Last year, the formerly Chicago-based hedge fund Citadel announced that it would be moving its global headquarters to Miami. (Though to be clear, the company still has an office in Chicago.) Today, the Miami housing market is feeling the effects:

“They’ve been buying here aggressively,” said Michael Martinez, a real estate agent with Sotheby’s in Miami, who recently brokered the sale of a $5mn home in Coconut Grove, a quiet salubrious suburb, to a Citadel employee. Most of the luxury homes he has sold in recent months have been to hedge fund buyers, half of them from Griffin’s firm, he estimates. “The Citadel migration is definitely occurring.”

But it's not just Citadel.

According to another agent quoted in the article, there are many other "hedge fund buyers" active in the market, and many/most of them are buying all cash. In desirable suburbs like Coral Gables and Coconut Grove, homes between $3-7mm now account for about 40% of all listings.

I remember visiting family in Miami in and around the GFC of 2007-2008. It was at this time that I really fell in love with the place. You could see how it was using art and culture to carve its identify. It was (and still is) this really exciting and sexy place.

But it was also reeling from the GFC. I remember seeing listings for large and newish 2-bedroom waterfront condos for ~US$150k in some areas. If I had any money, this likely would have been a smart move given how Miami has grown since then.

So I think this story is less about the Citadel effect and more about Miami's continued rise as a global city and global financial center. Notwithstanding the whole climate risk thing, this city region has some pretty powerful tailwinds.

Photo by Ryan Parker on Unsplash

Monroe County, Florida, which is the county that includes the Florida Keys, held a public meeting at the end of last month to discuss what they are going to do to respond to climate change. The agenda can be found over here. According to this article in Grist, it was a seven-hour public meeting and the overall tone was something along the lines of this:

“The water is coming and we can’t stop it,” said Michelle Coldiron, mayor of Monroe County, which encompasses the Keys. “Some homes will have to be elevated, some will have to be bought out. It’s very difficult to have these conversations with homeowners, because this is where they live. It can get very emotional.”

In attendance at the public meeting was a scientist from the National Oceanic and Atmospheric Administration (NOAA), who outlined that they are expecting an additional 17 inches of sea level rise by 2040. This is the "intermediate high" scenario based on the below chart.

Which is why the county is looking to spend $1.8 billion over the next 25 years to raise some 150 miles of roads and deploy a bunch of other fixes that include things like new drains, pumping stations, and vegetation -- all of which are of course intended to mitigate the impacts of sea level rise.

One problem, which shouldn't be all that surprising, is that the county doesn't have the money to pay for all of this. And as the quote at the beginning of this post suggests, part of "this" includes buying out many of the homes. Presumably these are the higher risk homes where there are no clear alternatives.

This is a problematic situation. Because as time goes on, one would expect the tax base here to start to decreasing. Both as homes get bought out and as overall housing demand weakens. There are also financing and insurance considerations. Already the Keys have some of if not the highest insurance premiums in Florida.

As I understand it, the Florida Keys are one of the most vulnerable areas in North America when it comes to sea level rise. And so unfortunately, the public meeting that took place two weeks ago could very well be considered a leading indicator for what's to come.

I have stayed at two hotels over the last month where I did not need to interact with a human as part of the check in process. And in one of those two instances I didn’t even need to interact with a computer at the hotel.

My room key was issued to me through an app and I used that (and Bluetooth) to open my hotel room door (after the app, of course, notified me that my room was ready).

This is prediction #2 in Fred Wilson’s annual roundup of what is going to happen next in the world. Automation is reducing the costs associated with operating many businesses. Who is going to be the beneficiary of this consumer surplus?

The other prediction that should interest most of you — because the impacts would be widespread — is this one here regarding climate change:

The looming climate crisis will be to this century what the two world wars were to the previous one. It will require countries and institutions to re-allocate capital from other endeavors to fight against a warming planet. This is the decade we will begin to see this re-allocation of capital. We will see carbon taxed like the vice that it is in most countries around the world this decade, including in the US. We will see real estate values collapse in some of the most affected regions and we will see real estate values increase in regions that benefit from the warming climate. We will see massive capital investments made in protecting critical regions and infrastructure. We will see nuclear power make a resurgence around the world, particularly smaller reactors that are easier to build and safer to operate. We will see installed solar power worldwide go from ~650GW currently to over 20,000GW by the end of this decade. All of these things and many more will cause the capital markets to focus on and fund the climate issue to the detriment of many other sectors.

For the rest of Fred’s predictions, click here. These are always great reads.

