The new Mansion tax took affect on July 1st of this year in New York City, and so this really is THE perfect time to purchase a home in Westchester. Not only were the Mansion Tax rates increased (see below), but also the Transfer Tax in New York City was increased also. Sales in the city had softened in the last several years partly due to an increased inventory of higher priced new construction properties which in turn, created a softer market in Westchester. However, with the announcement of the new increased city Mansion tax, savvy buyers took advantage, and sales greatly increased in the first six months in the city, resulting in a significant sales growth in the $2-5 Million price range setting a new record with buyers trying to avoid that new Mansion Tax. Not only that, but the Transfer Tax was also increased in the city too rising from 0.4% to 0.65% per $1000.
With sales in the higher priced properties in Westchester being softer, this all indicates a GREAT time in which to invest in a wonderful home in Westchester, perhaps at a lesser cost, and yet still be close to the city. There is always a trickle down effect from the city to the suburbs in sales, and if sellers weren’t able to sell their luxury condos and coops at optimum prices, many chose to remain in the city. That affected the higher priced homes in Westchester. That, and the new property tax structure ( only being allowed to deduct $10,000 of the property tax, and only up to $750,000 in the mortgage interest) , resulted in sluggish sales. Buyers were seeking value (and still ARE!). Homes in the $500,000 – $600,000 were going into multiple bidding situations throughout Westchester as those homes generally had lower taxes, and with interest rates dropping too, they became the first time home buyer’s choice. Luxury homes have been a different story. Also, many Millennials don’t seek the larger homes, and I have also seen a large amount of rentals this year. Buyers are taking their time in buying a home.
Bearing in mind that if the Manhattan or Brooklyn home owner chose not to sell their home before July 1st perhaps making a future sale a tad harder for them, they can still benefit from a well priced home in Rye, Larchmont, Mamaroneck, and New Rochelle which perhaps could make up for that differential in price point.
Purchase Price Mansion Tax
Less than $999,999 0.00%
$1,000,000 – $1,999,999 1.00%
$2,000,000 – $2,999,999 1.25%
$3,000,000 – $4,999,999 1.50%
$5,000,000 – $9,999,999 2.25%
$10,000,000 – $14,999,999 3.25%
$15,000,000 – $19,999,999 3.50%
$20,000,000 – $24,999,999 3.75%
$25,000,000 or more 3.90%
The statistics below are based on the recorded sales as of January 1st, 2019 – June 30th, 2019. While I have listed Larchmont, Mamaroneck and New Rochelle in single family homes sales totals, please see the separate blog posts for the different elementary schools.
These stats are reflecting the absorption rates of each area. We always refer to absorption rates as negative, positive and balanced. A balanced absorption rate would be 5-6 months of inventory. 04 months would reflect a seller’s market, and over 6 months would reflect a buyer’s market.
As you can see from the statistics below, Mamaroneck right now is indicating a balanced market, Larchmont and New Rochelle are indicating a buyer’s market. It is a GREAT time in which to purchase a home! Interest rates are low!!
Westchester is GREAT!