White Plains resident Lou Tallarini is a real estate investor and expert, the president and CEO of advisory firm Real Property Investors, Inc., has been an influential figure in the Columbus Foundation since 1979, and was just recently been named to the board of directors at Westchester’s Country Bank. (Among his many local business ventures Tallarini at one time owned Westchester Illustrated, an early precursor to Westchester Magazine itself!)
Country Bank president and CEO Joseph Murphy, Jr. praised the selection of Tallarini to the board, adding, “His expertise in real estate matters adds value to the bank.”
That expertise is what helps Tallarini explain why real estate sales take a winter dip, and more importantly how homeowners can use that knowledge to their advantage.
Chiefly, he says, the reason Westchester sees slower real estate sales in winter is because most of the buying in our area is done by families: many residents are willing to buy a new home if it means getting their child into a better school district, but enrollment cutoff dates in late fall tend to mean a winter move would be too late in the school year.
However there are many contributing factors in deciding when to buy a home, Tallarini says, some as simple as it being a fairly hectic time of year for families:
“”We have several religions that have holidays in December and January, and [people] are just not in the mood to deal with what we know is a major disruption in one’s life.”
That being said, Tallarini reemphasizes that a chilly season is no reason to get cold feet about selling your home. While it’s true that most families prefer to not move during the school year, thanks to its international schools, Westchester sees a relatively steady influx and outflux of non-native families less beholden to the traditional September-to-May educational calendar. Additionally, just because there is lower inventory of listed homes in winter, doesn’t necessarily mean there is less demand for homes.
“There are many reasons why people move.” Job or career changes, financial shifts, even a new baby or other change in a family’s living situation can set a family to wanting a new home, and these events aren’t confined to just the warmer months.
As a result, Tallarini says, “There’s always a buyer for the right kind of real estate.”
Homeowners can leverage this, knowing that prospective buyers during the winter months are often in more immediate need or are otherwise more serious about their offers. Owners looking for a faster sell with less haggling may find cold weather a rather hot time to sell properties.
And that might be very important this winter season in particular.
Analysis of next year’s coming changes to the federal tax code — particularly those limiting property tax deductions — are set to disproportionately affect a large number of Westchester homeowners. Asked how this could affect the commercial and residential real estate markets in Westchester, Tallarini says the general consensus is, “We don’t know.”
“I think that sellers are going to be resistant to lowering prices for those buyers who are tax-sensitive, who have done the analysis on their disposable income.”
“A house that you might want to own in Westchester, that has twenty-five or forty or fifty-thousand dollars in taxes … you’re only getting a ten-thousand dollar deduction now. So what’s the net economic impact of that? I don’t think we know. When I saw a residential broker I know recently, I asked him. He said, ‘You know, Lou, people buy for a lot of reasons, and maybe tax-driven reasons aren’t the majority of those reasons.’”
For example, one of the mitigating factors of the joint GOP tax plan is that homeowners can still deduct interest on mortgages up to $750,000. For homeowners still in the process of paying off their mortgages, this is a crucial deduction on their yearly taxes.
“You buy a million-dollar house,” Tallarini posits, “you get a 75 percent loan to value. You still get a 750 mortgage and deducting interest.” Unfortunately, “we have a lot of communities where a lot of houses sell for one-and-a-half or two or three million dollars. …I can’t imagine how it doesn’t decrease the value or damper the value of the higher-priced homes.”
While property owners looking at multi-million-dollar homes might be less concerned about the cap on tax deductions, the greatest strain will likely fall to middle-income households with current tax values just over that threshold. $2,000 might not be a tremendous difference on a home valued at $22 million, but a family used to getting back $12,000 in property tax deductions will see that is a large percentage they won’t be getting back anymore.
“It’s — no-question — going to hurt,” Tallarini says. “Hopefully some of the other benefits to middle-income families will equalize that a bit in our community.”
Even Governor Cuomo’s executive order allowing pre-payment of 2018 taxes in some municipalities was a stopgap at best. Tallarini notes that it was only available for this year and only to homeowners who could already afford to pay next year’s taxes and this year’s at once. “You gotta write the check,” he says.
“I look at the tax law as kind of an equalization law, where if you live in Missouri or Illinois or parts of the Midwest your total taxes — real estate and local — might be $10,000 or $12,000 or $8,000. In New York and other older communities, we have this benefit, because our infrastructure is older, our administrative costs are impacted by many sweetheart pension fund and union deals, and we’re paying a lot more for services than they do in different parts of the country. I think the perspective of Congress is that it was more of an equalization, that New York and California and maybe some of the East Coast cities had a great benefit to live on a higher plane at the cost of the Midwestern and the states that don’t have that old infrastructure that’s very costly.”
If that seems a fairly bleak forecast, remember what Tallarini said about real estate sales relying on a host of factors.
“The other thing is Westchester is such a desirable place to live. I’ve lived here all my life except for a year or two years I spent in the army and a year or two I lived in New York City, but it’s unparalleled. It’s amazing. Quality of life is something people will pay for.”