Impact of the Coronavirus on NYC Real Estate
COVID-19 has been having a significant impact on many areas of life. The real estate market is one of these areas. Stay-at-home orders have prevented agents from providing tours of homes. People are unlikely to purchase a home they have not seen in person, which means the lack of private showings has caused a decrease in sales. Another factor in decreased real estate purchases may be financial reasons. COVID-19 has caused brick-and-mortar stores across the country to shut down, resulting in about 36.5 million Americans losing their jobs.
New York City, which had seen success in its real estate market in the first quarter of 2020, had soon faltered under the weight of the coronavirus. It appears as though the virus will hurt housing markets throughout the rest of the country as well. The downturn in real estate has been especially brutal for New York City, though, which had already been rebounding from incidents such as the September 11th terrorist attacks and the fall of the Lehman Brothers in 2008.
While real estate agents have tried to work around the virus with video calls and other forms of technology, it is not enough. Other factors have impacted the market as well, such as higher transfer taxes for luxury apartments, tenant-friendly rent laws going into effect, possible taxes on pieds-à-terre, and the rising anxiety over a recession. All of these issues created the perfect storm for a failing real estate market.
Donna Olshan, the president of Olshan Realty, remarked that “anything left on the market now, the price is just a suggestion.” Sellers, desperate to sell, have been lowering their selling price. Buyers have been pushing for cheaper real estate as well.
The future of the real estate market in New York City is unknown. Since there is difficulty knowing when COVID-19 itself will stop being a problem, it is hard to predict when the market can recover. The only certain thing, according to Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers & Consultants, is that the impact on real estate is going to be catastrophic. However, there is still a chance the market will recover.
NYC’s Mansion Tax Explained
New York City’s mansion tax is a real estate tax applied to the purchase of property that costs more than a specified dollar amount. When purchasing a home, condo, or co-op in New York, the mansion tax is the most expensive closing cost.
Anyone planning to buy a home in New York City should understand how the mansion tax can affect the sale.
Property and the Mansion Tax
Any residential property that costs less than $1,000,000 isn’t subject to the mansion tax. The mansion tax threshold is $1,000,000 or higher. So even if the property isn’t a mansion, any residential property that costs at least $1,000,000 is subject to the mansion tax.
How Much is the Mansion Tax?
The real estate buyer is required to pay the mansion tax as part of the closing cost. The tax amount depends on the purchase price of the real estate.
As of 2019, the mansion tax rates are as follows:
- 1 percent tax for residential property costing $1,000,000 to $1,999,999
- 1.25 percent tax for residential property costing $2,000,000 to $2,999,999
- 1.50 percent tax for residential property costing $3,000,000 to $4,999,999
- 2.25 percent tax for residential property costing $5,000,000 to $9,999,999
- 3.25 percent tax for residential property costing $10,000,000 to $14,999,999
- 3.50 percent tax for residential property costing $15,000,000 to $19,999,999
- 3.75 percent tax for residential property costing $20,000,000 to $24,999,999
- 3.90 percent tax for residential property costing $25,000,000 or more
Planning for Closing Costs
Anyone planning to buy a residential property in NYC must determine if they’ll pay a mansion tax. If so, they must then make sure to have enough money to cover the expense.
Purchasing a residential property that costs $2,500,000 will result in a $31,250 mansion tax. And there are also other closing costs to consider.
There is a growing debate concerning the fairness of NYC’s mansion tax. With the astronomical rise in NYC real estate prices, some buyers are scared away by the additional expense of the mansion tax.
In the past, it was believed that only wealthy buyers would have to deal with the additional tax. But not all real estate buyers are wealthy. There is a concern that the addition of the mansion tax will potentially make it impossible for non-wealthy residents to buy residential real estate. There is also a concern that real estate buyers who aren’t full time NYC residents will balk at paying the tax.
2020 Development Boom in NYC Neighborhoods
New York City is a booming city, and there are some exciting developments when it comes to the neighborhoods in this area. NYC is a big area, and more developments are showing up in 2020.
