New York City’s housing market was already struggling with a historic mismatch involving a flood of luxury inventory and a shortage of buyers looking for housing in that price-range (instead, the city has continued to suffer from a shortage of housing affordable to its workforce), when the city adopted a new transfer tax on properties valued over $2 million.
It’s believed the new ‘mansion’ tax (which comes on top of President Trump’s tax-reform plan that eliminated the SALT deduction) pushed sales forward earlier this summer.
Instead, the market is growing accustomed to more sobering data points like this one: Sales on previously owned coops and condos in Manhattan continued what has become a multiyear slump during the third quarter. Prices on apartments sold slumped 8%, the largest YoY decline since 2011, Bloomberg reports.
According to another set of data from Douglas Elliman and Miller Samuel, the drop was even larger: The average sales price declined by 14% during Q3, which would make it the biggest drop since the financial crisis, according to a story from CNBC.
It’s just the latest sign that buyers are demanding more concessions – not that they have a choice. NYC is one of the most unaffordable cities in the world, where the median income is just $50,711, and even a small condo can fetch at least $600,000.
Finally, the lenders start to panic and force fire sales. Miami was the biggest bubble crash in the last real estate bust, averaging 52%. It will be higher this time. The market is dominated by even higher “faker luxury” condos. Larger with more flamboyant features. Those are the hardest to unload when prices drop, says Kuppy’s lending friend.