GOP Tax Law a Drag on New York Apartment Sales

In the March issue of Habitat, we noted that co-op and condo boards are being squeezed from every side. Some of the biggest pressure is coming from the new GOP tax law, which was designed to punish residents of high-tax states, including New York and New Jersey. The law, we predicted, would likely have a negative effect on home sales, which would hurt the bottom lines of co-ops and condos that rely on flip taxes to augment their incomes. Our dire prediction is already coming true. 

The first three months of the 2018 – the first three months under the new tax law – marked Manhattan’s lowest sales quarter in more than six years as well as the largest annual decline in nine years, according to newly released market research, Curbed reports. 

“Unease regarding effects from the federal tax law and an uptick in mortgage rates may have resulted in a slowdown among buyers and sellers,” says a report from Douglas Elliman. Jonathan Miller, author of the reports, adds, “The concept to consider here is ‘price discovery,’ where it will take the next year or two for buyers and sellers to get reacquainted with what the right values are. The new tax law has been the catalyst for this change in sentiment about the market.” 

The median sales price in Manhattan slipped from the first quarter of last year, a slight 2 percent to $1,077,500. Manhattan co-ops sold this quarter at a median price of $810,000, 4.5 percent higher than last year. The median for condos was $1,628,279, 1.3 percent lower than a year ago. Miller notes that this quarter many buyers were paying in cash—it was the highest all-cash market share in the four years of tracking the metric. The bottom line: if you’re flush with cash, you’re not worried about mortgage rates or the GOP tax law.