Why Westchester homes are getting battered by “dramatic price reductions”
The new federal cap on state and local property tax deductions is forcing sellers to slash prices dramatically
UPDATED, Aug. 7, 12:37 p.m.: Westchester residents, many trying to avoid the hefty tax bill that 2018 promises, are finding themselves in an unforgiving buyers’ market.
In Scarsdale alone, prices dipped 5 percent in the first six months of 2018, while Mamaroneck saw a 13 percent drop, according to Bloomberg. The number of homes selling in the county fell 18 percent in the second quarter of 2018, with those asking between $1.5 million to $3 million faring the worst.
The major push factor for sellers to plow ahead despite plummeting prices is the GOP’s new tax law which slapped a $10,000 cap on state and local property tax deductions, which means homeowners in areas like Westchester, where property taxes can run up to $50,000, are feeling a serious crunch.
As a result, the number of homes for sale in Westchester has been increasing: in late June, inventory was up 5 percent compared to last year and, for homes priced between $2-2.5 million, listings were up 26 percent.
Buyers are feeling no sympathy for homeowners who bet on turning a neat profit when they decided to sell off their prestige address. Compass broker Angela Retelny says her clients tell her “‘Look, I’m not going to spend more than $35,000 in taxes.’ … Houses are just being dismissed, even though they’re superior homes, and they have to be reduced — because their taxes are just way too high for the price range.”
With buyers taking a hard line, sellers are being forced to bend, according to her. There are “dramatic price reductions every single day — every hour, pretty much,” she told Bloomberg.
Yorktown Heights property attorney Matthew Roach recalled one client who sold his home of 25 years immediately after the GOP’s tax law was passed. His home had property taxes over $50,000 and he was planning to move to Brooklyn, pay $10,000 in rent and never buy another home.
“We all think next year is going to be a tough year for real estate sales,” Roach told Bloomberg. [Bloomberg]
Correction: A previous version of this post incorrectly stated there had been an 18 percent drop in Westchester home prices. The 18 percent drop was, in fact, for the number of Westchester homes that sold.