- NYC, Los Angeles, and London are home to the most people with a net worth of over $ 30 million.
- New York ranks first in the world according to a new report that includes the second and third residences.
- There’s one problem for NYC, however: the ultra-rich may choose to live – and pay taxes – mostly elsewhere.
- You can find more stories in Insider’s business section.
Of all the cities in the world, New York City still has the most ultra-wealthy homeowners, but there is a catch.
A report released on February 18 by real estate platform REALM and financial information firm Wealth-X found that NYC had the highest number of homeowners in December 2020 with a net worth of over $ 30 million, with 24,660 people in that class residing in the city had. It was followed by Los Angeles with 16,295 ultra-wealthy homeowners, then London, Hong Kong and Paris.
“The largest regional economy in the US ranks first, both in terms of the number of wealthy individuals by primary residence and second homes,” the report said. “This reflects New York’s status as a global center for finance and commerce, offering a rich mix of cultural and luxury lifestyle opportunities, quality education and world-class real estate.”
With regard to high net worth individuals, the report also found that:
- Cities in the west, like London and Australian cities, have the highest proportions of wealthy second home owners.
- Monaco and Aspen have the highest density of ultra-high assets.
- Secondary homeowners tend to be a little younger and represent more women than primary homeowners.
In making the decision to include secondary homeowners in the report, the two writing firms said it allowed for a “more holistic view” of the ultra-rich.
“The pandemic has created the best market for second and even third homes in the luxury real estate market,” said Joanne Nemerovski, luxury real estate advisor at Compass in Chicago, in the report. “No matter how impressive their primary residence is, this group of affluent people is used to travel and has a hard time staying there.”
However, the importance of second and third residencies among the ultra-rich in cities like NYC could be a detriment to the post-pandemic economy. The rise in remote working during the pandemic has led many wealthy homeowners to relocate their primary residence to warmer jurisdictions with lower taxes, particularly Texas and Florida, potentially leaving a hole in their former cities’ budgets.
According to a 2020 Bloomberg report, the top 1% of New Yorkers paid 42.5% of the city’s total income tax. If these individuals change their primary residence, NYC’s economy could suffer a severe financial blow.
Manhattan real estate prices have also fallen since the pandemic gave buyers the opportunity to move to other cheaper cities, putting the ultra-rich homeowner’s hotspot at risk of losing a significant portion of its tax base.
In other words, New York could remain the number one city for ultrawealthy homeowners, just maybe not full-time.