Manhattan luxury real estate sales hold firm

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A month after New York’s second-home tax went into effect, luxury real estate sales remain strong and stocks are falling, brokers and analysts say.

When New York Gov. Kathy Hochul and the state legislature approved the so-called land tax on May 27, real estate agents and developers predicted it would have an immediate impact. Brokers said wealthy New Yorkers would flee to Florida, developers said they would halt new projects, and real estate lobbyists predicted a decline in employment. Many talked about what they called the “Mamdani effect,” a reference to New York City Mayor Zohran Mamdani and the potential flight of wealth from taxes.

“A tax on second homes will slow market activity, reduce property values, harm new development, and weaken the city’s economy,” the Real Estate Board of New York said in a statement shortly after the measure was passed.

But luxury apartment sales show little sign of weakness. The 124 contracts for apartments priced at $4 million or more were signed in the same four-week period last year, up from 126 in June, according to Olshan Realty.

According to Brown Harris Stevens, the average price of an apartment in Manhattan reached its second-highest level ever in the second quarter; It reached roughly $2.2 million, up 5% from last year. Sales of condos priced between $10 million and $20 million increased by 55%, according to Compass. The real estate broker said sales of apartments over $20 million increased by 33 percent, while average prices increased by 14 percent.

Deals in June included an $80 million duplex penthouse in a new apartment building near Manhattan’s West Village, a $26 million downtown condo and a $22 million co-op on the Upper East Side. Some buyers initially feared the tax, but an influx of liquidity from recent IPOs and rising wealth from asset prices put their fears to rest, brokers say.

“The amount of money out there is crazy,” said Lauren Muss of Douglas Elliman, which had a listing for a $17.5 million condo that went under contract in June. “Every day we see great things happen to us. It gets stronger.”

Of course, it is too early to judge the long-term effects of the tax. Real estate lawyers say there will be lawsuits for years regarding valuations, cooperative boards, residence status and other issues related to the new tax. Hochul and Mamdani say the tax would increase by $500 million a year, while the New York City Comptroller estimates the tax would increase by about $340 million to $380 million.

But leading brokers say tax fears are quickly receding. The surcharge on non-primary residences valued by the city at more than $1 million was first proposed in April, approved in May and officially went into effect this week. This applies to homes that meet tax criteria as of January 5, 2026. So this year buyers of expensive pied-à-terres will be subject to tax.

Some buyers initially paused their deals when the tax was first proposed, according to agents. Scott Hustis of Compass Paradigm Advisory said April 8 that he listed a penthouse duplex at Madison Square Park Tower for $16.5 million. One buyer immediately expressed interest and was about to make an offer, but when Hochul announced the proposed tax a week later, the buyer backed out.

However, as the details of the tax began to become clear in late May, buyers returned to the market. The penthouse went under contract on June 6.

“There’s a lot of confidence out there,” Hustis said. “Markets are strong. A lot more New York buyers are coming out of the woodwork.”

Hustis declined to comment on the buyer of the $16.5 million penthouse or whether it would be a primary residence. Otherwise, the apartment would be subject to a tax bill of more than $98,000 this fiscal year, in addition to property taxes, based on city assessments.

But ultra-wealthy buyers are more concerned about buying at the right time in the market cycle than paying additional taxes, Hustis said.

“Right now they see that things are going into contract and prices are not falling, and they decide to implement it,” he said.

Low inventories increase the pressure on buyers. Jonathan Miller, CEO of valuation and research firm Miller Samuel, said luxury inventory is down 40% from last year and is now at its lowest level since he started tracking it in 2004.

Douglas Elliman’s Marc Palermo has a listing for a $19 million, 4,700-square-foot apartment at 565 Broome St., a glass condominium tower whose buyers include tennis star Novak Djokovic. Uber Nephew of co-founder Travis Kalanick and president Mary Trump. In fall 2025 and early 2026, the listing received several offers of 20% or 25% below the asking price, Palermo said. But the building remained true to its price.

By late spring, the Manhattan market had revived as markets got over fears of war in Iran and SpaceX’s IPO and other offerings created massive liquidity events, brokers said. Palermo said he received a “strong offer” for the $19 million apartment and was contacted in late June. While he declined to comment on the buyer, he said they already own an apartment in the building and are looking to expand. Since the buyer is not a primary tax resident of New York, he or she will likely owe a tax liability.

“People took a breather, got used to the new reality, and the smart ones stepped in,” Palermo said.

He said two other firms that initially bid for the listing on Broome Street had also recently closed on other apartments; one for a $15 million apartment and the other for a $17 million apartment. Nearly all high-end buyers in Manhattan pay cash with no mortgage, he said.

Along with gains in the stock market and the boom in finance, so-called massive wealth transfers are also driving demand in Manhattan. Palermo said it has done a number of high-end deals with buyers under 40, where parents or the family office or foundation are the primary buyers.

“We’re seeing a lot of gifts coming in from parents,” he said. “If you’re under 40 and shopping in New York, you probably don’t make enough money to buy on your own.”