Pandemic-fueled surge in East End real estate market pushes preservation tax revenues to new record highs

The red-hot real estate market on the East End continues to push home prices higher and break revenue records for the Peconic Bay Community Preservation Fund, which is generated by a 2% tax on real estate transfers in the five East End towns.

Community Preservation Fund revenues generated in the first five months of 2021 were double what was generated in the first five months of 2020 — and the January-May 2020 CPF tax receipts were already the highest five-month total in the history of the fund, which dates back to 1999.

Overall, last year’s CPF revenues were higher than in any other year in the program’s history, thanks to rising home prices and high volume fueled by an exodus from New York City to the East End as the coronavirus pandemic swept through the New York metro region. The number of sales set records and the median home price on the North Fork surged by 23.8% in 2020 to a record of $805,000, according to a report prepared for Douglas Elliman Real Estate by Miller Samuel Real Estate Appraisers and Consultants. The median sales price in the Hamptons in 2020 climbed 54.5% to a record $1.4 million, according to Elliman.

And in 2021, the trends continue, with the number of sales on the North Fork up nearly 60% in the first quarter of 2021 compared to the same period last year and median sale price climbing to $751,000 for the quarter, up 23.4% year over year, according to a report prepared for Douglas Elliman Real Estate by Miller Samuel Real Estate Appraisers and Consultants. The Hamptons saw “runaway growth” in the $1 million to $5 million range in the first quarter, an Elliman report said.

According to the Assemblyman Fred Thiele, from January to May this year the fund generated a record-breaking $93.69 million, compared to $45.43 million in the first five months of 2020 — and that sum, a 54% increase over the first five months of 2019, was itself the highest-ever five-month total in the history of the CPF.

Since its inception, the CPF has generated $1.694 billion.

The CPF was established by voter referendum in 1998, approving legislation passed by Thiele and former State Sen. Ken LaValle, to finance farmland and open space preservation on the East End. In 2006 the CPF was extended from 2020 to 2030, and in 2016 it was extended to 2050. Voters in 2016 also authorized the expenditure of up to 20% of CPF revenues on water quality improvement projects. In each instance, the CPF referendum passed by wide margins among voters of the East End towns. Each town separately manages its fund and administers the programs it finances.

The town-by-town breakdown of CPF revenue generated January-May 2021, according to data provided by Thiele:

Town 2020 2021 Percent Increase
East Hampton $12.34 million $31.04 million +151.6%
Riverhead $1.71 million $2.86 million +67.3%
Shelter Island $0.69 million $2.31 million +234.8%
Southampton $27.6 million $51.62 million +87%
Southold $3.08 million $5.85 million +90%
Total $45.43 million $95.68 million +106.2%

“Revenues for the CPF continue to reflect the significant increase in real estate activity on the East End since the advent of the COVID-19 pandemic,” Thiele said in a statement. “This marks the 10th straight month that revenues have exceeded $10 million per month. The last eight months have all exceeded $15 million per month.”

Alek Lewis contributed reporting for this story.

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