Ultra-wealthy Americans are flocking to this obscure town

House prices are soaring in quiet Paradise Valley, population 12,658, as coronavirus spurs a new wave of affluent buyers seeking to escape coastal cities. Io Dodds writes.


Ben Gillikin was hiking up a mountain in the middle of Arizona’s biggest urban sprawl when he knew for sure he wanted to live in Paradise Valley. 


Mr Gillikin and his wife Jeannine, both 52, had been scoping out various cities across the US where they could make their new home after leaving California. From the slopes of Camelback Mountain, a 2,700 ft peak that sprouts incongruously out of the Phoenix metro area, they could see the lush enclave of Paradise Valley, population 12,658, nestled between three crags.It would be another two years before the Gillikins actually managed to land a house there. Over the past few years, rich buyers from all over the US and beyond have been flocking to this obscure town, squeezing its limited housing supply and driving property values skyward. Amid fierce competition, the Gillikins ended up paying far more than they hoped – $7.2 million (£5.3 million).


“The house prices since we started looking two years ago have gone up between 30 and 40 per cent,” Mr Gillikin told The Independent on Wednesday, three days after agreeing to buy (the sale closes in about two months). “Digesting that was tough, but the lifestyle improvement, and investing in our forever home was important to us, and we’re willing to pay that premium.”


Since its foundation in 1961, Paradise Valley has attracted wealthy citizens including mega-Olympian Michael Phelps, rocker Alice Cooper, and boxer Mike Tyson, as well as clientele at high-end resorts. Tucked away amidst the hills between downtown Phoenix and nearby Scottsdale, it is a short drive away from shops, restaurants and bars yet remains relatively secluded.


Yet now local real estate agents and politicians say the coronavirus pandemic has spurred a new level of interest from far beyond Arizona, including from ultra-wealthy families with net fortunes of anything from $30 million to $500 million.


According to the Wall Street Journalwhich first reported the boom, the median listing price of homes in Paradise Valley has doubled in three years to $5 million, pushing it from the 93rd most expensive American postal code to the 50th. Greg Hague, a local real estate agent, said there had once been 300 to 400 homes on the market at any given time; now, there are often less than a hundred.


Earlier this month, an unbuilt house in a gated development called Crown Canyon – which bills itself as “America’s most exclusive private enclave of luxury estates” – reportedly became Arizona’s most expensive house listing at $30.6 million. A Ritz Carlton branded resort is coming to the area soon.


‘A $1.5 million home is hard to find here’


“Paradise Valley is unquestionably an in-demand location,” city mayor Jerry Bien-Willner tells The Independent. “Since our town is ‘landlocked’ [no room to expand] and observes stringent zoning and development standards, there is essentially a fixed supply of housing (approximately 5,550 homes altogether) with high demand, which leads to increased prices.”


For Joan Levinson, a luxury real estate agent who has been selling houses in Paradise Valley for 35 years, this is by far the busiest her job has ever been. As well as handling the Gillikins’ sale, she has been selling to chief executives, athletes, wealth managers, company owners, and families with their own charitable foundations, hailing from Pennsylvania, Florida, New York, and especially California.


One recent buyer was from England, attracted in part by the direct flights between Heathrow and Phoenix Sky Harbour Airport. Some are young families, with toddlers or newborns in tow. A house priced at only $1.5 million, Ms Levinson says, would be “hard to find”.Why Paradise Valley? Arizona’s famous sunshine is a lure, with even February temperatures averaging between 49 and 71 degrees Fahrenheit. Its combination of quiet streets and proximity to major downtown areas is rare; residents can easily access nightlife in Phoenix and Scottsdale but, as Ms Levinson puts it, “they don’t have to live next door to it”.


More distinctively, the town has almost no non-residential buildings (bar places of worship) and boasts unusually large parcels of land, with most fixed by law at no less than one acre for one house and some as large as five acres.


“People have space to entertain and have fun, have their own gym if they would like, have their own [movie] theatre in their house if they would like,” says Ms Levinson, who still speaks with a noticeable New England accent but has long since made Paradise Valley her home.


“People in many of the other places were cloistered in their apartments, and so they came here for a month or two to be able to have some more space, and when they came here, they decided they really loved it.”


