In Real Estate In-Depth, editor John Jordan keeps us abreast of the real estate market. This one is focused on the counties in the Hudson Valley area of New York. As we all figured, the SALT deduction cap is having an effect on “luxury market” type homes:
The data keeps indicating that the changes to the SALT deduction (cap of $10,000 on state and local tax deductions) imposed by the federal tax reform law is having an impact on some segments of the housing market in the area.
The latest statistics that seem to back up that theory come from the Westchester County Clerk’s office, which reported that for the months of October 2018 through March 2019, mortgage tax collections in the county were down more than $500,000 from the same period last year.
The real estate market overall has seen a drop in the volume of sales. The latest Westchester County mortgage tax data was part of the State Of New York Mortgage Tax Semi-Annual Report, prepared by the Westchester County Clerk’s Office.
The winter months of December 2018 and January and February of 2019 saw the most significant drops in the amount of tax collected, as compared to the same months the previous year. In December of 2017, the County of Westchester received $1,683,508.44 in mortgage tax. However, in December of 2018, only $ 1,271,006.45 was collected, a drop off of $412,507.99. January and February saw declines of $212,488.14 and $239,710.35 respectively.
“We are seeing the effects of the SALT reduction here in Westchester County,’ said Westchester County Clerk Timothy C. Idoni, whose office collects mortgage taxes for the county. “Winter months always see a decline in home sales, and the weather was particularly bad this winter, but it is hard to deny that the new tax laws are a significant factor. The drop in the volume of sales was noticeable as prices were relatively consistent.”
There were some positives in the report as well. The month of March in 2019 saw an increase from 2018 with a $46,105.76 increase. “Hopefully it is a sign of good things to come,” said Idoni.
The first quarter 2019 home sales report released in early April by the Hudson Gateway Multiple Listing Service noted that there has been a decline in the home sales in Westchester County.
Westchester County’s single-family home sales fell 5.6% in the first quarter of 2019 as compared to a year earlier. Condo and cooperative sales in Westchester County posted during the first three months of this year declined by 1.5% and 1.3% respectively.
Residential brokerage firm Houlihan Lawrence stated in a report in Real Estate In-Depth that the luxury market in Westchester has been suffering from declining sales. The brokerage firm said one factor in the sales dip in the luxury market has been new limitations on property tax deductibility stemming from the new federal tax law. “Many would-be move-up buyers, an important sector in the luxury market, are now more likely to stay in their current home, perhaps adding a bedroom or renovating the kitchen, rather than trade up to a larger and more expensive one,” Houlihan Lawrence stated in its first quarter report.
Joseph Rand, managing partner, Better Homes and Gardens Rand Realty, said in the Real Estate In-Depth report that when the SALT cap was first announced he expected a “modest but meaningful impact” on the luxury market with a slight uptick in listings and a decline in buyer demand.
He said that scenario seems to be playing out. “What you are seeing is not that it (the SALT cap) has crashed the market, but it is definitely holding the market back,” Rand said.
- John Jordan