $972 million across 57 deals in 2020 (final figures could eventually be higher due to reporting delays). Interestingly, while the deal count last year was the lowest in five years, the dollar volume of venture capital invested in Miami was the highest there had been for that same period.

The greater Miami area, which includes the city of Miami and surrounding municipalities, saw nearly $2 billion in funding for companies based in the area in 2020, according to Crunchbase data. Again, while the deal count was the lowest of the past five years, the total funding reached a five-year high.

The largest funding round in the past five years for a venture-backed company based in the greater Miami area was Magic Leap’s $793.5 million Series C in February 2016, according to Crunchbase. The company, which is based in the city of Plantation, has raised more than $3 billion in funding.

Florida’s largest funding round in the past five years was Jacksonville-based Fanatics’ $1 billion Series D in September 2017. Fanatics’ large round bumped venture funding totals that year, making 2017 a peak year for venture funding for the state with $3.4 billion total invested. Last year, venture-backed companies in the state of Florida raised $2.8 billion.

Miami’s geographic location on the coast and near Latin America, its large airport, and being home to Florida International University and University of Miami are part of what makes it a good place to do business, Danta of Miami Angels said.

Companies from Miami Angels’ portfolio have been able to find workers who want to stay in the area, she said. Thus far, companies don’t run the same risk of having top talent poached as they do in larger hubs like Silicon Valley, she said, though that could change as more tech companies are in Miami.

“To me the thing that makes Miami unique is that it’s always been a city of builders because of our large population of foreign-born (residents),” Danta said.

Alexander Taub, CEO of professional networking startup Upstream, began mulling a move away from New York City after he and his family came down with COVID-19 in early March.

“We realized that like, looking back at the Spanish Flu and things like that, the winter would be really bad,” Taub said. “My daughter was in pre-K on Zoom, and it was such a nightmare.”

Taub and his family briefly considered Los Angeles and Austin, but ultimately decided on Miami. They moved to North Miami in July and have renewed the lease for their new home until July 2022.

“We were like ‘we need her back in school,’ but also if winter’s going to be really bad, we need somewhere where we’ll at least have a backyard or a pool,” Taub said. “So we started thinking about Miami pretty quickly. Long story short: We started Zillowing in April and looking at what was even possible.”

The lack of a state income tax is “a really nice thing to have,” Taub said, but that wasn’t the impetus for his family’s move, though he noted it would be hard to go back to a different tax situation.

“It’s a combination of the good weather, the ecosystem is sort of young and hungry and trying,” Taub said. “You have government officials like the mayor being as proactive as possible and trying to get people to come here … it helps to feel wanted in any type of professional setting.”

Upstream’s team is remote, and Taub said if he ends up staying long-term in Miami, it will be for family reasons, though the growing tech scene is an added bonus.

Edgewater, Brickell and Wynwood are among the most popular areas of Miami for new transplants, Taub said.

Since moving to Miami, he’s been fielding questions from others who are interested in making the move. Taub tweeted on Dec. 27 that he’d received five texts from people in the tech and startup world who were considering Miami and looking for suggestions of where to live.

“Some people are trying to get out for the winter, some people are thinking more long term, some people are trying to get a download of information because they’re trying to get a spouse to do it. … There’s a lot of different types of people who are coming,” he said.

Illustration: Dom Guzman

Source: Crunch Base

 

 

 

 

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Miami home sale prices surge again in November, setting new all-time record

How high will they go?

The median sales price of single-family homes in Miami-Dade surged to an all-time high of $450,000 in November, the third consecutive month of setting a new record and continuing a nine-year streak of monthly increases.

According to the Miami Association of Realtors, median sales prices grew 23% year-over-year from November 2019, when the figure was a now-nostalgic $385,000.

The median sales price of existing condos also rose 10% year-over-year in November, from $245,000 to a current $270,000.

In Broward, demand was equally high. The median sales price of single-family homes there jumped 13.3% year-over-year in November 2020, increasing from $375,000 to $425,000 — equaling the all-time record high set in September 2020. Existing condo prices in Broward increased 20% year-over-year, from $170,000 to $204,000.

The overall number of home sales in Miami-Dade was 2,459, a 20% jump from November 2019. Overall number of existing condo sales showed a similar increase year-over-year of 23%, from 1,061 to 1,305.

The percentage of all-cash sales dipped to 29% from 35% in November 2019, an indication that fewer foreign buyers are competing with locals. But Miami-Dade still had the highest percentage of cash transactions in the U.S. The national percentage is 20%.

“The pandemic has prioritized the importance and value of our homes,” Miami Association of Realtors Chairman of the Board Jorge L. Guerra Jr. said in a press release. “More than ever, home has become the focal point of our lives, and consumers want more space and convenience. Remote work, home schooling, record-low mortgage rates, low inventory and purchases from tax-burdened Northeastern home buyers are some of the factors boosting Miami real estate.”

ALL PRICE RANGES SHOWED GROWTH

The increase in the number of home and condo sales cut across all price brackets. Single-family homes priced between $400,000-$600,000 jumped 50.4% year-over-year to 352 transactions in November 2020. Existing condo sales priced between $400,000-$600,000 increased 68.3% to 138 transactions.

The growth was even more dramatic in the luxury market. The number of sales of single-family homes priced at $1 million and up grew 120.3% year-over-year, to 163 transactions in November 2020. Sales of existing condos priced at $1 million and up increased 88.2% year-over-year, to 96 transactions.

Befitting the high demand, the median number of days between listing and contract dates for single-family home sales was 23 days, a 57.4% decrease from 54 days last year. The median number of days between the listing date and closing date for condos was 50 days, down 35.9% from 78 days.

Real estate broker Neal Oates, owner of the Miami-based World Renowned Real Estate, said speed is essential for buyers venturing into the Grand Prix Miami market.

“Go ahead and be quick to make a decision when you see something you like,” he said. “But you should really begin doing the work before you look at a property. Find out exactly what you can afford from a lender and get pre-approved. Then you only need to have the property approved.”

The monthly inventory of single-family homes in Miami-Dade stands at a scant 3.6 months (a healthy market should have between 6-9 months of housing stock). New listings for homes in November dipped 3% year-over-year, from 1,438 to 1,393. The scarcity is bound to continue to keep driving sale prices up.

The inventory for existing condominiums in Miami-Dade dipped 1.5% to 13 months, which means that market is still driven by buyers. New listings of condominiums increased 4.4%, from 2,005 to 2,094.

Source: Miami Herald

 

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