Million Dollar Homes? CT Ranks 6th in USA

There has been discussion during Connecticut’s ongoing state budget shortfall about the disproportionate impact of the state’s wealthiest residents, and how overall state revenues are affected when some of those residents decide to relocate to lower-tax states. Now, national data analyzing million dollar homes is underscoring Connecticut’s standing as being among the states where the ultra-wealthy have roots.

An analysis by Overflow Data and Visual Capitalist ranks Connecticut in the top ten among states with the highest percentage of homes worth more than one million dollars.  Connecticut ranks sixth, with 4.5 percent of homes surpassing that threshold.

Ahead of Connecticut are only Washington, D.C. (17.3%), California (13.6%), Hawaii (13.5%), New York (7%), and Massachusetts (5.2%).

Connecticut’s standing may slip in the coming years.  In a review of cities where million dollar listings have “skyrocketed,” increasing over the past three years, the leaders were Denver, Santa Rosa (CA), Boulder, Truckee (CA), Fredericksburg (TX), Heber (UT) and Boston.

The share of homes valued at more than $1 million has surged more than fourfold since 2002, according to recent data compiled  from real estate site Trulia, which analyzed the luxury real estate market in the top 100 U.S. metropolitan areas, and reported by CBS News.  Across those regions, about 4.3 percent of homes are now worth at least $1 million, compared with about 1 percent in 2002, said Trulia senior economist Cheryl Young told the network.

The five metropolitan areas with the largest share of homes worth $1 million in 2017, according to CBS News, are: San Francisco, San Jose, Los Angeles, Fairfield County, CT, and Long Island, New York.

The network reported that rising real estate values, tight inventory and a lack of new construction are contributing to the surge in million-dollar homes. Another factor may be at play: rising income inequality, which has benefited the bank accounts of America's richest families, the network report noted.

CT Aims to Keep Ultra-Wealthy in State; Tracks Tax Payments of 100 Top Earners

Connecticut is ranked second in the nation in the number of millionaires per capita.  Only Maryland has more.  But with Connecticut’s precarious financial situation amidst what has been described as a “new economic reality,” any drop in the plethora of extremely wealthy residents can almost instantly have far-reaching consequences, officials say. In Connecticut, as well as California, Maryland and New Jersey, the top 1 percent pay a third or more of total income taxes, The New York Times reported this month. “There's an outmigration trend. It's real,'' Sullivan recently told The Hartford Courant, describing the departure of wealthy residents from Connecticut.

But Connecticut is not sitting idly by.  The state is trying to keep its wealthy residents right here in the Land of Steady Habits.

Connecticut, the Times reported, now tracks the quarterly estimated payments of 100 of its top earners. State Revenue Services Commissioner Kevin B Sullivan told Inside Wealth columnist and CNBC wealth editor Robert Frank that about five or six of the highest earners could have a "measurable impact on the revenue stream."

By way of example, Sullivan said that when one of the state's rich hedge fund executives planned to move his family and company to a lower-tax state, state officials met with him and persuaded him to leave some of his work force in Connecticut, the Times reported.  "We knew we were going to lose him," Sullivan said, "but we wanted to keep some of the higher-paying jobs."

He added, “We advised him that there are ways to be close to family and friends in Connecticut on occasion that are perfectly legal.  We're trying to send a more welcoming message to the high earners as a group." Homeowners who spend more than 183 days in the state are considered residents for tax purposes.

The top 10 states in millionaires per capita, after Maryland and Connecticut, are Hawaii, New Jersey, Alaska, Massachusetts, New Hampshire, Virginia, Delaware and the District of Columbia, according to Phoenix Marketing International’s Global Wealth Monitor.

Earlier this year, the Courant reported that one of three Connecticut residents with an 11-figure net worth, according to the latest Forbes magazine list of the wealthiest individuals, had relocated from Greenwich to Florida, the second individual in that tax bracket to do so recently.  The exits, the Courant reported, “leave Connecticut with 13 billionaires, including Ray Dalio ($15.6 billion) and Steven Cohen ($12.7 billion), both hedge fund owners who live in Greenwich.”  Eight of those 13 state residents list Greenwich as their home address, according to Forbes.

Connecticut is not alone in keeping a watchful eye on its billionaires.  New York is now more closely monitoring wealthy taxpayers who have homes in New York but claim Florida as their tax residence. And New Jersey is collecting data on all of the taxpayers who make more than $1 million to forecast their tax payments more accurately, the Times reported.

