For one month, Manhattan’s resi market returned to glory. Why it won’t continue.

A TRD analysis found a spike in resi deals recorded last month YOY

New York /
Jul.July 02, 2019 05:30 PM
(Credit: iStock)

(Credit: iStock)

During the last week in June, Tania Isacoff Friedland witnessed a mad rush to get deals inked. Buyers wanted to get deals across the finish line before new mansion and transfer taxes took effect on July 1.

“Agents and attorneys and everybody — they were just booked back-to-back-to-back on closings,” said Isacoff Friedland, an agent with Warburg Realty. “Nobody wants to spend more than they have to.”

The preliminary data appears to back that up.

There were far more residential deals recorded with the city last month compared to June 2018 — lending support to the theory that a greater number of buyers were looking to get ahead of the new taxes. The end result is a temporary jolt to what remains a shaky luxury market.

Residential deal volume recorded last month totaled about $2.94 billion across 1,203 transactions in Manhattan, according to an analysis of Department of Finance data by The Real Deal. That’s a year-over-year spike of about 37.6 percent for dollar volume and about 9.7 percent in terms of the number of sales. (TRD’s analysis only looked at deals that were recorded; the figures will likely be higher once additional deals are added to the city’s property records.)

The figures align with those found by brokerage firm Douglas Elliman, which noted a year-over-year increase in June for the first time in six quarters. The median sale price also had ballooned to $1.22 million, representing a record 10.5 percent increase, the firm found.

Our analysis of recorded Manhattan closings in June 2019 found that roughly 383 deals closed at $2 million and up, accounting for $2.18 billion in overall volume. It resembles the market in June 2016, when 380 deals closed at $2 million and above, totaling $2 billion in dollar volume. June 2017 saw 378 transactions over $2 million, with dollar volume hitting $1.9 billion. By contrast, in June 2018, just 280 deals closed at $2 million or above, totaling $1.4 billion in dollar volume.

The state’s new mansion taxes on residential deals over $2 million and transfer taxes on transactions over $3 million went into effect July 1. And in the run-up to the deadline, brokers and others in the residential real estate industry noted a sense of urgency to get deals done to sidestep the new fees.

Isacoff Friedland said that because of the new taxes, there were changes to how deals were structured — pushing the new fees onto sellers and developers. She said she had buyers who had been fixated on an apartment in a new development. But when they ultimately chose to buy on a higher level — delaying the closing because the unit wouldn’t be ready until the fall — the contract was negotiated so the developer would pick up the increased cost because of the new fees.

At some point, the market will absorb the new costs as just part of buying in New York City. “In the interim, I think there will certainly be an adjustment period and ultimately that will come out of the sale price,” Isacoff Friedland said.

Still, it may be too soon to tell how the new taxes fit into the full picture of the city’s luxury residential market, which is feeling impacts from a variety of sources — changes in the state and local tax deduction (SALT), lower mortgage rates and a high supply of luxury properties that are selling at times well below ask.

Any June spike may belie the true story, said Donna Olshan, president of her eponymous brokerage.

For example, her firm, which tracks the pace of luxury sales in Manhattan, found a year-over-year drop in contracts signed in the second quarter.

And last week two properties at 432 Park Avenue sold for $61 million combined. That could’ve been $80.5 million had the condominiums sold at what they were asking.

Many of the deals that have closed last month may also have been ones that were already in the works. “The thing is these are sales that would’ve happened, they would’ve happened just a little later,” she said.

And the elephant in the room, Olshan said, is what the next quarter will really look like after this short-term spike.

“I think people think that the next quarter is going to be really tough,” she said.


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