Buyers faced with the twin realities of high prices and high real estate taxes are stepping back from the New York City real estate market. After being fully exposed to the state’s high tax rates after the federal tax reform bill passed last year, buyers are taking recoiling from what has been one of the world’s hottest real estate markets for at least a decade.
Lindsay Fortado writes in the Financial Times:
The number of co-op and condominium sales in Manhattan fell nearly 25 per cent during the first quarter compared to the same period last year, according to new research by Miller Samuel real estate appraisers and Douglas Elliman real estate brokers.
It was the largest annual decline in sales in nine years, according to the report.
The average sale price across Manhattan fell by 8.1 per cent from the year-earlier quarter, and the average price per square foot also recorded a sharp decline, falling by 18.5 per cent to $1,697.
Luxury apartment sales, considered the most expensive 10 per cent of all properties, were hit particularly hard, as were new developments.
Some buyers held off buying real estate as they grappled with the impact of President Donald Trump’s changes to the federal tax code, which introduced a cap on the deduction of state and local taxes, including property taxes, from federal tax bills. It also reduced the size of mortgages eligible for interest deductions.
The change is expected to hit high earners in high-tax states including New York, particularly in New York City.
Read more here.