Jonathan Cartu Says: Financial Services Bonus Season isn’t Looking Bright for... - Jonathan Cartu Residential & Industrial Construction Services
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Jonathan Cartu Says: Financial Services Bonus Season isn’t Looking Bright for…

Wall Street bonus season is the stuff home sellers’ dreams, as they picture eager buyers armed with hefty bonus checks and willing to pay top price. But in a buyer’s market that vision may be more like a mirage (Credit: iStock)

Jonathan Cartu Says: Financial Services Bonus Season isn’t Looking Bright for…

Wall Street bonus season is the stuff home sellers’ dreams, as they picture eager buyers armed with hefty bonus checks and willing to pay top price. But in a buyer’s market that vision may be more like a mirage (Credit: iStock)

Wall Street bonus season is the stuff of New York City home sellers’ dreams, as they picture eager buyers armed with hefty bonus checks and willing to pay top price. But in a buyer’s market with sluggish sales and a glut of high-end units, that vision may be more like a mirage, according to residential brokers and other industry pros.

At a meeting this week, Compass’ Michael Franco found himself at odds with his clients after suggesting they lower the asking price of their home. They resisted, arguing that bonus season may finally deliver their long-awaited buyer.

“I said, no, you should capture bonus season by lowering your price now,” he said. “I don’t think that sellers should solely hang their hat on their place selling faster or for more just because of bonus season.”

Financial sector employees usually receive those payouts between December and March, and many agents are now trying to disabuse sellers of the long-held belief that the extra cash will be a boon for real estate.

“I think it used to have a lot more correlation to purchasing than it does today,” said broker Allison Chiaramonte of Warburg Realty. “It’s a little outdated.”

And this year, bonuses may be a little down.

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Year-end incentives, which includes cash and equity, were expected to fall across the board by 5 percent, according to compensation consulting firm Johnston Associates. That follows last year’s results, when bonuses fell for the first time in three years, to an average of $153,700, according to the New York State Comptroller’s annual estimate.

The report on bonus compensation for 2019 will be released in March. Anecdotally, results have been mixed to date: JPMorgan Chase is keeping bonuses flat while Deutsche Bank is postponing payouts by about a month until April 1.

“We’re not having a flush year” as an industry, said Alan Johnson, managing director of compensation consulting firm Johnson Associates.

Compass broker Robin Kencel said Wall Street compensation doesn’t have a “direct correlation” with home-buying anymore. She attributed it to a “shift in mindset.”

“I don’t see them saying, ‘let’s spend as much as we possibly can,’” said Kencel, who is based in Greenwich, Connecticut. “They’re being more conservative overall in how they handle their total compensation.”

It could also be the taxes.

When it comes to real estate, Johnson noted the 2017 federal tax overhaul’s impact. He said the elimination of the state and local tax deduction has made living and working in New York City more expensive for many companies and individuals. Though the changes were first felt last year, Johnson said the fallout is only beginning now.

“It usually takes people two to three years to get their heads around [tax changes],” he said. He said several clients are looking at quietly relocating employees to Florida, Texas or Utah.

“New York is just very very expensive,” he said. When it comes to wealthy financiers buying apartments, “why buy it here if you can buy it in Miami?” he asked.

Johnson did note, however, that there’s a bright spot for bankers compensated in equity in recent years. With bank stocks up, they could have “more money in their pocket than they thought.”

Valley National Bank’s Joe Palermo said he still believes Wall Street’s bonus season can boost home sales, though he said it’s more likely for younger employees buying a first home, particularly in a low mortgage rate environment.

For Wall Street veterans, however, “people are not flocking to New York right now,” he said, adding, it has been slow for purchases, but busy for refinancing.

Still, for sellers, there may still be hope. With bonus season still in swing, low interest rates could change the tone of the market, Palermo added.

“With rates down, it may help,” he said. “You may end up getting very busy.”

Write to Erin Hudson at [email protected]

Jon Cartu