Manhattan condo sales increase in June as buyers rush to avoid mansion tax: Elliman

The mansion tax came into effect on July 1
By Sylvia Varnham O’Regan | July 02, 2019 07:00AM

The median sales price in Manhattan rose a record 10.5 percent to $1,215,000

The median sales price in Manhattan rose a record 10.5 percent to $1,215,000

In June, as the deadline for the mansion tax neared, buyers rushed to close condo and co-op sales across Manhattan, triggering a sharp uptick following months of decline.

Figures from the latest Douglas Elliman market reports show that year-over-year sales increased in June for the first time in six quarters, and the median sale price increased by a record 10.5 percent to $1.22 million.

The spike was driven in part by the expanded mansion tax on residential properties sold for more than $2 million and the increased transfer tax for properties over $3 million. Both came into effect on July 1.

Jonathan Miller, CEO of the appraisal firm Miller Samuel and author of the report, said the June sales — while positive for the industry — were a “perfect storm” in response to the tax changes, rather than an indication of market recovery.

“The uptick in activity is essentially poaching from the third quarter,” he said. “Logic says, if we’re poaching from the future, we’ll see a lower level of activity in the next quarter.”

In 2018, sales dropped sharply after the introduction of a new federal tax law, Miller said, meaning the current figures were being compared against a period of unusually low sales activity. The trends in both periods were influenced by tax changes.

Most of the June growth was seen in the $2 million- to $5 million-property range, which meant that while the median price increased significantly, the overall average increased by just 0.2 percent to $2.1 million.

The number of sales increased 12.5 percent to 2,957, and the price per square foot rose 1.7 percent to $1,762.

Amid the positive figures, the report noted that listing inventory also increased 8.2 percent to 7,558 in June.

“Resale inventory is up 10 percent; overall inventory is up. That tells me the market is still not robust,” Miller said.

In the northern Manhattan sales market, listing inventory for condos and co-ops also expanded for the fifth straight quarter, while the median sales price increased 1.5 percent to $589,000.

According to the Brown Harris Stevens 2nd Quarter 2019 Manhattan Market Report, sellers of resale apartments offered their biggest price discounts in nine years over the quarter. The average resale price fell 5 percent on the previous year to $1.64 million.

The Brown Harris Stevens report showed a 71 percent increase in new development closings compared to the second quarter of 2018 — 40 percent of which were in downtown Manhattan.