Ultra-rich Americans are flocking to this shadowy city

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

Mr Gillikin and his wife Jeannine, both 52, had traveled to various cities in the United States where they could settle after leaving California. From the slopes of Camelback Mountain, a 2,700-foot peak that juts incongruously out of the Phoenix metro area, they could see the lush enclave of Paradise Valley, population 12,658, nestled between three boulders.

It would be another two years before the Gillikins managed to land a house there. In recent years, wealthy buyers from across the United States and beyond have flocked to this obscure city, squeezing its limited housing supply and sending property values ​​skyrocketing. Amid fierce competition, the Gillikins ended up paying far more than they expected – $7.2m (£5.3m).

“House prices since we started looking two years ago have gone up 30-40%,” Mr Gillikin said. The Independent on Wednesday, three days after agreeing to buy (the sale closes in about two months). “Digesting this has been tough, but improving the lifestyle and investing in our forever home was important to us, and we’re ready to pay that premium.”

Since its founding in 1961, Paradise Valley has attracted wealthy citizens including mega-Olympian Michael Phelps, rocker Alice Cooper and boxer Mike Tyson, as well as the clientele of upscale resorts. Nestled in the middle of the hills between downtown Phoenix and nearby Scottsdale, it’s a short drive to shops, restaurants, and bars, but remains relatively secluded.

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

According to the wall street journal, who first signaled the boom, the median listing price of homes in Paradise Valley has doubled in three years to $5 million, moving it from the 93rd most expensive U.S. ZIP code to the 50th. Greg Hague, a local real estate agent, said there had already been 300 to 400 homes on the market at one point; 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 properties” – would have become Arizona list of the most expensive houses at $30.6 million. A Ritz Carlton-branded resort is coming to the area soon.

“A 1.5 million dollar house is hard to find here”

“Paradise Valley is definitely a hot spot,” said city mayor Jerry Bien-Willner. The Independent. “Since our city is ‘landlocked’ [no room to expand] and observes strict zoning and development standards, there is essentially a fixed supply of housing (approximately 5,550 housing units in total) with high demand, resulting in rising prices.

For Joan Levinson, a luxury real estate agent who has been selling homes in Paradise Valley for 35 years, it’s by far the busiest of her jobs. In addition to managing the sale of Gillikins, she has sold to CEOs, athletes, wealth managers, business owners and families with their own charitable foundations, hailing from Pennsylvania, Florida, New York and especially from California.

A recent buyer was from England, attracted in part by direct flights between Heathrow and Phoenix Sky Harbor Airport. Some are young families, with toddlers or newborns in tow. A home priced at just $1.5million, Ms Levinson says, would be “hard to find”.

Why Paradise Valley? Arizona’s famous sun is a decoy, even with average February temperatures ranging between 49 and 71 degrees Fahrenheit. Its combination of quiet streets and proximity to major city centers is rare; residents can easily access the nightlife of Phoenix and Scottsdale but, as Ms. Levinson says, “they don’t have to live next door.”

More distinctly, the town has almost no non-residential buildings (bar places of worship) and has unusually large plots of land, most set by law at no less than an acre for a house and some as large only five acres.

“People have space to entertain and have fun, have their own gym if they want, have their own [movie] theater in their house if they wish,” says Ms. Levinson, who still speaks with a noticeable New England accent, but has long called Paradise Valley home.

“People in many other places were cooped up in their apartments, so they came here for a month or two so they could have more space, and when they came here they decided they really liked it. .”

Taxes and politics also play a role. Arizona has always been a dark red state, and although 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 the most populated blue states from where new shoppers migrate.

“A lot of people I have from California are maybe more independent-minded in some things, but in tax situations, Arizona has remained very friendly with them,” Ms. Levinson says. “Our Governor, [Doug] Ducey” – who also lived in Paradise Valley, selling her home there for $8.1 million in 2019 – “did a great job and made sure the state tax was kept low.

Affluent Americans flee California

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

“We wouldn’t call ourselves ultra-liberals or conservatives, and yet California has been hard to live with,” Ms Gilliken says. She cites “taxes, politics, infrastructure challenges and [homeless] community, and just not feeling safe at times,” as well as the state’s Covid restrictions, which were much stricter than Arizona’s.

The couple were looking for the winter sun above all else, since they spend the summer in another house in North Carolina. Texas, they said, was too conservative, while Florida was tempting but ultimately too hot, too humid, too far from West Coast friends and family, and too full of biting insects.

Another major contender was Las Vegas. But Ms Gilliken says: “Vegas has a bit of a branding issue. When we talked to friends and family about the possibility of moving there, half of the people we had had a funny look on their face. And and real, because if you have a very large group of friends that you’ve met over many years of living in different places, you want to have a very welcoming community and environment.

Even after choosing a city, it took six to nine months of research to agree on a sale. Although Ms Gilliken claims the couple had a ‘frankly romantic idea’ of escaping San Francisco’s overheated real estate market and making a profit on the sale of their old home, they eventually had to accept that Paradise Valley would require the same type silver.

In addition to wealthy landlords, the area has proven very attractive to Airbnb hosts and other short-term rental businesses, prompting complaints from residents and new rules prohibiting “clearly audible” noise between 10 p.m. a.m. and 7 a.m. during the summer and imposing a series of requirements on the rental. the owners.

“Our fellow citizens have spoken,” Bien-Willner said. when the rules were adopted last month. “The most pressing issue facing our residents is the disruption caused by short-term rentals in our neighborhoods. They also disproportionately burden our police and other first responders and put them at risk.

Mr. Bien-Willner said The Independent that a state law that “overridden” local zoning regulations in favor of short-term rental businesses was to blame, but that the problem had nothing to do with people moving to Paradise Valley permanently.

Interstate Migration Changes Arizona Politics

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

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 pivotal swing against Donald Trump, thus causing the fury and disbelief of the former president.

According to The Arizona Republic, the state’s legislative district that includes Paradise Valley gained about 17,000 new voters in the six years ending in 2020, of whom about 13,000 were Democrats. The same district went 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 “appreciate the privacy and a ‘live and let live’ mindset”. Either way, Levinson warns that a Democrat from Arizona isn’t necessarily like a Democrat from other states.

Look at Kyrsten Sinema, a former Green Party member who became the first openly bisexual U.S. senator when Arizona elected her in 2018. Last year, she would have insisted that President Biden’s landmark Build Back Better Act contains no increases in marginal tax rates for businesses, high earners, or capital gains.

“Her and [Joe Manchin], it was the two votes that kept it so they wouldn’t make a big difference to the tax situation of the wealthy,” says Levinson. “His financial leanings are everything you would want to consider Republicans.”