What Is New In NYC
Brooklyn and Queens is where a lot of people are seeing new developments in their neighborhoods. There are new apartments for 2020 that are being developed in these areas. More than 30,000 units are coming to Queens and Brooklyn neighborhoods. This shows that there is a large amount of growth happening in these areas as more people flock to NYC.
Harlem
There is a development boom in Harlem as well, and much of it starts with the renovation of buildings that are now becoming upscale apartments. The resurgence of Harlem has been in the making for years, and 2020 is providing another boom for real estate investors that are trying to provide more living space for those that like the way that the Harlem landscape is evolving.
How Tech Boom Affects Real Estate
There is a huge tech boom that is playing a big part in the way that NYC is expanding. A lot of companies are putting their focus towards building businesses in New York, and this will bring more jobs. That is the thing that will inevitably lead to the need for new residential developments in 2020.
There are people that are living in Manhattan that can walk to work in less than 20 minutes. There are some developments there, and there are other developments that are being built in Long Island. People that live here will also benefit from the more than 20,000 tech jobs that are projected to arrive in NYC in the next several years.
A New Day
NYC residents that are fans of the luxury developments are waiting to see what Manhattan and neighborhoods like Soho, Tribeca, the Upper East Side and the Lower East Side have to offer. There are new developments in these areas that will cater to those that can afford the life of luxury. People that are new to New York will discover that there are a wide range of possibilities that exist if they are relocating to NYC in 2020.
About Avraham Glattman
Avraham Glattman is the owner of First American Properties Group, a real estate business based in New York City, New York.
Avraham brings over 26 years of experience working as a real estate agent in the city, where he continues to work today. He graduated from Newport University with a Bachelor’s Degree in Business Administration and Management and remained at the university to attain his Masters of Business Administration (M.B.A.). After graduation, he jumped straight into the real estate field in 1992 in the greater New York City area. Throughout his career, Avraham has explored listings across the New York area, keeping a detailed account of the locations, pricing and comparable properties in the housing market.
After gaining a wealth of knowledge about the real estate marketing in New York, Avraham Glattman decided to take it a step further by creating First American Properties Group with his longtime business partner, Pete Jacov in 2008. First American Properties is a real estate and development company that services the five boroughs of New York. The company currently owns residential and commercial properties in Queens, Downtown Brooklyn, Harlem, and Manhattan. The company focuses on monitoring the growth and development in different areas of the city, so they can work to establish more patterns of growth and help revitalize the area.
While monitoring the different areas of New York City, Avraham Glattman consistently keeps an eye out on up-and-coming neighborhoods that he could potentially invest in. For example, after seeing Harlem, Avraham was immediately impressed by the neighborhood’s charm, leading him to invest in properties in the area. With a convenient location next to the subway and charming business like music venues in the area, it was not hard to see what attracted Avraham to the area.
Today, Avraham Glattman continues to find new investments with First American Properties Group, alongside his business partner, Pete Jacov. Together, they are working towards the goals that they set for First American Properties Group. The goals include acquiring property in the Harlem area to renovate and sell, as well as acquiring properties in all five boroughs.
Avraham Glattman is also the proud owner of 1927 Café Bar Popularr. Located in Harlem, the café serves a variety of open-faced Mediterranean sandwiches, called ‘Toastics’, and many types of coffee. Café Bar Popularr is proud of the rich artistic traditions of Harlem, and invites local musicians, authors, and comedians to visit and share their talents with friends.
Avraham was born and raised in Israel, where he went graduated high school. Not long after, he served in the Israeli army for three years, before he was sent to the United States to work with an Israeli newspaper in Brooklyn, NY. Not long after making the move to New York, Avraham met the woman that would become his wife in 1991. Together, they have three children.
In his spare time, Avraham Glattman enjoys spending his time with his wife and three children and loves to explore new parts of New York City. Avraham’s incredible dedication to both his work and family brings him immense happiness and purpose each day.
To learn more about who Avraham Glattman is, visit AvrahamGlattmanNewYork.com.
