Wall Street Bonuses Drop; Will Home Sales?

Wall Street bonuses reportedly were down 9 percent last year—screeching to the runway at $146,200 on average, the state comptroller’s office announced this week.

What will that mean for home sales in the Hamptons?

Not as much as one might think, said Jonathan Miller, president and CEO of Miller Samuel, an appraisal and consulting firm, who writes the Douglas Elliman report on the Hamptons sales market.

Mr. Miller said a median figure actually would have been lower than an average, which is skewed by some very large bonuses, but that the cuts in bonuses have been offset by pay raises in conformance with post-financial crisis regulations. “Compensation isn’t as volatile as it used to be,” he said.

“Most people say, ‘Imagine getting a pay cut like that,’” Mr. Miller said wryly, while acknowledging that “Manhattan and the Hamptons are joined at the hip through Wall Street.”

According to the comptroller’s office, the financial sector accounts for less than 5 percent of jobs, but about 22 percent of New York City wages—with an average salary of $404,800—and a significant portion of that money trickles east to South Fork real estate.

“A 9-percent decline is big, but it’s not monumental,” said Judi Desiderio, CEO of Town & Country Real Estate, adding that she knows people who receive bonuses in the millions. “The bigger question is what the [financial] markets are going to do this year.”

The comptroller did note that profits in the financial industry went down almost $1.7 billion, to $14.3 billion, in 2015. National elections, an unpredictable global market, a day last August when stocks briefly plummeted more a thousand points—Ms. Desiderio said such factors encourage high-end buyers to sit on the sidelines rather than invest in hard assets like Hamptons mansions.

“I don’t see them plunking $25 million on properties, as they did in the first half of 2015, not at the same rate,” Ms. Desiderio said. “In markets like this, you have to be very nimble.”

Mr. Miller predicted “a net neutral, maybe a positive” effect on the local real estate market, however. He pointed out that the comptroller’s office also said the financial sector added 4,500 jobs, which in turn could mean more home buyers here—though not necessarily in the $5 million-plus arena.

“I would be skeptical that pricing in some of the records that were set in 2015 would be matched,” he said.

Ms. Desiderio also said that a sadder year for sales can mean a happier year for rentals, with people who still have a relatively nice wad of cash scrutinizing the real estate scene through the picture window of a long-term summer rental, then perhaps taking a plunge in the fall to make a purchase.

“If they take a wait-and-see attitude, I don’t think people are going to want to sit baking in the city,” Ms. Desiderio said. “It’s already happening, where the rental season is booming.”