Florida Millionaires Vanishing
Florida’s losing a population that was growing rapidly the past few years: Millionaires.
The Tampa Bay area last year lost 51 percent of its residents with investible assets of $1 million or more, while Miami and Orlando both saw 42 percent of its millionaires fall below the magic mark as real estate and tourism tanked, a new report shows.
“The Florida areas are seeing a real flip-flop from how they performed from 2005 through 2007,” said David Wilson, a New York wealth manager and author of the report for Capgemini, a global consulting firm. “The declines in Florida are quite a significant number.”
Parts of the U.S. where the real-estate bubble grew biggest before it burst are shedding millionaires fast. The hard-hit Florida metro areas are joined by big losses in Last Vegas, down 38 percent and Phoenix, down 34 percent in millionaires, the U.S. Metro Wealth Index found.
Capgemini tracks what it labels high net-worth individuals (HNWIs), people with more than $1 million in investible assets excluding the value of a primary residence. Tampa Bay had average 9.1 percent growth in on-paper millionaires between 2005 and 2007, Orlando, 8.8 percent growth, and Miami, a 7 percent gain in millionaires until last year’s tumble, Wilson said.
The total number of millionaires in the Florida cities was not immediately available. But the New York metro area remains the top location for millionaires in the U.S., with 561,000, although that is down roughly 89,000 from 2007, or 13.6 percent, the index reported.
The nation’s top 10 metro areas in population, which includes no Florida locales, lost an average 15.7 percent of their millionaires, amounting to 300,000 residents whose wealth fell below that level last year. The top 10 cities were seen as less reliant on the boom and bust of real estate than other large municipal areas, such as those in the Sunshine State, analysts found.
“There are still more millionaires in the U.S. than number 2 Japan and number 3 Germany, combined,” Wilson said. “But when you have losses like these, they are felt across all industries and economic sectors.”
Indeed, Wilson said the drop in millionaires isn’t just felt among the brie and white wine set.
When investible assets fall the way they have, government tax dollars shrink, reducing public services, while service industries that depend on discretionary spending by the wealthy also tighten. Investment in such economic engines as real estate and entrepreneurial businesses also is dwindling, he said.
Florida’s unemployment rate reached 10.6 percent in June, it’s highest level in 34 years and topping the national jobless rate of 9.5 percent. Foreclosures in Florida, while steadying somewhat, have been among the highest in the nation for months.
The wealth management industry also comes under the microscope when millionaires disappear, Capgemini said.
“You find more people losing confidence in their advisors and their investment firms,” Wilson said.