Last year, the formerly Chicago-based hedge fund Citadel announced that it would be moving its global headquarters to Miami. (Though to be clear, the company still has an office in Chicago.) Today, the Miami housing market is feeling the effects:

“They’ve been buying here aggressively,” said Michael Martinez, a real estate agent with Sotheby’s in Miami, who recently brokered the sale of a $5mn home in Coconut Grove, a quiet salubrious suburb, to a Citadel employee. Most of the luxury homes he has sold in recent months have been to hedge fund buyers, half of them from Griffin’s firm, he estimates. “The Citadel migration is definitely occurring.”

But it's not just Citadel.

According to another agent quoted in the article, there are many other "hedge fund buyers" active in the market, and many/most of them are buying all cash. In desirable suburbs like Coral Gables and Coconut Grove, homes between $3-7mm now account for about 40% of all listings.

I remember visiting family in Miami in and around the GFC of 2007-2008. It was at this time that I really fell in love with the place. You could see how it was using art and culture to carve its identify. It was (and still is) this really exciting and sexy place.

But it was also reeling from the GFC. I remember seeing listings for large and newish 2-bedroom waterfront condos for ~US$150k in some areas. If I had any money, this likely would have been a smart move given how Miami has grown since then.

So I think this story is less about the Citadel effect and more about Miami's continued rise as a global city and global financial center. Notwithstanding the whole climate risk thing, this city region has some pretty powerful tailwinds.

Photo by Ryan Parker on Unsplash

Monroe County, Florida, which is the county that includes the Florida Keys, held a public meeting at the end of last month to discuss what they are going to do to respond to climate change. The agenda can be found over here. According to this article in Grist, it was a seven-hour public meeting and the overall tone was something along the lines of this:

“The water is coming and we can’t stop it,” said Michelle Coldiron, mayor of Monroe County, which encompasses the Keys. “Some homes will have to be elevated, some will have to be bought out. It’s very difficult to have these conversations with homeowners, because this is where they live. It can get very emotional.”

In attendance at the public meeting was a scientist from the National Oceanic and Atmospheric Administration (NOAA), who outlined that they are expecting an additional 17 inches of sea level rise by 2040. This is the "intermediate high" scenario based on the below chart.

Which is why the county is looking to spend $1.8 billion over the next 25 years to raise some 150 miles of roads and deploy a bunch of other fixes that include things like new drains, pumping stations, and vegetation -- all of which are of course intended to mitigate the impacts of sea level rise.

One problem, which shouldn't be all that surprising, is that the county doesn't have the money to pay for all of this. And as the quote at the beginning of this post suggests, part of "this" includes buying out many of the homes. Presumably these are the higher risk homes where there are no clear alternatives.

This is a problematic situation. Because as time goes on, one would expect the tax base here to start to decreasing. Both as homes get bought out and as overall housing demand weakens. There are also financing and insurance considerations. Already the Keys have some of if not the highest insurance premiums in Florida.

As I understand it, the Florida Keys are one of the most vulnerable areas in North America when it comes to sea level rise. And so unfortunately, the public meeting that took place two weeks ago could very well be considered a leading indicator for what's to come.

I have stayed at two hotels over the last month where I did not need to interact with a human as part of the check in process. And in one of those two instances I didn’t even need to interact with a computer at the hotel.

My room key was issued to me through an app and I used that (and Bluetooth) to open my hotel room door (after the app, of course, notified me that my room was ready).

This is prediction #2 in Fred Wilson’s annual roundup of what is going to happen next in the world. Automation is reducing the costs associated with operating many businesses. Who is going to be the beneficiary of this consumer surplus?

The other prediction that should interest most of you — because the impacts would be widespread — is this one here regarding climate change:

The looming climate crisis will be to this century what the two world wars were to the previous one. It will require countries and institutions to re-allocate capital from other endeavors to fight against a warming planet. This is the decade we will begin to see this re-allocation of capital. We will see carbon taxed like the vice that it is in most countries around the world this decade, including in the US. We will see real estate values collapse in some of the most affected regions and we will see real estate values increase in regions that benefit from the warming climate. We will see massive capital investments made in protecting critical regions and infrastructure. We will see nuclear power make a resurgence around the world, particularly smaller reactors that are easier to build and safer to operate. We will see installed solar power worldwide go from ~650GW currently to over 20,000GW by the end of this decade. All of these things and many more will cause the capital markets to focus on and fund the climate issue to the detriment of many other sectors.

For the rest of Fred’s predictions, click here. These are always great reads.