- NYC, Los Angeles, and London house the highest number of individuals with net worths over $30 million.
- New York takes the top spot globally, per a new report that includes second and third residences.
- There’s a problem for NYC, though: the ultra-rich may be choosing to primarily live — and pay taxes — elsewhere.
- Visit the Business section of Insider for more stories.
Out of all of the cities in the world, New York City still has the highest number of ultra-rich homeowners, but there’s a catch.
A report released February 18 by real estate platform REALM and financial information firm Wealth-X found that NYC had the highest number of homeowners with net worths over $30 million as of December 2020, with 24,660 people in that class having a residence in the city. Following behind were Los Angeles with 16,295 ultra-rich homeowners, then London, Hong Kong, and Paris.
“The largest regional economy in the US ranks first, both for the number of ultra-high-net-worth individuals by primary residence and second-homers,” the report said. “This reflects New York’s status as a global center for finance and commerce that offers a rich blend of cultural and luxury lifestyle opportunities, high-quality education and prime real estate.”
With regard to ultra-high-net-worth individuals, the report also found that:
- Cities in the West, like London and Australian cities, have the highest shares of ultra-high-net-worth secondary homeowners;
- Monaco and Aspen have the highest levels of ultra-high-net-worth density;
- Secondary homeowners are generally slightly younger and have more female representation than primary homeowners.
When deciding to include secondary homeowners in the report, the two authoring companies said it allowed for a more “holistic view” of the ultra-rich.
“The pandemic has set up the best market for second and even third homes in the luxury real estate market,” Joanne Nemerovski, a luxury real estate advisor for Compass in Chicago, said in the report. “Regardless of how amazing their main residence is, this group of wealthy individuals is used to travel, and it’s hard for them to stay put.”
However, the prominence of second and third residences among the ultra-rich in cities like NYC could be a disadvantage in the post-pandemic economy. The boost in remote working during the pandemic has prompted many wealthy homeowners to move their primary residence to lower-tax, warmer jurisdictions, notably Texas and Florida, potentially leaving a hole in their former cities’ budgets.
According to a Bloomberg report in 2020, the top 1% of New Yorkers paid 42.5% of the city’s total income tax, meaning that if those individuals choose to change their primary residence, NYC’s economy could suffer a major financial blow.
Housing prices have also been declining in Manhattan since the pandemic has given buyers the option to move to other less expensive cities, putting the ultra-rich homeowner hotspot at risk of losing a significant chunk of its tax base.
In other words, New York could stay the number-one city for ultrawealthy homeowners, just maybe not full-time ones.