Only two units asking +$30M (and zero units asking anything higher) have gone into contract since New York affected its progressive mansion tax on July 1, 2019. And, Soho and Tribeca are hurting…only one in four lux deals of $4M or more in units located below 34th Street have gone into contract, according to data compiled by Compass Real Estate for Mansion Global.

In the 14 weeks prior to the mansion tax being enacted, there was a lux buying spree of 640 units; post mansion tax, only 242 units have been sold. Of those 242 units sold post-mansion tax, 36% of all deals priced at +$4M are located in the heavily discounted and highly negotiable Upper East Side; 12% of +$4M deals are located in the Upper West Side which has replaced Greenwich Village and Shoo as the second busiest neighborhood in the city; and 2% of those +$4M were located in Shoo and Tribeca.

Beyond the effects of the mansion tax, Donna Oldham, president of Oldham Realty, said, “I think more than anything, the big hit came from the SALT tax…” in late 2017 when federal tax reform enactments effectively eliminated state and local deductions for high income earners. Frances Kazan, an agent with Douglas Elliman Real Estate, said, “Owning a luxury property once meant arrival in to the wealthy class – now it’s becoming a liability. The higher luxury market is getting pummeled.”

The median price of a luxury unit has been $4.795M in the three months post-mansion tax change. This $4.795M median price represents a -22% decline from the three months prior to the enactment of the mansion tax and a -17% decline from September 2018, according to Miller Samuel Real Estate Appraisers and Consultants.

How long this decline in demand for lux properties and trophy homes priced at $10M and above will continue is anyone’s guess. Donna Olshan simply repeated that not one deal priced over $40M has gone into contract since July 1, 2019.

Also read: Is Now the Time to Buy Investment Properties?, Selling Fast Before the Holidays, Podcast: 5 Reasons To FIRE Your Broker | How To Hire The Right Broker (Part 2)