Taxes and politics also play a role. Arizona has historically been a deep red state, and though it is now firmly “purple” and voted for Joe Biden in 2020, it still has lower taxes, looser laws, and a more libertarian culture than many of the populous blue states from which new buyers are migrating.


“Many of the people who I have coming from California are maybe more independent minded in certain things, but in tax situations Arizona has stayed very friendly to them,” Ms Levinson says. “Our governor, [Doug] Ducey” – who also lived in Paradise Valley, selling his home there for $8.1 million in 2019 – “has done a good job and making sure that the state tax stayed low.”


Affluent Americans flee California


All those reasons were in play for Ben and Jeannine Gilliken, both partners at the accounting firm PWC who currently live in the San Francisco Bay Area. They had planned to leave California for some time, but Covid accelerated their schedule as the Golden State imposed strict Covid restrictions and remote working became routine.


“We would characterise ourselves neither as ultra-liberal nor conservative, and yet California has been challenging to live,” says Mrs Gilliken. She cites “the taxes, the politics, challenges with the infrastructure and the [homeless] community, and just not feeling safe at times”, as well as the state’s Covid restrictions, which were far stricter than Arizona’s.


The couple were looking first and foremost for winter sunshine, since they spend summer at another house in North Carolina. Texas, they felt, was too conservative, while Florida was tempting but ultimately too hot, too humid, too distant from friends and family on the West Coast, and too full of biting insects.Another major candidate was Las Vegas. But Mrs Gilliken says: “Vegas has a little bit of a brand issue. When we talked to friends and family about possibly moving there, half the people that we had a funny look on their on their faces. And and real, because if you have a very big group of friends that you’ve met over many years of living different places, you want to have a community and environment that’s very welcoming.”


Even after deciding on a city, it took six to nine months of searching to agree a sale. Although Mrs Gilliken says the pair had a “frankly romantic notion” of escaping San Francisco’s overheated housing market and making a profit on selling their old house, they eventually had to accept that Paradise Valley would require the same kind of money.


As well as wealthy homeowners, the area has proved highly attractive to Airbnb hosts and other short-term rental businesses, prompting complaints from residents and new rules banning “plainly audible” noise between 10pm and 7am during summer and imposing a suite of requirements on rental owners.“Our citizens have spoken,” said Mr Bien-Willner when the rules were passed last month. “The most pressing issue facing our residents is the disruption caused by short-term rentals in our neighborhoods. They also disproportionately burden and expose to risk our police and other first responders.”


Mr Bien-Willner told The Independent that a state law that “overrode” local zoning regulations in favour of short-term rental businesses was to blame, but that the problem was nothing to do with people who move to Paradise Valley permanently.


Interstate migration is changing Arizona’s politics


Ironically, the movement from blue states to Paradise Valley might actually accelerate Arizona’s political transformation. The city’s residents exemplify a demographic that appears to have skewed towards Mr Biden in the 2020 election: older, highly educated, affluent independents who lean fiscally right but socially left, and who were traditionally part of the Republican Party base.


Alongside Hispanic voters, these types of suburbs – and the steady migration of young families from out of state – were a key factor in Arizona’s decisive swing against Donald Trump, which so prompted the former president’s fury and disbelief.


According to The Arizona Republic, the state legislature district which includes Paradise Valley gained about 17,000 new voters in the six years ending in 2020, of which about 13,000 were Democrats. The same district has gone from electing one Republican and one Democrat between 2012 and 2016 to electing two Democrats in 2018 and 2020.Mr Gilliken declines to comment on how he voted in 2020, and Mr Bien-Willner says many people who come to Paradise Valley “value privacy and a ‘live and let live mindset’”. In any case, Ms Levinson cautions that an Arizona Democrat is not necessarily like a Democrat from other states.


Look at Kyrsten Sinema, a former Green Party member who became the first openly bisexual US senator when Arizona elected her in 2018. Last year, she reportedly insisted that President Biden’s flagship Build Back Better Act contain no increase in marginal tax rates for businesses, high-income people, or capital gains.


“She and [Joe Manchin], they were the two votes who kept it so that they didn’t change much of the tax situation for wealthy people,” says Ms Levinson. “Her financial leanings are very what you would want consider Republican.”


SOURCE: https://www.independent.co.uk/

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