A Sure Sign That the Condo Market Has Gone Soft

New York City

Tax-Free Condos
Feb. 17, 2017

Co-op and condo developers have been going to extreme lengths to outdo each other in the race to lure buyers with ever-more-seductive amenities. But here’s a new one that should convince you, once and for all, that the market for luxury condos has gone soft.

Luxury developer Toll Brothers is offering to pay the taxes if you buy one of their condos right now, Bloomberg reports.

The publicly traded homebuilder is offering to pay the city transfer tax and the New York state “mansion tax” – an effective discount totaling almost 2.5 percent – on deals made at three of its developments by Feb. 20, the company said in a statement Wednesday. The closing incentives apply to any apartment bought at Toll’s under-construction projects at 100 Barrow St., in the West Village, and 55 West 17th St., in Chelsea. The deal is also being offered at the Sutton, a development in the East 50s, where sales began in early 2015.

Toll’s offer comes as Manhattan developers contend with a market brimming with costly condos and buyers tepid about committing. Builders hoping to boost sales in their projects are doing what they can to attract interest without officially lowering their prices – everything from offering gift cards and upfront commission to brokers, as well as payment of transfer taxes that, in a healthier market, are passed on to buyers, says Joshua Stein, a Manhattan real estate lawyer. Renters are also benefitting from the softening market, with landlord concessions growing more common and more generous.

“Toll Brothers is a public company, and they have realism,” says Donna Olshan, president of the brokerage that bears her name. “If it’s not selling, they’ll adjust – and they’ll adjust quicker than somebody else. They’re signaling to the market, ‘We want to move our product.’ Developers who take prices down are the ones who’ll get rewarded."

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