South Florida has nation’s biggest price gap between luxury and non-luxury homes

Luxury homes in Miami and West Palm Beach cost nearly nine times more than non-luxury homes.

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West Palm Beach and Miami are the American metros with the widest and second-widest disparities between luxury and non-luxury home prices, according to a new report from the online real estate platform Redfin.

The data echoes concerns about growing inequality in South Florida, as billionaires buy up prime waterfront real estate across the region and working-class residents struggle to afford rent.

Redfin’s report shows that the median luxury home price in West Palm Beach is around $4.5 million, 8.9 times higher than the median non-luxury home price of $506,609. In Miami, the median price of a luxury home is around $4.9 million, 8.8 times more expensive than the median non-luxury home price of $554,441. The data includes both single-family homes and condos.

The report defined luxury homes as the top 5% of homes in a metro area, and the non-luxury homes were those that fell between the 35th and 65th percentile of homes in the market. A Redfin spokesperson said in this survey, the Miami metro area encompasses all of Miami-Dade County, and the West Palm Beach metro area corresponds with Palm Beach County.

The two metros also have two of the country’s most expensive markets for luxury homes, with Miami ranking third and West Palm Beach ranking fifth.

Ultra-wealthy buyers drive up home prices

Daryl Fairweather, the chief economist at Redfin, said the gulf between the luxury and non-luxury housing markets in Miami and West Palm Beach is driven by South Florida’s ultra-wealthy buyers. As buyers with plenty of money to spend vie for a limited supply of luxury homes in Miami-Dade and Palm Beach counties, prices go up.

“The ultra-wealthy, they don’t care about the cost,” Fairweather said.

That’s why Miami-Dade has seen skyrocketing prices for prime real estate. Earlier this year, Meta CEO Mark Zuckerberg broke the county’s record for most expensive home sale with the purchase of an Indian Creek Village waterfront mansion for $170 million.

But it’s not just Zuckerberg. Empty lots and “tear-down” homes on prime waterfront real estate are selling for tens of millions of dollars. And waterfront towns like North Bay Village and Bay Harbor Islands that were once known as quiet working-class suburbs are getting facelifts with new ultra-luxury condo buildings.

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Ed Jahn, senior vice president of the development firm Kolter Urban, said competition among developers for land in desirable areas, like neighborhoods on the water, leads to high land costs, which in turn leads to rising home prices. Kolter Urban builds luxury condo buildings in both Miami-Dade and Palm Beach counties.

Disparity is growing in Miami

The median luxury home price is growing faster in Miami than in all but one of the 49 metros surveyed in Redfin’s report. The year-over-year change was 14.2% in Miami; in Tampa, the change was 15.6%.

That is causing the gap between luxury and non-luxury homes to expand in Miami. Last year, the median luxury home cost 7.6 times more than the median non-luxury home. This year, the median luxury home was 8.8 times more expensive.

Florida International University professor Maria Ilcheva researches demographic shifts in Miami-Dade County. Her analysis of IRS tax returns filed in the county shows Miami-Dade is gaining wealthy residents and losing lower-income residents. According to data from 2023, those who moved to Miami-Dade had an average income of $178,000, while the average income of those leaving was $89,000.

As wealthy residents flow into the county, many middle- and low-income Miami-Dade residents are struggling to find affordable housing. The nonprofit Miami Homes for All estimates the county is facing a shortage of about 90,000 units of affordable housing.

Cities where the gap between luxury and non-luxury homes is largest

• West Palm Beach
• Miami
• New York
• Los Angeles
• Phoenix

The gap between luxury and non-luxury home prices in West Palm Beach and Miami was significantly larger than the gaps in the next cities on the list.

In New York, the median luxury home is five-and-a-half times more expensive than the median non-luxury home; in LA, luxury homes are 4.9 times more expensive; in Phoenix, they’re 4.8 times more expensive.

Cities where the gap is smallest

• Portland, Oregon
• Sacramento, California
• Columbus, Ohio
• Riverside, California
• Cincinnati, Ohio

Among the cities where the gap was smallest, the median luxury home was between two-and-a-half and three times more expensive than the median non-luxury home.

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