NYC’s Luxury Housing Market Booms Despite Mamdani’s Pied-à-Terre Tax

It’s still early, but New York City’s luxury housing market is showing little sign of slowing after Mayor Zohran Mamdani’s new tax on high-value second homes took effect.

The city’s first-ever pied-à-terre tax took effect on July 1, applying to non-primary residences valued at more than $5 million as part of the mayor’s larger effort to improve housing affordability. Early market data, however, suggests the tax has done little to deter wealthy buyers from buying Manhattan’s most expensive properties.

Compass’ second-quarter Manhattan market report shows that signings for homes priced above $20 million rose 25% year-over-year, while activity in the $10 million to $20 million segment rose 38.6%.

“The introduction of the pied-à-terre tax appears to have had only a limited impact, with some buyers opting to purchase primary residences instead of second homes,” Compass said in its report.

The luxury market data comes as New York prepares to implement one of the most closely watched elements of Mamdani’s tax agenda.

Generate New Revenue

The measure applies to second homes in New York City valued at $5 million or more and is intended to generate new revenue from high-value, non-primary residences, Newsweek reported. State and city officials have estimated the tax will raise about $500 million annually from roughly 13,000 properties, with the proceeds expected to support housing initiatives, the publication noted.

New York City Comptroller Mark Levine has projected lower revenues, estimating the tax could generate between $340 million and $380 million per year depending on how it is ultimately structured, implemented, and enforced.

Supporters say the measure asks owners of multimillion-dollar second homes to contribute more toward addressing the city’s housing challenges, but critics have said higher taxes could discourage investment or encourage wealthy residents to relocate to lower-tax states.

Newsweek reported that the latest luxury market data suggest those concerns have yet to be reflected in Manhattan’s high-end housing market.

Luxury condominiums were among the strongest performing segments of the market, Newsweek noted.

Contract Activity Rose

It said that contract activity rose 54.5% for condos priced between $10 million and $20 million, while transactions involving properties valued at more than $20 million rose 33.3 percent. Asking prices in the ultra-luxury category also climbed 13.9 percent, the data showed.

The market’s strength comes despite elevated mortgage rates, persistent inflation, and broader economic uncertainty, Newsweek said. Industry experts have said that affluent buyers remain largely insulated from those pressures, supported by rising equity markets, Wall Street bonuses and generational wealth transfers.

Compass broker Christine Miller Martin told Realtor.com that recent IPOs and strong financial markets have put a lot of capital into the hands of luxury buyers.

“At this level, buyers are seeking something rare—they’re buying provenance and irreplaceability, not just square footage,” Martin said, adding that many purchasers are focused on long-term ownership rather than short-term returns.