As is true in a number of states with wealthy residents, including New York, New Jersey and California, even as some of the state's wealthiest residents head to warmer climates and more favorable tax structures, the number of millionaires in the state grows.

Just three years ago, in 2013, the number of millionaires in Connecticut topped 100,000 for the first time.  In 2015, it exceeded 101,000.  That compares with just over 84,000 in 2006.  Millionaires made up 6.2 percent of state residents that year, compared with 7.3 percent in 2015, based on data from Phoenix Marketing International.

Connecticut Ranks #2 in Millionaires; New Jersey Drops to #3

Which state has 99,965 millionaires?  Connecticut.  How many states have a greater percentage of millionaires, based on population?  Only one. Connecticut is ranked at #2 among the states in an analysis of the number of millionaires, as a percentage of population, developed by Phoenix Marketing International.  Only Maryland has a higher percentage – and Connecticut moved up one notch this year, surpassing New Jersey, which was ranked second a year ago.

Perhaps surprisingly, it’s not all about Fairfield County.  David Thompson, Managing Director of the Phoenix Global Wealth Monitor and the lead researcher, points out that the data shows “pockets of wealth” throughout the state – in the Bridgeport-Norwalk-Stamford corridor, but also in Litchfield County, Hartford-West Hartford, and Norwich-New London.  In fact, only California has more metropolitan areas in the nation’s top 30 for millionaires per capita.

And while some have suggested that Connecticut’s tax structure and economy are pushing people to exit the state, millionaires seem to be quite comfortable here.  The total number of millionaires dropped slightly during the past year from 100,754 to 99,965, a loss of 789 millionaires.  New Jersey lost more individuals with investable assets over a million dollars as a percentage of population, dropping behind Connecticut.  New Jersey's total number fell from 242,647 to 232,514, a loss of more than 10,000 millionaires during 2014 (from 7.49 percent to 7.14 percent of the state's population).

“Connecticut holds on to its wealthy population.  There’s no downward trend (compared with other states),” Thompson notes.  “The tax structure isn’t so onerous, the state offers stability, and attracts industries that grow wealth.”  Thompson, a Connecticut resident, adds that the quality of life in the state, as well as its accessibility to New York and Boston also prove attractive.

Maryland has 170,248 millionaires, a ratio of 7.67 to total households.  Connecticut ranks #2, with 99,965 and a ratio of 7.23, followed by New Jersey with a ratio of 7.14 and 232,514 millionaires.  Connecticut has consistently been a top five state, placing third  in 2013, fourth in 2012, 2011 and 2010.

Among the key findings for 2014:

• Maryland held strong in the first position for its fourth year in a row
• On the strength of its oil boom, North Dakota continued its meteoric rise in the millionaire rankings, moving up to number 20 in 2014. Its neighbor, South Dakota, however, was the biggest gainer this year, rising twelve points to number 26
• The top ten states remained the same, with only slight shifts: New Jersey #3 (down one point), Hawaii, Alaska, Virginia (up one point), Massachusetts (down one point), New Hampshire, Delaware and the District of Columbia.

Besides Maryland, the top ten states remained the same, with slight shifts: Connecticut rose one notch to hold the #2 spot, followed by New Jersey (down one spot), Hawaii, Alaska, Virginia (up one position), Massachusetts (down one slot), New Hampshire, Delaware and the District of Columbia.

“The amazing rise of North Dakota in the millionaires rankings clearly demonstrates the power of an industry to quickly create wealth,” Thompson said.  But he indicated that “new industries may not be a sustainable economy,” and cited the nation’s large population centers, including those along the east coast, as more likely to retain their positions as most attractive to wealthy individuals.

There were a few notable declines in the rankings: Louisiana dropped 6 positions to number 38, Texas dropped 5 slots to number 27, erasing gains it made last year; and Georgia lost another 5 places this year for the second year in a row, falling to number 40.

Smallest percentage of millionaires?  Mississippi, Idaho, Arkansas, Kentucky, Tennessee and West Virginia.

The PMI Global Wealth Monitor (GWM) provides ongoing intelligence on the attitudes, behaviors and needs of affluent and High Net Worth consumers to leading organizations in the U.S., Canada, and Europe.