Home sales in the Hamptons just slumped to the lowest level in 7 years
- At the beginning of 2019, home sales in the Hamptons declined for a fifth straight quarter to the slowest pace in seven years.
- That helped pull the median sales price down to $850,000, about 5.5% lower than the same period a year ago.
- The tax overhaul passed in 2017 may have softened demand for more expensive homes, according to economists.
Americans still wanted in on homes in the Hamptons at the beginning of 2019, but they weren't willing to pay as much as in the past.
The chain of seaside communities on the eastern end of Long Island saw inventories jump between January and March as quarterly sales fell to the lowest level in seven years, according to a report released Thursday by Miller Samuel Inc. and Douglas Elliman Real Estate.
Demand for the most expensive properties plummeted in the first quarter, with the lowest number of sales at or above $10 million in six years. But purchases of homes priced below $1 million rose to the second-highest level in five years.
Economists said the tax overhaul passed in 2017 may have softened demand for more expensive homes. It effectively increased after-tax home-ownership costs by capping the amount of mortgage debt on which interest is deductible, doubling Americans' standard deduction and lowering marginal tax rates.
"It's true that the limited deductibility of state and local taxes in some markets has caused a drag on demand for high-cost housing," said Odeta Kushi, the deputy chief economist at First American. "So called 'tax refugees' are choosing to find more after-tax, cost-effective places to live and work as a result of the changes in the tax code."
A recent New York Federal Reserve study found the largest sales declines across the US last year tended to be in the areas with the highest listing prices and those that had relatively high state and local taxes, where homebuyers would have been most affected by the changes.
The fifth straight quarter of declines helped pull the median sale price of homes in the Hamptons down to $850,000, about 5.5% lower than the same period a year ago.
Activity in the Hamptons could pick up heading into the spring and summer, said Carl Benincasa, Elliman's regional vice president of sales for the region.
"And now that tax day is behind us and consumers are figuring out the effects of the new tax law, we may see some pent-up demand start to affect sales in the coming quarters," Benincasa said.