2017 ended with Sales Volume up an impressive +16% versus 2016 to $1.47 billion, with unit sales remaining basically flat year-to-year. Also up was the Average Sale Price, +17.1%, and the Median Sale Price, +5.9%. New State and Federal Tax Laws have helped to fuel this surge…
Unit Sales overall were “up and down” all year, with the end result being -0.9% versus 2016 or, basically flat, with 570 units sold in 2017 versus 575 in 2016. Unusually, the $0-3M range specifically ended down an average of -7.33% year-to-year while most price ranges $4M and up, ended in the plus column. This $0-3M range is the one that has traditionally driven the Greenwich market.
Many think that this was due to the unsettled CT State budget. Later in the fall the State budget was passed and this certainty likely contributed to a huge +73% bump in November Sales. Also unusually, what drove the Greenwich Real Estate Market in 2017 were upper end sales of over $5M. This has resulted in the dramatic increase in Sales Volume.
The great news about the State budget is that it was passed with Veto-Proof majorities in the Senate and the House. And, it was balanced without raising taxes!! Advantages in the new State Budget for Greenwich:
- The Estate Tax or “Death Tax” has been raised from being imposed on estates worth $2M or more to estates worth $5.49M or more. Hopefully this will “stem the tide” of the number of people who are relocating to other states– like Florida—that have a more beneficial estate tax structure and encourage CT residents to remain, to help overcome our recently announced State deficit.
- A hard spending cap has been instituted on State employees and teachers’ pensions and on State bonding.
- All union contracts must now be approved by the Senate and the House and are valid for only 4 years at a time.
- The State is paying for 80% of New Lebannon School’s construction costs.
Meanwhile, high end home sales came back to life in 2017, with 4 Greenwich estates garnering over $20M each! This remarkable market vitality can be attributed to 2 things:
- Sellers have finally pulled themselves out of their pre-recession mindset and have become more realistic about today’s Greenwich market. And, opportunistic Buyers have responded favorably! For example, billionaire Thomas Peterffy paid $45M for his Conyers Farm estate in 2004 and it just sold for $21M. Peterffy clearly became more realistic over the course of its 2-year listing period. The Original List Price was $65M in 2015.
- A stronger Economy and Stock Market, which have been fueled at least in part by the lowering of the corporate tax rate by the Federal government from 35% to 21%.
Changes in the new Federal Tax Law, some favorable and others not- so- favorable for homeowners, include:
- Capital Gains Exclusion: remains as $250,000 for individuals and $500,000 for married couples on the sale of a home. Both the House and Senate sought to make it much harder to qualify for this exclusion.
- Mortgage Interest Deduction: maximum Mortgage Deduction amount has been decreased to $750,000 from the previous $1M limit. The House bill sought a reduction to $500,000. This will increase homebuyers’ expenses. Homes under $2M typically account for the most units sold in Greenwich so, this will most definitely have an impact on real estate here.
- State and Local Tax (SALT) Deductions: both Property Taxes and State and Local Taxes remain deductible, with a combined new limit of $10,000. Both the House and Senate bills sought to eliminate the State and Local Tax Deduction completely. This will affect buyers of more expensive homes but, the significantly lower Property taxes in Greenwich will always be an advantage versus West Chester taxes. Any home assessed in Greenwich at a Fair Market Value of more than $1.2M will have a tax bill of greater than $10,000. Bottom line: mostly everyone in Greenwich will see that a sizeable portion of their State income tax and Property taxes are not deductible.
Despite the impact that all of these State and Federal Taxes will have on Greenwich residents, living in Greenwich has many advantages: its close proximity to New York City, low property taxes, superior parks and beaches, recreational programs, schools, private clubs, shopping and restaurants. With all that Greenwich has going for it, combined with a stronger economy, we can look forward to a Great 2018!!
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