Business Monday

Younger buyers drawn to Miami’s active high-end market

Danny Hertzberg is a real estate agent with Coldwell Banker Residential Real Estate’s The Jills® and is based in Miami Beach.
Danny Hertzberg is a real estate agent with Coldwell Banker Residential Real Estate’s The Jills® and is based in Miami Beach.

The calls come every week from luxury home buyers, and most of them start out the same way.

“I’ve been talking to my accountant,’’ the callers say, many from tax-heavy states like New York and California, “and they tell me it’s time to become a resident of the state of Florida.’’

The recent wave of high net worth buyers has sparked a boom at the top end of the Miami real estate market. A recent study — the Coldwell Banker Previews International Luxury Market Report — showed that outside of New York City, Miami is the country’s busiest locale in the million-dollar-plus market.

Often, it is also just a matter of dollars and cents. There is no state income tax in the state of Florida, which saves high-end buyers a fortune in taxes alone. This favorable tax environment is a huge draw for buyers from the Northeast and California.

“The taxes on inheritances and estates are very high in some states, like California,” says Duff Rubin, regional senior vice president of Coldwell Banker Residential Real Estate, Southeast region in Florida. “Florida is one of the most attractive places to live from a tax perspective, so we get quite a few people who decide to live here for at least six months and a day each year. People are saying, ‘I want this money to go to my kids instead of to pay taxes.’”

We know we have it all here — the great Miami lifestyle, a favorable tax environment, tropical weather and an abundance of choices for the perfect place to live. Affluent buyers from all over the world want to be here and their presence has been a true driver in the luxury market.

What’s different today from the past is that high-end buyers now are considerably younger than they once were. They’re not waiting until they retire or sell a business to move to South Florida any more. Many are coming to live here permanently and are bringing their businesses with them or starting new businesses in Miami.

The work-life balance has become increasingly important to the younger demographic who have flocked to Miami, the city that embodies this equilibrium. Advancements in technology, transportation and communication make it easier for these young executives to conduct business worldwide while enjoying Miami as their home base.

This immigration of young and successful professionals willing to pay top dollar has undoubtedly affected the real estate market, and their impact will continue to thrive as they do. Their real estate purchases will follow the same upward trajectory as their careers, as the successful young executive who has a home on 100 feet of water will want to be on a guarded island with 200 feet of water next, and so on and so forth.

Younger buyers also do not plan to live in the same home for 20 or 30 years like their parents did. One of the most illuminating statistics from the Coldwell Banker Previews International Luxury Market Report is that 73 percent of those under age 35 say that they expect to buy a home in the next 12 months, which is a dramatically different percentage compared to other age groups surveyed in the study. Only 49 percent of 35- to 44-year-olds, 26 percent of 45- to 64-year-olds and 11 percent of the over-65 group expect to purchase a home in the same time period.

The younger, affluent buyers in the luxury market want brand-new, modern, technologically equipped turnkey products, as do the foreign buyers. Developers saw this trend and reacted quickly to accommodate the needs of this new buyer demographic. As the presence of South American buyers has decreased, this younger, successful domestic buyer has stepped in to make a major impact in the luxury segment.

Danny Hertzberg is a real estate agent with Coldwell Banker Residential Real Estate’s The Jills® and is based in Miami Beach. Hertzberg completed a joint JD/MBA degree at the University of Miami. He can be reached at danny@thejills.com; www.thejills.com

Realtors may submit columns for Broker’s View of 700 to businesseditor@MiamiHerald.com. Questions, email rclarke@MiamiHerald.com. This column is primarily for brokers of residential real estate, but from time to time, we will publish columns about commercial real estate.

Luxury listings by city

U.S. cities with the highest number of active luxury home listings as of February 2015, according to the Coldwell Banker Previews International Luxury Market Report (2015 edition). Here are the company’s figures for America’s top cities for luxury listings at three price points: $1 million-plus, $5 million-plus and $10 million-plus:

$1 million-plus

City

Number of listings

New York

5,272

Miami

1,144

Naples, Fla.

1,072

Brooklyn, N.Y.

1,003

Park City, Utah

960

$5 million-plus

City

Number of listings

New York

1,751

Miami Beach

253

Greenwich, Conn.

182

Park City, Utah

161

Aspen, Colo.

136

$10 million-plus

City

Number of listings

New York

773

Miami Beach

96

Aspen, Colo.

56

Greenwich, Conn.

52

Santa Barbara, Calif.

39

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