New York City's new tax on second homes was approved on May 27. One month later, the luxury real estate market continues to show resilience, with brokers and analysts reporting that sales remain active and available properties are shrinking.
Hochul and Mayor Zohran Mamdani have projected the tax will bring in $500 million annually, while the New York City Comptroller estimates a more modest $340 million to $380 million.
Yet luxury buyers kept signing. In June, 126 contracts were inked for apartments priced at $4 million or more, compared with 124 during the same four-week period last year, according to Olshan Realty.
Condo sales in the $10 million to $20 million range jumped 55%, and transactions above $20 million rose 33%, with average asking prices climbing 14%, as reported by Compass.
An $80 million deal closed on a duplex penthouse in a new West Village condo development. A downtown condo fetched $26 million, and an Upper East Side co-op went for $22 million.
A wave of cash from recent initial public offerings and rising asset prices has outweighed tax concerns. According to Jonathan Miller, who leads appraisal and research firm Miller Samuel, luxury inventory has dropped 40% compared to last year and is now the lowest he has recorded since 2004.
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"The amount of money out there is insane," said Lauren Muss, a broker at Douglas Elliman, who saw a $17.5 million condo listing go into contract in June. "We're seeing big things come to us every day. It's only getting stronger."
Scott Hustis, a Compass broker with Paradigm Advisory, put a $16.5 million penthouse duplex in Madison Square Park Tower on the market on April 8. One buyer was immediately interested and nearly made an offer. However, when Hochul revealed the tax proposal a week later, the buyer stepped back.
By late May, as tax details became clearer, buyers returned. The penthouse went into contract on June 6.
"There is a lot of confidence out there," Hustis said. "Markets are strong. A lot more New York buyers are coming out of the woodwork."
Marc Palermo of Douglas Elliman is representing a $19 million, 4,700-square-foot unit at 565 Broome St., a glass tower whose past buyers include the president's niece Mary Trump, tennis star Novak Djokovic, and Uber co-founder Travis Kalanick. The listing had received several lowball offers in late 2025 and early 2026, Palermo said, but the seller held firm. By late spring, as concerns over geopolitical tensions and a major tech IPO faded, the Manhattan market reignited.
Palermo received a "strong offer" for the $19 million apartment, and it went to contract at the end of June. Since the buyer is not a primary resident for New York tax purposes, they will probably be subject to the pied-à-terre tax.
"People took a breath, they settled into the new reality and the smart ones charged in," Palermo said.
Nearly every luxury buyer in Manhattan makes all-cash purchases, avoiding mortgages. Palermo also observed many gifts from parents: "If you're under 40 and you're buying in New York City, chances are you're not making enough to buy on your own."
Shortly after the measure passed, a New York real estate industry lobby group issued a statement warning that the tax on second homes "will dampen market activity, reduce property values, hurt new development and weaken the city's economy."
Nevertheless, leading brokers say concerns over the pied-à-terre tax are fading quickly. Hustis noted that ultra-wealthy buyers focus more on timing the market cycle than on an added tax. "Right now, they're seeing things go into contract and prices not coming down and they decide to execute," he said.
It is still too soon to evaluate the tax's long-term effects. Real estate lawyers anticipate years of litigation over valuations, co-op board rules, residency status, and other issues tied to the new levy.
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