Due to the new federal tax codes, big earners from the higher taxed states like New Jersey and New York are migrating south to the states with lower taxes, and Miami, Florida has become the landing spot.
Miami Real Estate Market is Seeing a Boom
A quarterly South Florida real estate report is showing that people from New York are snatching up a good portion of the available Miami properties. People began flocking to this coastal city in July of 2017, and according to the December Census data, the origin of most of these moves was New York. The second state to see a big loss of earners was Illinois.
This influx of people has raised the median price of the condos in the Miami area. Miami-Dade County has seen prices go up by 2% from the previous year. During that same period, condo sales in Manhattan went down by 12%, which is the lowest the sales have been since 2009.
New Tax Law is to Blame
The reason that all these big earners are flocking south is the increase in their tax bill. The new tax laws passed by the current administration put a cap on the deductions that can be made on property taxes. This cap also applies to mortgage interest, the loan amount being capped at $750,000 is a blow to those states where home prices are high.
New York, New Jersey, and Connecticut residents have been accustomed to deducting substantially more than the capped $10,000 that is allowed now. The new tax laws are costing them thousands of dollars which is why states like Florida and Texas now hold so much appeal, especially since these states don’t have a state income tax.
According to an accountant that specializes in finding lower-tax cities for his clients, “A lot of rich people are trying to find a way out of New York.”
What Does This Mean for the Housing Market in Miami
The median value of a home in Miami is currently hovering just over $300,000 according to Zillow, which is nearly a 4.6% increase over the previous year’s median value. The market is predicted to continue to rise by 3.6% over the next year. Miami is currently in the top 30% for real estate appreciation in the United States, the annual appreciation rate over the last ten years has been about 2% with a jump to 7.5% in the last year.
This migration of Northern big earners will likely cause these numbers to keep trending upwards.