Are high property taxes behind the new decline in luxury home sales in the Hamptons?
A few years ago, renovating and flipping ultra high end homes in the Hamptons was highly fashionable. That may have changed. General demand for the most expensive homes on Long Island may be diving in 2017. That may be evidence that even the wealthiest and most optimistic are tired of the area’s equally expensive tax rates.
According to Bloomberg just 27 homes sold for over $5M in the Hamptons during the first quarter of 2017. That has now begun to drag down the average home sales price, now down almost 9% to just $1.72M. Zillow reports East Hampton has now moved into a ‘buyer’s market’, after local average house prices have soared by almost $300k since 2013, and sit around $100k higher than in 2008. Zillow says the health of the East Hampton market has crashed by about two thirds since 2010, and is just a quarter as healthy as the national US housing market.
This is despite more optimism in the overall US economy, and Wall Street brokers and investors enjoying setting new records. There has been some growth in the sales of cheaper Hamptons homes in the first quarter of 2017. So, it seems that even for those whom normally aren’t fazed by the price of anything, Long Island’s notoriously high property taxes may finally just be too much. When that starts impacting the market, you know it’s out of control.
The Hamptons is unlikely to ever go out of fashion. It could, but it’s highly unlikely. Still, that doesn’t mean that smart buyers and investors won’t wait, and put some pressure on the market and local government to correct things. They can influence the market just by sitting on the sidelines. However, that may not change things for other areas of Long Island where housing is desperately needed.
Buying a less expensive home is one way to minimize the impact of property taxes. Others may wait and see if property prices come down before buying. Those that already own a home on Long Island should know that they have the right to appeal their annual property tax bills too. The data shows that this can yield substantial savings. With it potentially becoming harder to sell some types of properties over the next few months, more local homeowners may want to have their tax bills reviewed and challenge them to minimize their holding costs.