Pied-A-Terre Tax Catastrophe Might Be Downgraded to Just Bad
Sometimes we don’t stop and figure out why we are going in circles…
Logic is for losers…. pic.twitter.com/ZiCnudQZXD— WTF!? (@wtfvids_) October 3, 2018
But I digress…
Albany Pauses And Loses Its Appetite To Crush The Manhattan Luxury Condo Market
It looks like the outrage over the pied-a-terre tax proposal caused Albany to back off but it is not clear what form it will take other than being a transfer tax:
State lawmakers were reviewing a transfer tax starting on property sales of $3 million or even less, with the rate increasing for sales of $5 million, according to a person briefed on those discussions. Mr. Heastie confirmed only that the tax would apply to properties over $5 million and would be phased in.
City Comptroller Scott Stringer, who had supported the pied-à-terre tax, said an analysis by his staff showed it could raise $650 million a year, while the real-estate industry said it would raise far less—about $372 million annually. A Wall Street Journal analysis of 17 years of sales data estimated that revenue at $471 million a year.
My estimate of $455,000,000 in new tax revenue for the original version assuming no change in consumer behavior was consistent with the Wall Street Journal’s conclusion, both far short of the $650,000,000 NYS Comptroller’s estimate.
At this point, it looks like proposed tax will be converted to some sort of transfer tax rather than annual property tax. This will still impact high-end sales and prices – and new development might handle it as an additional concession if buyers push back – but it doesn’t look to be as Draconian as the original bill seemed to show.
I haven’t seen such a severe tax proposal in my career and with the backlash over Amazon and the $238M condo sale, the political zeitgeist seemed determined to make it happen. Thankfully, with all the voices in the real estate industry raised, Albany listened…so far. This outrage wasn’t about saving taxes for the wealthy, but actually reducing overall tax revenues so that the shortfall would cost all New Yorkers and destroy the new development industry.
Wall Street Bonuses Are Down But Who Cares
After years of hyperbole over their impact to the Manhattan housing market, post-financial crisis their impact (rising or falling) has been nominal. Bonus comp is now about 40% of total comp down from more than half pre-financial crisis due to the regulatory overlay from Dodd-Frank. And they really aren’t bonuses.
But here’s my annual triple super deluxe bonus chart series:
Our favorite charts of the week of our own making
Len Kiefer‘s Chart Handiwork
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
I took a break this week on appraisal issues (ok, ok, I have several things to write about but didn’t have time to research the topics) as I prepare for a 30+ city market report release gauntlet in April. But there are a lot of good appraisals related reads at the bottom of the newsletter!
OFT (One Final Thought)
Brilliant Idea #1
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- And I’ll use logic.
Brilliant Idea #2
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See you next week.
Reads, Listens and Visuals I Enjoyed
- The 4% Mortgage Is Back [The Wall Street Journal]
- Airbnb Has a Hidden-Camera Problem [Citylab]
- Brexit Limbo Having a ‘Suffocating Affect’ on Prime Central London Real Estate [Mansion Global]
- U.S. Charges Facebook With Violating Fair Housing Laws [The Wall Street Journal]
- “No man’s land”: How Trump Tower became Chicago retail's biggest failure [The Real Deal]
- New York State Comptroller DiNapoli: Wall Street Profits Rose in 2018, But Bonuses Fell [NY OSC]
- BBRG: Wall Street Bonuses Aren’t Really Bonuses [The Big Picture]
- Santa Monica temporarily bans micro-apartments that aren’t affordable [Curbed LA]
- Trump to Seek Overhaul of Housing-Finance System [The Wall Street Journal]
- How to Get the Most Out of a Second Home [The Wall Street Journal]
- Still More Signs of a Housing Slowdown [Barrons]
- An Ex-Fox News Host Pitched ‘Financial Freedom.’ His Clients Want Their Money Back. [The New York Times]
- How congestion pricing could help fix NYC’s crumbling subway system [Curbed]
- Housing Affordability Crisis Spreads to Rural America [Governing]
- New York Leaders Retreat From Annual Tax on High-Priced Second Homes [The Wall Street Journal]
- How tech companies want to change the way you buy and sell a home [Curbed]
- Pied-à-Terre Tax Key Articles [REBNY]
- Many Rich Fretting About SALT Didn’t Get That Tax Break Anyway [Bloomberg]
- Translating Broker Babble [The New York Times]
- Peep the lavish homes of those college admission cheaters [Yolanda's Little Black Book]
- Three Scenarios for Growth in Homeowner and Renter Households [Joint Center for Housing Studies of Harvard University]
- 45 rattlesnakes removed from under West Texas home [The Austin American-Statesman]
- FHA Clamps Down on Risky Government-Backed Mortgages [The Wall Street Journal]
- California Has the Jobs but Not Enough Homes [The Wall Street Journal]
- Opinion | A Pied-à-Terre Tax Will Bring Revenue New York Needs [The New York Times]
My New Content, Research and Mentions
- From Renting to More Realistic Pricing: 3 Ways to Weather the Chill in L.A.'s Luxury Real Estate Market [Hollywood Reporter]
- Slowing Market, Swelling Rental Prices [Professional Builder]
- Report: First-time NYC Home Buyers Need To Save For 18 Years To Make A Down Payment [Gothamist]
- A housing-market slowdown could be bad news for renters [Business Insider]
- One of Aspen’s Founding Families Is Selling Its Mountain Mansion [Bloomberg]
- NYC divided over pied-a-terre tax [The Guam Daily Post]
Appraisal Related Reads
- Will AVMs Create a World Without Appraisers? [Think Realty]
- Coester AMC Out of Business, Appraisers Unpaid [Working RE]
- Hybrid Appraisals Part 5: Robust and Precise Inspections? [George Dell]
- If You Price Your Home Like Fro-Yo, You’re Gonna Get Licked! [Cleveland Appraisal Blog]
- April 1st Edition of the Florida Real Estate Appraisal Board [Appraiser Active]
- Let Appraisers Train their Own Inspector Personnel for Desktop Appraisals [Glen Dale Floyd, Jr./Appraisersblogs]
- Another Huckster Enters the Appraisal Arena – Appraisers Blogs [Mike Ford/Appraisersblogs]
- The Importance Of Accurate MLS Information [Birmingham Appraisal Blog]
- Tips for choosing comps on a unique home (straw-bale house) [Sacramento Appraisal Blog]
Extra Curricular Reads
- Stairway to What? [The Baffler]
- Garfield beach phone mystery solved after 30 years [AFP/Yahoo News]
- Andre Kertesz’s Photos From His Window [New York Times]
- Why Are Economists So Bad at Forecasting Recessions? [Bloomberg]
- Def Leppard On Howard Stern [The Lefsetz Letter]
- 346- Palaces for the People [99% Invisible]
- Nathan Pyle's Strange Planet Is Comic Relief for Instagram [Time]