The New Gold Rush

By staff July 1, 2005

When my daughter was seven, she returned from a weekend with her father and his new wife, who had entertained guests while she was there. Kate was used to my parties, which tended to be rowdy gatherings of artists, writers and ne'er-do-wells, and her father's event had been a little staid for her tastes.

"When you and Dad were married, did you, like, sit in the living room and talk about real estate?" she asked.

At the time, I found her remark amusing and immensely gratifying, but all these years later, the joke's on me, since like everyone else I know in Southwest Florida (including Kate, whose boyfriend is a real estate agent), I seem to do nothing but talk about real estate-how much it's escalating, whether it's peaking, and how blissfully rich I would be if I'd only known then what we all know now.

In this issue, Ilene Denton reports on the runaway real estate market, which has made home prices in Manatee and Sarasota the fastest-growing in the entire nation. It's the No. 1 story in Southwest Florida right now, but there's a bigger story behind it: We're feeling the beginnings of a seismic shift in population.

People are getting rich in record numbers-the number of billionaires jumped 30 percent last year, to 691, according to Forbes, and vast fortunes created in the last few decades have swollen the ranks of the merely super-rich. (There are also more poor and disenfranchised people than ever before, but that's another story.) Dr. Doug Landau of International College in Naples calculates we now have one million millionaires in the U.S. alone (not that $1 million is much of a measure of wealth any more-in a recent New York magazine article about the proliferation of the super-rich, reporter Daniel Gross sets the new standard at $1 million of income per year). This huge new free-spending class has made the luxury market the hottest niche in the country, driving sales of everything from vacation ski retreats to Grey Goose vodka.

And Florida-especially Southwest Florida-is getting more than its share of this new money. The state has attracted wealthy retirees and visitors for more than a century; but this, says Scott Watkins, of Michigan's Anderson Economic Group, which recently completed a study of Collier County's economy, is "uncharted territory"-not just for Florida but for the country. "The growth and concentration of wealth here is so fabulous that it's hard to draw any comparisons to any other place," he says.

Why are they coming? Our scenic beauty and low-key Midwestern charm? The diligent efforts of our economic development officials? Not really, says Harvard economist Dr. Edward Glaeser: "The biggest single factor that predicts the success of a region is its weather." People who can live wherever they want to want to live in year-round sunshine.

Glaeser concedes that Florida's lack of a state income tax may also be a factor. And as Gross points out, wealthy people attract other wealthy people, since money "likes to hang out with other money." Just ask some of the folks disembarking from all those private jets at Dolphin Aviation (which has seen a 38-percent increase in private jet traffic in the last five years, says president Ron Ciaravella) how many of them decided to buy a vacation place on Longboat or Casey Key after visiting their friends here.

Collier now has the highest median family income in the state-$63,300; and to the north, Sarasota's has reached $55,900 and is growing fast. (And the areas between them are rapidly gentrifying, points out demographer Mike Timmerman of Hanley Wood/Feasinomics.)

This enormous new wealthy class is an incredible economic engine, with an insatiable demand for top-quality goods and services, creating jobs for private bankers, restaurateurs, jewelers, decorators, plastic surgeons and many others. (I'm thinking of my Sarasota friend who's built a booming business as an SAT tutor at $100 an hour, or the woman who writes thank-you notes for Naples socialites.) And as in the gold rush in California, all this wealth will spark more explosive growth, as the need for services and goods attracts more workers, who will need housing and services of their own.

That's what's sending real estate prices into the stratosphere, and why many of us who moved here 10 or 20 years ago couldn't afford a house in our neighborhoods now. And, yes, all this growth will present challenges. The days when the average person could live on a canal on Siesta Key or even in downtown Sarasota are already fast receding; and in the future, workers and the middle class will be forced even farther into outlying areas, commuting long distances on congested roads. We'll have to keep expanding our infrastructure and public services, and our landscape will keep changing, often in ways we don't like, as green space and old-Florida landmarks give way to new high-rises and upscale establishments.

Great wealth can have psychic costs, too, creating an us-and-them schism between those who live in luxury and those who serve them, and making even the relatively well-off feel they've somehow been left out of the game.

But before we start fretting about the problems our new prosperity will bring, Glaeser provides a reality check: "The United States is dotted with cities like Detroit and St. Louis that would die to have rich people wanting to move there."

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