The Impact of Rising Housing Costs on Savings when Moving from New York to Florida: A Recent Study

The decrease in savings when moving from New York to Florida is evidenced in recent studies by the increase in housing costs. (Getty Images)

The savings previously gained by moving from high-tax states like New York to no-income-tax states like Florida and Texas have diminished in recent years. This change is due, in part, to the escalation of home prices in the most sought-after destinations, according to a study by SmartAsset, a financial information provider.

This economic analysis center highlights that, while New Yorkers who earned USD 100,000 annually could expect significant savings by moving to cities like Miami, Austin or Dallas in 2019, these benefits have been considerably reduced by 2023. The main cause is the increase in housing costs, which has offset some of the savings generated by the absence of state income taxes in Florida and Texas.

In this context, the data shows that in 2023, people with a salary of USD 250,000 who chose to move to Miami from New York saved approximately 30% less compared to those who made the same decision in 2019. Meanwhile, Those who moved to Dallas or Austin experienced a reduction in their savings of between 20% and 25% if they did so last year compared to 2019.

Financial analysis reveals that rising housing costs in Miami reduce the tax advantages of moving from New York. (Getty Images)

According to the financial institution, inflation in cities such as Miami, Dallas and Austin has been higher than in Manhattan in recent years. This has led to the real, inflation-adjusted purchasing power of those moving from Manhattan to these cities to decrease compared to that observed four years ago, even taking into account differences in costs and taxes.

On the other hand, the increase in the cost of housing in Miami and some Texas cities is not the only factor contributing to the decrease in savings. An increase in the prices of food, public services and transportation has also been observed. In Miami, for example, rents and home prices have increased nearly 40% since 2019, while in Austin home prices have increased more than 50%.

The phenomenon of migration to states like Florida and Texas has been driven by the fiscal and climatic attractions they offer. However, as more people choose to move to these regions, the demand for housing has increased, causing a rise in prices that has ended up impacting the savings that were expected to be obtained.

Migration to Florida, motivated by tax benefits, faces new obstacles due to the rise in prices of goods and services. (Getty Images)

The upward trend in housing and general living costs in these areas highlights the growing demand for real estate in states traditionally considered more affordable than New York. However, according to the study, this dynamic is changing, affecting both new residents and those who already lived there.

This set of factors illustrates a landscape where the difference in living costs between New York and previously considered cheaper destinations, such as Florida and Texas, is narrowing. As these areas face rising inflation and rising housing costs, the economic benefits of moving from New York are beginning to diminish.

2024-04-10 04:57:00
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