It’s been an eventful month at Compass, including the acquisition of Stribling, one of the most respected and admired groups in the real estate industry and the fifth largest brokerage in NYC.
More noteworthy activity in Q1:
While January is typically sluggish, we definitely felt more activity towards the end of Q1. According to CNBC, homes listed in the first week of April get 14% more online views on average and are likely to sell 6 days faster than the average during the rest of the year. Homes sold in April are also priced 6% higher than those in January. We listed an apartment last week and have already had 30+ showings and have received four offers. Perhaps they’re right!
As Q1 came to an end, the S&P 500 surged 13.1% and the DOW 11.2%. Mortgages have hit lows for the year, yet in most segments of the real estate market pricing is down while some have stabilized. There are several new tax laws that could play a big impact on activity moving forward.
We summarize them below.
Owning a ‘Mansion’ Just Got More Expensive Since its enactment in 1989, the New York State Mansion Tax has held firm at 1% of the purchase price (for sales over $1M). The New Progressive Mansion Tax Law breaks the mansion tax into eight tiers as defined below:
- $1M to $2M: 1%
- Ex: No Change from Current Mansion Tax
- $2M to $3M: 1.25%
- Ex: For a $2.5M purchase there is an increase of $6,250 in mansion tax
- $3M to $5M: 1.50%
- $5M to $10M: 2.25%
- $10M to $15M: 3.25%
- $15M to $20M: 3.50%
- Ex: For a $17M purchase there is an increase of $425,000 in mansion tax
- $20M to $25M: 3.75%
- $25M+: 3.90%
Transfer Tax Overhaul In addition to an overhaul of the NYS Mansion Tax, the NYS Transfer Tax has changed as well. For residential purchases greater than $3M, the NYS Transfer Tax increases from its current rate of 0.4% to 0.65%. The new rate also applies for commercial purchases greater than $2M. The proceeds from this and the new mansion taxes are scheduled to fund the MTA for subway repairs and upgrades.
