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The Great Florida Wealth Migration Resumes

Florida, Gulf Coast, Real Estate, Economic Recovery, Great Recession, Income Tax, TaxAs long as there is year-round sunshine; and plenty of first-rate recreational, cultural and coastal amenities, home buyers will beat a path to Southwest Florida. 

Certainly, the Great Recession clamped-down on the pace of growth; but as our reduced housing stocks suggest, those who postponed moving here because they lacked confidence in the economy—or could not sell homes up north—are once again migrating here in large numbers.  This is particularly true of the Baby Boom generation, whose mass retirement happily coincides with some of the best home buying conditions—including low prices and interest rates—in our market’s history.  Sellers too are happily facing one of the largest and most committed blocks of buyers in recent years.

Recovering Markets Inspire Migration 

One of the main reasons for this massive resumption of movement into Florida is the concurrent recovery of the nation’s financial markets, which have effectively restored trillions of dollars in wealth lost during the recession. This is the hypothesis behind How Money Walks, a new study by Travis H. Brown. The study suggests that Americans are more intent than ever on safeguarding their recovered assets through such strategies as migrating to low tax states. Brown’s study further reveals that over the past eighteen years no other state has benefitted more from migratory wealth patterns than Florida. From 1992 through 2010, an estimated $95.6 billion in net wealth poured into the state’s economy, more than tripling Arizona’s next highest gain of $28 million.

Low Taxes, Abundant Sunshine 

Seeing Florida and Arizona atop such a list, one might naturally assume that people are packing up and heading to warmer climates. But that simply isn’t the case, as less than 5% of those surveyed said they moved primarily for the weather. Plus, if climate truly influenced wealth migration, California would be gaining rather than losing population to low tax states. Instead, Brown asserts that their motivation for moving is tied strongly to Florida’s tax friendly status. According to the Tax Foundation, California leads the country with a top income tax rate of 13.3%, New York and New Jersey charge a top rate approaching 9%; and Illinois helps itself to 5% of an individual’s adjusted gross income. Florida, on the other hand, extracts not a single penny in state or municipal income taxes.

The Gulf Coast Appeal 

More than half of Florida’s $95.6 billion in net wealth gained since 1992 was siphoned from just five states—New York, New Jersey, Illinois, Ohio and Pennsylvania.  Moreover, the Gulf Coast region—from Tampa southward—enjoyed a net gain of nearly $32 billion in incoming wealth; while Miami suffered a net loss of $5.6 billion. Clearly a disproportionate share of the state’s most affluent newcomers choose Florida for reasons other than its physical and cultural attributes, although these assets eventually play a tremendous role in narrowing their choice to Southwest Florida.

As an additional barometer of our region’s appeal and our Southwest Florida lifestyle, Sarasota, Manatee and Charlotte Counties gained $11.7 billion in combined migratory wealth—or 12.2% of the state’s total—against only 4.6% of its population.

Florida’s corporate income tax rate adds an extra incentive for corporations to relocate here. Its 5.5% rate is almost half of Illinois’s; and is well below that of New York, New Jersey and Pennsylvania. Factor in sunshine, award winning beaches and a lower cost of living and it’s easy to grasp why Florida’s population is suddenly poised to surpass New York as the nation’s third most populous state.

With the economy on the mend, the mass migration of people and wealth into Southwest Florida is on again.  Consequently, if you’ve postponed selling your home in anticipation of better times and more buyers, this may be your moment.

  • User Gravatar Deborah Stone
    August 5th, 2013

    Yes, I see a great change real estate atmosphere on this side of Florida as well. I live in West Palm Beach and the housing market is really heating up. Appreciation is up, buyers are purchasing with cash. (Even though mortgages are low) The restaurants and malls are always active and full of life even in the steamy summer months.
    Florida has something very special to offer – sun and ocean and sandy beaches.
    I’ve always said, “keep the frosting on the cake”. Warm, tropical weather is a delight.

  • User Gravatar Livewell Homes
    August 9th, 2013

    Incredible info…I’m still stuck on living here in Charlotte, but this def makes me lean more toward Fl 🙂

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