At the $5 Million Line
The Roebling Report · By Corey Cohen · Principal, The Roebling Team at Compass
Manhattan's first half did not produce a surge in transaction count. But it did produce a shift in composition.
In the second quarter, transactions below $1 million lost market share, while sales above $2 million continued to expand.
| Second quarter | Below $1M | $1M–$2M | $2M–$5M | $5M+ |
|---|---|---|---|---|
| 2021 | 44% | 28% | 22% | 7.0% |
| 2023 | 44% | 28% | 19% | 8.3% |
| 2025 | 43% | 28% | 21% | 8.7% |
| 2026 | 40% | 27% | 24% | 8.9% |
That richer sales mix now meets a new variable. New York's pied-à-terre tax took effect July 1 as an annual property-tax surcharge on certain high-value homes that do not serve as a primary residence. Houses, condominiums and cooperative apartments can be exempt when occupied as the primary residence of an owner, immediate family member or qualifying tenant.
The $5 million line is a market proxy, not a universal tax trigger. During the first two fiscal years, condominiums and cooperative apartments are screened using a $1 million Department of Finance phase-one market value. Beginning July 1, 2028, the threshold becomes $5 million under a new phase-two valuation system.
One market, two headlines
Within days, CNBC said Manhattan luxury sales were holding firm. The New York Post said the market had "plummeted."
Apparently the pied-à-terre tax had already produced both outcomes.
The Post based its verdict on one apartment asking more than $10 million entering contract during a single summer week. We will keep watching Department of Finance notices, contract activity on both sides of $5 million, buyer behavior in active searches and the recorded sales that follow.
The $5 million line
Historically, apartment sales at or above $5 million have represented only about 8% of Manhattan transactions, but approximately 34% of apartment dollar volume.
That gap is interesting. The upper tier is small by deal count and central by value. A change in the behavior of a limited number of purchasers can materially affect pricing, liquidity and dollar volume.
Some buyers will remain above $5 million because the apartment they want has no convincing substitute below it — and at the very top, the tax may barely register. A $26 million SoHo penthouse just set a five-year neighborhood price-per-foot record.
Buyers may also reorganize their search around the line. A purchaser who began at $6 million may decide that a strong apartment below $5 million is close enough, establish New York residency or price the surcharge into an offer. The negotiation then becomes whether — and how much of — the surcharge's present value the seller absorbs upfront.
And some may rent instead — and that means entering a fierce market. Manhattan's median rent reached a record $5,295 in June, up 8% from one year earlier. If prospective buyers move into rentals while existing owners place additional apartments on the market, both sides of the high-end rental equation could change.
State officials estimate that roughly 10,000 properties will ultimately be subject to the surcharge. Any market response is likely to be most visible where sales above $5 million already account for a meaningful share of activity and an even greater share of dollar volume: Billionaires' Row, Fifth Avenue, Park Avenue, Central Park West and high-end condominium clusters elsewhere in Manhattan.
Run the numbers on your apartment: Estimate the pied-à-terre tax →
No single apartment is the market. For owners considering a sale, buyers evaluating a purchase, or anyone looking for a clear assessment of a particular building or property, I offer private consultations grounded in current competition, recorded sales and the details that determine value apartment by apartment.
Book a consultation with Corey →
Best,
Corey Cohen Principal, The Roebling Team at Compass c.cohen@compass.com · 646.939.7375