The new mansion and transfer taxes spurred Manhattan home sales in the second quarter of 2019, while completion of new construction projects let to more closings.
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The Manhattan real estate market saw in increase in sales for the first time in a year and a half, and some experts say the jump was caused by a rush to close before the new mansion and transfer taxes took effect yesterday.
The new mansion tax expands the previous 1% fee on sales of $1 million and above; they now range from 1.25% for a $2 million sale to 3.9% for a sale of $25 million and above. The transfer tax increases from 0.4% to 0.65%.
Bearing this out, sales were up 12.5% to 2,957 from the same time last year and surged 37% in the $2 million to $5 million price range during the second quarter of this year, according to a report from Douglas Elliman Real Estate released today.
“Effectively, they just poached from the third quarter,” says Jonathan Miller, chief executive of Manhattan appraisal firm Miller Samuel, which produced the report in conjunction with Douglas Elliman.
Others in the industry have previously noted the flurry of activity, attributed to the new taxes.
The median sales price rose 10.5% over the same period in 2018 to $1.215 million, setting a new record, and the number of sales at or above $10 million rose sharply from last year, according to the Douglas Elliman report.
But the news wasn’t all rosy.
At the same time, resale inventory rose for the seventh consecutive quarter and at 7,558 units is the highest it’s been in seven years, with the highest co-op listing inventory total in six years, exceeding the ten-year quarterly average — which doesn’t bode well for the rest of 2019.
“It’s a mixed bag, but certainly much better overall results than we’ve seen in the last 18 months,” Miller says.
The Q2 report from Brown Harris Stevens found that sellers of resale apartments offered their biggest price discounts in nine years and the average resale apartment price fell 5% from a year ago to $1.642 million.
The report also indicated a rush of new development closings, because buildings were completed, which led to an 11% increase the number of those sales from a year ago and a 71% increased compared to the second quarter of 2018. The report found that the most active buildings during the quarter were One Manhattan Square and 15 Hudson Yards, though 40% of new development closings were downtown.
New development prices also averaged $3.48 million in the second quarter, which was 9% less than last year, meaning there was a drop in closings on the high end of that market, according to Brown Harris Stevens.
Brown Harris Stevens President Hall Willkie attributes the sales uptick to more “responsive” sellers.
“With two-and-a-half years of a declining market, sellers are being more responsive,” Willkie says. “There were more sales over $10 million and sellers give a discount because of comparables. I don’t think the mansion tax has made a difference in terms of buyers buying or not buying. Those who were in the process of buying rushed to close. It’s another factor they are able to throw in. I think (the uptick in sales is) happening at a time when activity is greatly improving.”