Central Park Tower, left, and One57, heart, alongside Billionaire’s Row in New York, Could 1, 2026.
Michael Nagle | Bloomberg | Getty Photos
A model of this text first appeared in CNBC’s Inside Wealth e-newsletter with Robert Frank, a weekly information to the high-net-worth investor and client. Enroll to obtain future editions, straight to your inbox.
A month after the passage of a tax on second houses in New York Metropolis, gross sales of luxurious actual property stay sturdy and stock is falling, in keeping with brokers and analysts.
When New York Gov. Kathy Hochul and the state legislature permitted the so-called pied-à-terre tax on Could 27, actual property brokers and builders predicted a right away impression. Brokers mentioned the New York rich would flee to Florida, builders mentioned they might halt new tasks and actual property lobbyists predicted declines in employment. Many cited what they referred to as “the Mamdani impact,” referring to New York Metropolis Mayor Zohran Mamdani and potential wealth flight from taxes.
“The tax on second houses will dampen market exercise, cut back property values, harm new improvement and weaken town’s economic system,” the Actual Property Board of New York mentioned in an announcement quickly after the measure handed.
But gross sales of luxurious residences present little indicators of weak point. There have been 126 contracts signed for residences priced at $4 million or extra in June, up from 124 throughout the identical four-week interval final yr, in keeping with Olshan Realty.
The typical value of a Manhattan house reached its second-highest stage ever through the second quarter, up 5% over the previous yr to roughly $2.2 million, in keeping with Brown Harris Stevens. Gross sales of condos priced between $10 million and $20 million surged 55%, in keeping with Compass. Gross sales of condos over $20 million have been up 33%, with common asking costs up 14%, the true property brokerage mentioned.
The offers in June included an $80 million duplex penthouse in a brand new rental constructing close to Manhattan’s West Village, a $26 million rental downtown and a $22 million co-op on the Higher East Aspect. Brokers say that whereas some patrons have been initially spooked by the tax, the flood of liquidity from latest preliminary public choices and hovering wealth from asset costs has outweighed their fears.
“The sum of money out there may be insane,” mentioned Lauren Muss of Douglas Elliman, who had a $17.5 million rental itemizing go to contract in June. “We’re seeing large issues come to us every single day. It is solely getting stronger.”
It is too early to evaluate the long-term impacts of the tax, in fact. And actual property attorneys say there shall be years of litigation associated to valuations, co-op boards, residency standing and different points associated to the brand new tax. Whereas Hochul and Mamdani have mentioned the tax will elevate $500 million a yr, the New York Metropolis Comptroller estimates it should elevate about $340 million to $380 million.
But prime brokers mentioned the pied-à-terre tax fears are rapidly subsiding. The surcharge, imposed on non-primary residences valued by town at greater than $1 million, was first proposed in April, permitted in Could and formally took impact this week. It applies to residences that match the tax standards as of Jan. 5, 2026. So any patrons of dear pied-à-terres this yr shall be topic to the tax.
Some patrons initially paused their offers when the tax was first proposed, in keeping with brokers. Scott Hustis, of Paradigm Advisory at Compass, mentioned he listed a $16.5 million penthouse duplex in Madison Sq. Park Tower on April 8. One purchaser expressed instant curiosity and was about to make a proposal, he mentioned, however when Hochul introduced the proposed tax per week later, the client pulled again.
By late Could, nevertheless, as the small print of the tax began turning into extra clear, patrons got here again into the market. The penthouse went into contract on June 6.
“There may be quite a lot of confidence on the market,” Hustis mentioned. “Markets are sturdy. Much more New York patrons are popping out of the woodwork.”
Hustis declined to touch upon the client of the $16.5 million penthouse or whether or not will probably be a main residence. If not, the house could be topic to a pied-à-terre tax invoice of over $98,000 this fiscal yr along with property taxes, based mostly on metropolis valuations.
However Hustis mentioned ultra-wealthy patrons are extra involved about shopping for on the proper time available in the market cycle quite than paying an added tax.
“Proper now, they’re seeing issues go into contract and costs not coming down they usually resolve to execute,” he mentioned.
Low stock is including strain to patrons. Jonathan Miller, CEO of appraisal and analysis agency Miller Samuel, mentioned luxurious stock is down 40% in comparison with final yr and is now on the lowest stage he is seen since he started monitoring it in 2004.
Marc Palermo of Douglas Elliman has a list for a $19 million, 4,700-square-foot house at 565 Broome St., the glass rental tower whose patrons have included tennis nice Novak Djokovic, Uber co-founder Travis Kalanick and niece of the president Mary Trump. Within the fall of 2025 and early 2026, the itemizing attracted a number of provides for 20% or 25% beneath the asking value, Palermo mentioned. But the constructing held agency to its value.
By late spring, with markets overcoming Iran struggle fears and the SpaceX IPO and different choices creating huge liquidity occasions, the Manhattan market sprang to life, brokers mentioned. Palermo mentioned he obtained a “sturdy supply” for the $19 million house and it went to contact on the finish of June. Whereas he declined to touch upon the client, he mentioned they already personal a unit within the constructing and wished to broaden. Because the purchaser is not a main New York tax resident, they’ll probably owe a pied-à-terre tax.
“Individuals took a breath, they settled into the brand new actuality and the sensible ones charged in,” Palermo mentioned.
He mentioned the opposite two early bidders for the Broome Avenue itemizing additionally ended up closing on different residences lately — one for a $15 million house and the opposite for a $17 million house. He mentioned nearly all of the high-end patrons in Manhattan are paying money, with out mortgages.
Together with the inventory market beneficial properties and increase in finance, the so-called nice wealth switch can be driving demand in Manhattan. Palermo mentioned he is doing a variety of high-end offers with patrons below the age of 40 during which the dad and mom or a household workplace or belief is the underlying purchaser.
“We’re seeing quite a lot of presents coming in from dad and mom,” he mentioned. “Should you’re below 40 and also you’re shopping for in New York Metropolis, likelihood is you are not making sufficient to purchase by yourself.”