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Kathy Hochul has found a tax on the wealthy she can get behind: a surcharge on New York City pied-\u00e0-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\u2019t close the city\u2019s budget gap, but people generally seem to like the idea. (It\u2019s 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.<\/p>\n
\u201cI think it\u2019s a horrible idea that\u2019s going to backfire,\u201d 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 \u201cgood chunk\u201d of Glazer\u2019s 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: \u201cI\u2019m not happy. Buyers are not happy.\u201d Noble Black, a broker at Corcoran who not too long ago sold<\/a> a penthouse at 520 Park Avenue for $73 million, agrees. \u201cEveryone is talking about it,\u201d Black says. \u201cI\u2019m not saying this is going to kill the city, but it\u2019s a very negative proposal and poorly thought through.\u201d He has already gotten calls from at least one pied-\u00e0-terre owner asking about selling, but Black advised them to wait and see. He says he\u2019s heard of other buyers pausing their searches for a second place (or third or fourth or fifth, as the case may be<\/a>) in the city while waiting to see how this plays out. \u201cI think it\u2019s a misguided and alarming message to be sending to people,\u201d 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\u2019s Citadel seemed to threaten<\/a> to halt construction on a midtown office tower.)<\/p>\n But some brokers are skeptical that the sky is actually falling. After all, isn\u2019t a wealthy person in New York always angry about something? The city\u2019s ultrarich threatened to flee over Mamdani\u2019s election, but the luxury market has continued apace<\/a> anyway. (Or as one Serhant broker presciently told<\/a> my colleague after Mamdani won the primary: \u201cAnybody that says they are leaving New York ain\u2019t fucking leaving.\u201d) \u201cBrokers are fearful by nature,\u201d 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-\u00e0-terre to begin with. \u201cI\u2019m working with a client who\u2019s worth north of $2 million or $3 billion, and he\u2019s been scooping up property in New York. It hasn\u2019t dissuaded him at all,\u201d says Biryla. Mostly, he thinks it\u2019s 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, \u201cevery buyer and every offer we\u2019ve gotten is refusing to go over the $5 million threshold.\u201d (It\u2019s also not yet clear how property values for the tax will be assessed<\/a>.)<\/p>\n 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 \u201cabsorbed\u201d into the market, she says. She isn\u2019t in favor of the tax and thinks it will make some buyers look elsewhere, but demand is also demand. \u201cIs it driving people out in droves? No,\u201d Griffith says. \u201cIf you speak to any active real-estate broker in Manhattan right now, we all have significantly more buyers than we do listings \u2014 inventory is at an all-time low.\u201d 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-\u00e0-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.)<\/p>\n 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. \u201cPeople with a $5 million pied-\u00e0-terre aren\u2019t going to be hurt by the money,\u201d Glazer says. \u201cThey just don\u2019t want to spend it. It\u2019s the principle.\u201d<\/p>\n Sign Up for the Curbed Newsletter<\/p>\n A daily mix of stories about cities, city life, and our always evolving neighborhoods and skylines.<\/p>\n Vox Media, LLC Terms and Privacy Notice<\/p>\n