Photo-Illustration: Curbed; Photo: Getty
Kathy Hochul has found a tax on the wealthy she can get behind: a surcharge on New York City pied-à-terres worth $5 million or more. Details of the proposal, which is backed by Mayor Mamdani, are still being ironed out, but the governor has estimated it would raise $500 million a year. It won’t close the city’s budget gap, but people generally seem to like the idea. (It’s hard, after all, to drum up sympathy for an anonymous billionaire with an empty classic six on Central Park West.) Brokers who deal in the luxury market, on the other hand, very much do not.
“I think it’s a horrible idea that’s going to backfire,” says Rachel Glazer, a Compass broker with a history of eight-figure sales across Manhattan. Trophy apartments like the ones the Ken Griffins of the world seem to collect make up a “good chunk” of Glazer’s business. She believes the tax will mean fewer sales, translating into fewer transfer and mansion taxes. The general mood in her corner of the market was clear: “I’m not happy. Buyers are not happy.” Noble Black, a broker at Corcoran who not too long ago sold a penthouse at 520 Park Avenue for $73 million, agrees. “Everyone is talking about it,” Black says. “I’m not saying this is going to kill the city, but it’s a very negative proposal and poorly thought through.” He has already gotten calls from at least one pied-à-terre owner asking about selling, but Black advised them to wait and see. He says he’s heard of other buyers pausing their searches for a second place (or third or fourth or fifth, as the case may be) in the city while waiting to see how this plays out. “I think it’s a misguided and alarming message to be sending to people,” Black says, echoing Glazer about the possible fallout: depressed property values, less tax revenue if the ultrarich choose to buy second homes elsewhere. (We also have another tactic of billionaire spite to consider, as earlier this week the COO of Griffin’s Citadel seemed to threaten to scramble plans on a midtown office tower.)
But some brokers are skeptical that the sky is actually falling. After all, isn’t a wealthy person in New York always angry about something? The city’s ultrarich threatened to flee over Mamdani’s election, but the luxury market has continued apace anyway. (Or as one Serhant broker presciently told my colleague after Mamdani won the primary: “Anybody that says they are leaving New York ain’t fucking leaving.”) “Brokers are fearful by nature,” Michael Biryla, an agent at the Agency, tells me with a laugh. His take is that the tax will mean business as usual for the kinds of people who can afford a multimillion-dollar pied-à-terre to begin with. “I’m working with a client who’s worth north of $2 or $3 billion, and he’s been scooping up property in New York. It hasn’t dissuaded him at all,” says Biryla. Mostly, he thinks it’s going to be a bargaining chip for buyers. He envisions a lot of $4.99 million transactions. Biryla has seen it happen in real time: He has a $5.5 million listing on Park Avenue, but since the proposal was announced, “every buyer and every offer we’ve gotten is refusing to go over the $5 million threshold.” (It’s also not yet clear how property values for the tax will be assessed.)
Douglas Elliman broker Michelle Griffith has also seen some uncertainty in the market following the announcement, and she agrees it may kill some deals but is more measured overall. The tax will eventually be “absorbed” into the market, she says. She isn’t in favor of the tax and thinks it will make some buyers look elsewhere, but demand is also demand. “Is it driving people out in droves? No,” Griffith says. “If you speak to any active real-estate broker in Manhattan right now, we all have significantly more buyers than we do listings — inventory is at an all-time low.” The tax, in whatever final form it might take, would just be an added consideration for clients. That said, she can also see it having the possible impact of giving buyers looking for a primary residence a slight edge over pied-à-terre buyers. Part-timers will have to factor in the cost of the tax in their best and final offers, while someone who actually wants to live in that duplex on lower Fifth has wiggle room to outbid them. (Which is perhaps not the intention from Albany, but it may be an outcome all the same.)
One thing everyone seemed to agree on: At this point, with few actual details to work with, it was still too early to tell what would really happen. Oh, and there was one more point of overwhelming consensus: These buyers could obviously afford the tax. “People with a $5 million pied-à-terre aren’t going to be hurt by the money,” Glazer says. “They just don’t want to spend it. It’s the principle.”
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