Tax reform may be to blame for relatively flat housing sales in the higher-end markets of the Hudson Valley in the first quarter of 2019, local data says.
The state and local tax deductions cap (“SALT Cap”) impacted housing sales and price appreciation. Sales were down almost 5% in Westchester, 5% in Putnam, and more than 15% in Dutchess, but they were up 8% in Rockland and over 1% in Orange.
The SALT Cap limits tax deductions on tax returns to $10,000. Taxpayers in higher-end markets — like single-family homebuyers in Westchester County — are more likely to itemize their taxes, seeing in black-and-white the impact made by the cap, and adjusting their spending accordingly. Homeowners and homebuyers in the lower-priced markets, however, would most likely have lower income levels and take the standard deduction, with little effect from the SALT Cap.
The housing market in Westchester and the Hudson Valley was a “tale of two markets” in the first quarter, with a sharp divergence between higher-priced and lower-priced counties, according to a report published by Better Homes and Gardens Real Estate Rand Realty.
Lower-priced markets saw more robust rises in price than higher-end markets in the first quarter of the year. Westchester’s average prices were down just a bit; conversely, prices rose sharply nearly everywhere else in the Hudson Valley. Putnam saw a jump of almost 4%; there was a rise of more than 4% in Rockland, 8% in Orange, and 11% in Dutchess.
The Rand report explains that “the seller market fundamentals are very strong: the economy is growing, interest rates are near historic lows, inventory is relatively low, and homes are still priced well below their highs. Accordingly, we expect a relatively robust spring market throughout the region.”