[This is the first installment of a planned monthly post by real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller. Today Jonathan examines the $5M+ Hamptons market.]
This week, I thought I'd show how the other half (the top 4.9%) live—well, actually, how they react to large external events like economic collapse and repeated fiscal cliff drama. We seem to be having these significant events on a 2-year cycle now, at least for the past 6 years. The end of the year seems to be where a lot of the drama occurs.
Lehman Collapse 3Q 2008 While the number of $5M+ sales was lower than the any quarter in the prior 2.5 years I have analyzed this metric, the rebound began almost immediately in the following spring. This is all the more surprising since this was a Wall Street event--the final punctuation mark for the beginning of the global credit meltdown. Sales volume quickly returned to levels seen in the two years prior to Lehman.
Fiscal Cliff 2010 Although the fiscal cliff was averted, there was a surge in demand at the end of 2010 as buyers and sellers were anticipating possible tax exposure--namely capital gains.
Fiscal Cliff 2012 After a vicious election cycle with the threat of the fiscal cliff beaten into the masses since the summer of 2011 and the US elections in the fall of 2012, there was a much higher expectation that the fiscal cliff would occur. Changes in capital gains, gift tax exposure etc. and the strong belief that the fiscal cliff would not be resolved--2012 would represent a lower tax environment than 2013--$5M+ sales surged and a release of pent-up demand ensued.
Post Fiscal Cliff 2013 The "poached" activity in 1Q 2013 was followed by heavy 2Q 2013 volume, but with perhaps lower volume than if there was no fiscal cliff pulling transaction back into 2012. So far there have been few trophy sales--Steve Cohen is one--but a fairly heavy volume of upper end activity to date.
Takeaway: Who says rising taxes don't modify real estate purchase behavior at the top of the market?
· Matrix [MillerSamuel]