The Ultra-Rich Own More Second Homes in Miami Than in Any Other City on Earth

Lavish houses, often second or third residences, dot much of Miami’s waterfront. These are increasingly the homes of the ultra-wealthy — those with net worths exceeding $30 million. They’ve flocked in such great numbers that Miami is now the top global city for second homes of ultra-high net worth individuals, a new report found.

Some 13,200 such people, the most of any city on the planet, now keep a second home in the Miami metro area, according to Altrata, a wealth intelligence firm.

In total, when you factor in primary residences, nearly 17,500 ultra-wealthy people have houses in Miami, the fourth-largest über-rich population in the world behind New York, Los Angeles and Hong Kong. And that trend, building for more than half a decade, doesn’t seem poised to stop anytime soon, said David Siddons, CEO of the David Siddons Group at Douglas Elliman, a luxury real estate firm in Coral Gables.

The second-home city

The stage was set for such a massive influx of wealth back in 2017, noted Ned Murray, associate director of FIU’s Metropolitan Center and an expert on South Florida’s housing market. That year’s Tax Cuts and Jobs Act, known as the Trump Tax Cuts, capped formerly limitless state and local tax deductions at $10,000. Previously, taxpayers could discount property, income and sales taxes paid to their local governments from their federal income taxes.

That, said Murray, made living in high-tax states like New York or California less attractive relative to no-income tax states like Florida. But it was COVID, and the accompanying restrictions across much of the country, that drove the mega-wealthy to Florida.

Lax pandemic rules, a favorable tax environment, a warm climate and booming luxury investment opportunities combined to make the Sunshine State, particularly South Florida, a magnet for the ultra-rich, said Glen Steward, founder of Stewards Investment Capital, a South Africa-based investment firm. Miami’s population of millionaires nearly doubled in the 10 years before 2024, with much of that growth happening during and after the pandemic. Altrata estimates that there are 358 Miami-area residents for every ultra-wealthy homeowner. Per the wealth intelligence company, nearly 23% of ultra-rich Miami homeowners work in banking or finance, while 17% work in business and 11% work in real estate. Arriving in Miami flush with cash, they quickly and dramatically reshaped the local housing market, which to them was relatively cheap, Murray pointed out.

Data from the Miami Association of Realtors shows the average purchase price of single-family homes — which the ultra-wealthy tend to prefer over condos, noted Siddons — in Miami-Dade nearly doubled between mid-2020 and mid-2021, jumping from $583,094 to over $1 million in just one year. Almost a quarter of those nearly 4,500 sales were paid in cash, a 174% increase over the previous year. The total amount of money spent on single-family homes in the county during those 12 months exploded by almost 200% to $4.6 billion. “It was a different buyer” — one that was far wealthier than the typical snowbird of years past — that drove that housing boom, said Murray.

And those buyers attract more of the same. “Whatever’s hot and new, no one wants to be left out,” said Steward. But the ultra-wealthy second home dynamic poses a particular threat to some neighborhoods, Murray posited. Year-round residents, he said, provide essential support to local businesses — the shops and restaurants that give communities character.

It’s also driven up costs, both in areas the ultra-wealthy favor — think, the star-studded islands strewn across Biscayne Bay — as well as in cities or neighborhoods where less wealthy but still well-off incomers look to settle or might increasingly in the future, like North Miami Beach, Little Haiti, Little Havana and even Hialeah, all of which are close to the urban corridor and are still relatively economical, Murray said. That, in turn, pushes affordable housing for workers in well-off neighborhoods like South Beach or Coral Gables farther and farther away.

What can be done?

Zoning changes — like the one recently passed by the city of Miami — that increase density, particularly around transit hubs, theoretically have the potential to increase housing for workers. But whether or not such changes bring truly affordable housing remains to be seen.

To combat the city’s housing cost problem, the Metropolitan Center released its Affordable Housing Master Plan for the city of Miami back in 2020. Among its proposed solutions was an aggressive campaign of land banking — the purchase and holding of vacant properties to eventually repurpose them. The plan estimated that more than 90,000 new housing units could be built across the city of Miami’s vacant properties — enough to cover the estimated 90,000-unit affordable housing shortage for Miami-Dade households making less than $75,000 a year. A vacancy tax on properties that sit empty for at least six months a year — as many ultra-wealthy vacation homes do — was also proposed as a means to fund affordable housing, as was a trust fund to finance such projects. “Of course, it never got adopted,” lamented Murray, one of the plan’s authors. “And now,” he added, “things are worse, because land prices are much higher.” This story was produced with financial support from supporters including The Green Family Foundation Trust and Ken O’Keefe, in partnership with Journalism Funding Partners. The Miami Herald maintains full editorial control of this work.

Read this piece in the Miami Herald