Buyers who were looking to acquire homes before the city's new mansion and transfer taxes went into effect on July 1 was a factor in increased Manhattan co-op and condo sales during second quarter 2019.
According to the latest Manhattan market report by Douglas Elliman, sales rose year over year for the first time after six quarters of declines. It also said that the most significant rate of annual sales growth happened in the $2 million to $5 million sales range.
In a statement, Steven James, President and CEO of New York City, Douglas Elliman, said of the results: “This was a very encouraging quarter, with sales rising in Manhattan for the first time in 18 months. With mortgage rates lower than they were at this time last year and buyers beginning to adjust to the new federal tax law as well as trying to get ahead of the new mansion tax that kicked in on July 1st, these results are not surprising. While the signs of growth are certainly positive, it’s worth noting that inventory also expanded this quarter, so we will have to wait and see if this signals an end to the weaker sales market.”
For all co-ops and condos in Manhattan during the second quarter of this year, the median sales price was $1,215,000, a 10.5 percent increase year over year and a record-setter. The number of closed sales was 2,957, an uptick of 12.5 percent compared to the same quarter last year.
Breaking it down even further, Manhattan co-ops in second quarter 2019 saw a median sales price of $835,000, a jump of 3.1 percent. The number of closed co-op sales was 1,482, a 1.9 percent rise compared to second quarter 2018. The listing inventory was 3,648—up 12.2 percent.
The median sales price for Manhattan condos in this year's second quarter was $1,700,000, a 3.0 percent positive change. Closed condo sales numbered 1,475, an increase of 25.6 percent. According to Elliman, the listing inventory was 3,910—a 4.7 percent jump year-over-year.
Despite this bit of good news for a Manhattan real estate market that had been ailing, the positive trend may not last long according to Jonathan Miller of the appraisal firm Miller Samuel that prepared the report. “I don’t think these numbers signal a recovery,” he told CNBC.“They were certainly better than what we are accustomed to. But I think the third quarter will underperform the second quarter.”
Yesterday, the city's new progressive mansion tax went into effect, Curbed reported. Under the new system, there will now be a flat 1 percent tax on home purchases priced from $1 million to $2 million; 1.25 percent on sales worth $2 million to $3 million; and so forth. (The highest tax percentage is 4.15 percent for purchases over $25 million.) The mansion tax was seen as an alternative to the pied-a-terre option that lawmakers had considered until that idea was scrapped.
Citing a Wall Street Journal article, Crain's New York Business reported of a recent surge in sales of Manhattan luxury homes priced at $10 million or more—likely from homebuyers trying to beat the July 1 deadline.
Additionally, a one-time transfer tax also went into effect yesterday, starting at 1.4 percent for homes priced at $500,000 and less, and up to 2 percent for homes worth $25 million
Revenue generated from the new taxes-- estimated to be worth $365 million yearly -- will help fund the city's transit system.
David Chiu is an associate editor at The Cooperator.