Manhattan luxury sales surge despite pied-a-terre tax

Manhattan luxury homes continued to sell at a strong pace last week, even as a new tax on second homes took effect in New York City. The Olshan report counted 36 contracts signed at $4 million and above, eight more than the previous week and the most since the first week of June. Manhattan luxury buyers signed those contracts despite warnings that the pied-a-terre tax would slow demand for high priced second homes. The Upper East Side recorded the most activity, and condos outsold co-ops by a smaller margin than usual, with 19 condos sold against 13 co-ops.

The tax applies to secondary homes with a fair market value above $1 million. For homes valued from $1 million to $3 million, the surcharge rate is 4.00 percent. The rate rises to 5.25 percent for homes valued from $3 million to $5 million, and to 6.50 percent for homes valued at $5 million or more. The tax became effective on July 1 and is collected each year, with a scheduled end on June 30, 2031. About 55 percent of owners who received a tax bill have appealed so far, according to reporting by The City cited in the Realtor.com account of the Olshan report.

Manhattan luxury contracts climb in the Upper East Side

Manhattan luxury contracts in the latest week showed a shift toward older co-op buildings as well as new condos. Co-ops tend to be older than condos and often require board approval, but they are typically cheaper. The average asking price for a luxury co-op last week was $6.8 million, against $9.4 million for a condo. Manhattan luxury buyers who had waited for turnkey apartments changed course as those homes failed to appear on the market. Brokers said many buyers now accept a renovation project if the home meets their needs for size, layout and location.

The top sale last week was a six bedroom penthouse condo at 255 East 77th Street, with an asking price of $23.75 million, or $4,303 per square foot. The home measures 5,520 square feet and has views of Central Park from nearly all rooms, plus two terraces totaling 363 square feet. It took five months from listing to contract. The building has a concierge service, a lounge and a 75 foot swimming pool. Alexa Lambert of Compass held the listing.

Manhattan luxury buyers accept renovation work

Manhattan luxury demand in the latest week also reflected tight supply across price levels. Michelle Griffith of Douglas Elliman said agents were surprised by the strength of the market, and she put the result down to two factors: lack of inventory and high rents. She said inventory is down almost 30 percent this fall. High end apartments that once rented for $25,000 a month are now drawing bidding wars and renting for near double that amount, according to Griffith, which pushes people who live and work in Manhattan and have children in school toward buying.

The highest selling co-op was a 1925 five bedroom home at 860 Park Avenue, with an asking price of $10,950,000, described as impeccably maintained. Co-ops at the ultraluxury tier, the top 1 percent in the borough, start at about $5.6 million and generally need little work.

Manhattan luxury prices hold as tax fears fade

Manhattan luxury buyers also showed less concern about taxes in other states, brokers said. California has proposed a billionaire tax and Washington has a millionaires tax effective in January 2028, leaving wealthy buyers with fewer places to avoid higher taxes if they move. Michael Reisor of the Compass affiliated Reisor Team recently sold a $4.5 million loft condo at the Schumacher complex on Bleecker Street in Noho, which will be used as a pied-a-terre. Reisor said the pied-a-terre tax is not stopping wealthy buyers from investing in Manhattan, and buyers might adjust their budget a little rather than reduce their lifestyle.

Reisor said one client looked for a less expensive home because of the new pied-a-terre tax, but chose a property that met his wishes and standards. The second top sale last week, a sponsor condo at 53 West 53rd Street, had an asking price of $21.53 million. The 3,762 square foot, three bedroom unit, with north facing views of Central Park, was sold on the same day it was listed, which suggested it could have been an off market deal.