It appears the drop in home sales that has afflicted Manhattan and wealthy tri-state-area enclaves like Greenwich, Conn. is spreading to Westchester County, the suburban enclave directly north of the Bronx According to Bloomberg, sales fell 18% in the second quarter compared with a year earlier, marking the fourth straight quarter of declining sales.
Purchases in the northern suburban county — which shoulders the biggest property-tax burden in the U.S. — plunged 18 percent in the second quarter from a year earlier, the most since 2011, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. It was the fourth consecutive quarter of sales declines.
“We’re seeing buyers take a second to understand the math,” Scott Elwell, Douglas Elliman’s regional manager in charge of Westchester and Connecticut, said in an interview. “They’re spending more time with their accountants and really understanding how this plays out.”
The reason, according to Bloomberg, is that home buyers have been deterred by the county’s high property taxes. Federal rules approved in December set a $10,000 limit on deductions for state and local taxes, which is nearly half the $17,179 average tax paid by Westchester residents in property taxes last year.
The tax wasn’t passed until December, but details about the proposed cap on the SALT deduction surfaced months earlier. Also, the fact that home prices in the area have been rising much more quickly than incomes could have something to do with it. But even in towns like Scarsdale that are traditionally havens for Wall Streeters and other members of the monied elite saw a significant drop in sales. And according to preliminary data
Even before the tax changes, years of rising values were already making Westchester less affordable, said Jonathan Miller, president of Miller Samuel. The median price of homes that sold in the three months through June climbed 5 percent from a year earlier to $525,000, according to the report. Prices have increased in all but three quarters since the beginning of 2013.
The drop in transactions is likely to continue. On June 30, there were 8.8 percent fewer Westchester homes in contract than there were on the same day last year, brokerage Houlihan Lawrence said in its own report. The biggest decline was for homes priced from $1.5 million to $1.99 million. Pending deals in that range fell 17 percent to 94.
In Scarsdale, home to many Wall Street executives, completed sales in the first half of the year were down 20 percent to 88 transactions, Houlihan Lawrence said. The median price there dropped 5 percent to $1.57 million. In nearby Mamaroneck, closings rose 25 percent to 127. The median price of those deals dropped 13 percent to $1.19 million.
While the reasons why cashed strapped millennials aren’t buying are obvious (they don’t have any money), maybe wealthy people who have an understanding of how markets work aren’t buying because they think that they might be able to get a better deal if they wait a year or two. And they might be right, especially if Republicans retain control of Congress in November, which would greatly reduce the likelihood that the Trump tax cuts will be repealed.