MAHOPAC, N.Y.— For the first time in eight years, mortgage tax revenue—an important source of revenue for municipalities when preparing budgets—has climbed past the million-dollar mark in the town of Carmel, according to comptroller Mary Ann Maxwell.
Figures released by Maxwell show that 2016 mortgage tax revenues in Carmel topped out at $1,012,000, more than $300,000 above what had been anticipated in the budget. The last time the town’s mortgage tax revenues climbed past the $1 million mark was in 2008 when they came in at approximately $1.6 million. In 2007, they came in just under $2 million.
But ever since the recession hit in 2008 and the bottom dropped out of the real estate market, mortgage tax revenues have plummeted, not just in Carmel but nationwide and it’s wreaked havoc on municipal budgets.
“When the revenues were low in ’09 and ’10 and ’11, we would have to raise taxes to offset that,” Maxwell said. “It is our biggest source of revenue outside the tax levy (total money collected through property taxes).”
The boost in mortgage tax revenue seems to reflect the fourth-quarter Putnam County real estate sales information provided in the quarterly Elliman Report. Established in 1911, Douglas Elliman Real Estate is largest regional and the nation’s fourth largest real estate company, with more than 80 offices throughout New York City, Long Island and Westchester and Putnam counties, as well as other parts of the country.
The quarterly report, released last week, states that Putnam County experienced the most fourth-quarter real estate sales—310—in two decades. That’s also nearly a 4 percent jump from the same quarter in 2015.
“In the outlying suburbs, we are seeing multi-decade sales highs,” said Jonathan Miller, president and CEO of Miller Samuel Inc., the real estate appraising and consulting firm that prepares the report for Elliman. “There is a laundry list of [sales] records [being set] that began in the third quarter of 2015 and the year-to-year sales was significant. And it was across the region: Westchester was the first county where it was significant, but it came to Putnam as well.”
Miller said the boost in sales numbers in Putnam County and the surrounding area can be attributed mostly to people who are first-time buyers or who are looking to upgrade but were priced out of the New York City market and turned to the suburbs as an alternative.
“The housing supply in the city is slow to react to market conditions,” Miller said. “We have had an affordability crisis [in the city] for the last five years. I described it as consumers hit an affordability threshold. I don’t think [the phenomenon] is unique to New York. We are seeing these patterns in Los Angeles and San Francisco as well.”
Miller said there has been an emphasis on “in-town development” by suburban municipalities that has driven homebuyers to move to there.
“It’s the walkability aspect—being able to walk to shopping or to the train station,” he said. “Multifamily housing is happening. Where I live in Fairfield County [Connecticut], you can see that happening. The suburbs are now much more competitive. Many of the aspects that attracted people to the city are being emulated in the suburbs. It’s a macro-trend playing out across the country. You are seeing a mix of residential and retail.”
Miller notes that his report also shows that while sales and demand for homes have increased, there has been a sharp decline in inventory. Listing inventory fell by 30.4 percent. Yet, he notes, prices haven’t increased.
“Why aren’t prices rising? They should be skyrocketing,” Miller mused. “It is because there is still a lot of slack accumulated from a lackluster period. It will take a year or more to see more price growth. It is in a repair process. The change in sales activity won’t have a big impact on price trends for another 12 to 18 months. So, for 2017 the prospect of rising prices is on the horizon.”
Miller said it’s not just the migration of homebuyers from the city to the suburbs that has aided real estate growth throughout the country in general and in Putnam County in particular. He said the improved economy has also played a role.
“As a general sense, household income rose last year after being dormant for so long and that helps with the mobility of consumers,” he said. “There is the anticipation of even better economic conditions.”
Maxwell said Carmel has apparently benefited from the growing real estate market in the region.
“You can tell based on the [mortgage tax] checks we are getting,” she said.
Maxwell said she remains cautiously optimistic that the trend will continue. For the 2017 budget, she and the Town Board have projected $900,000 in mortgage tax revenue. That’s $200,000 more than they budgeted for 2016, but about $100,000 less than they actually received.
“I am hopeful it will keep increasing,” Maxwell said. “I just got December’s figures and it was $69,000, which was lower than I thought it would be based on the prior months where is was closer to $100,000. So, it would be nice if we could continue in [an upward direction]. That would be great.”