The Better Homes and Gardens Rand Realty second-quarter market report for the lower Hudson Valley shows the condominium and co-op market segments soaring while the cap on federal income tax deductibility of state and local taxes (SALT) continues to undercut the upper end of the market, especially luxury single-family homes.
Joe Rand, chief creative officer for the organization, described the luxury market as being “spooked” by SALT and told the Business Journal, “I think the market is fundamentally strong. We’ve got pretty robust demand at most price points. You’ve got a strong economy, you’ve got low interest rates.”
In Westchester, the report shows closed sales of co-ops at 489 in the second quarter of 2019, up from the 455 sold in the second quarter of 2018. Condo sales were also up, 346 sold compared with 324 in the same period a year ago. The average selling price for condos soared 14.8% to $481,557 with the median price up 8.1% at an even $400,000.
Co-ops gained 6.4% in the average sale price to $217,489 with the median price in the second quarter of 2019, up 5.9% at $180,000 when compared with the second quarter last year. Single-family sales stood at 1,496 for the second quarter, down from the 1,551 sold in the second quarter of 2018. The average selling price also declined, down 4% at $885,701. The median selling price dropped 1.1% from 2018’s second quarter, coming in at $705,000.
In Orange County, condo sales were up 2.7% at 114 units with the average selling price up 19.6% at $214,606 and the median sale price up 16.1% at $195,000. Single-family sales, however, dropped 10.9% to 851 units with the average selling price up 2.8% at $282,301 and the median price up 5.6% at $265,000.
In Dutchess, the condo market was on the plus side with closed sales up 6.4% at 149, the average sales price up 2.9% at $209,415 and the median selling price up 3.7% at $184,000. There was a 10.4% drop in sales of single-family homes to 500 with a 4.8% drop in the average selling price to $324,752 and a 2.7% gain in the median sale price to $288,500.
In Putnam, the average selling price of single-family homes remained essentially flat at $396,425 with 7% more sold in the second quarter of 2019 than in the same period of 2018. The median sales price moved up 3.5% to $366,250, according to the report.
Rockland experienced declines in the number of sales in both the single-family and condo segments, down 1.9% and 5.4% with 459 and 123 closed sales, respectively. The average price for a single-family home was down 3.7% at $491,513 and the median price was down 4% at $450,000. Condos saw average selling prices jump 16.4% to $297,223 while the median selling price went up 16.1% to $252,000.
“We have right now a classic sellers’ market in the condo and co-op markets,” Rand said. “We have extremely low inventory, historically low rates, high levels for demand, a strong economy and that is driving really strong sales and price appreciation in the condo and co-op markets.”
Rand suggested the single-family market also would be soaring were it not for the SALT deduction cap. That provision in the tax reforms passed in 2017 when the Republicans controlled both houses of Congress limits deductibility of state and local taxes to $10,000 on federal income tax returns.
“I think a lot of buyers in the higher end are spooked by the SALT cap. They’re at income levels that make it much more likely they’ll itemize their taxes. The average homebuyer buying a $300,000 home is probably making $100,000, maybe a little bit more. That person probably takes the standard deduction. So, you go to Orange County, you go to Dutchess County, you go farther upstate, the SALT cap doesn’t really affect most homebuyers because they’re not really itemizing their deductions anyway. But, in Westchester, where the average sale price is $800,000, almost everybody in the higher single-family market itemizes their taxes and they’re spooked by the SALT cap,” he said.
Rand said that while the higher end of the market may be comparatively slow, it’s not terrible and the lower end of the market is very strong.
“You’re seeing a lot of activity at the open houses, a lot of activity on the phones. Everywhere, except the very high end of the market, you’ve got a pretty strong sellers’ market. It’s just that it’s being masked by the weakness at the high end.”