NY taxes driving Florida real estate: agent
“Unless government pays attention to this and re-incentivize the wealthy to stay in New York City, there’s going to be a transfer of wealth here for sure,” the costar of Bravo’s hit show “Million Dollar Listing New York” told “Mornings with Maria.”
The real estate executive pointed out that he has been on an airplane with clients from New York to South Florida two to three times a month to look for properties with them.
“It’s in part fueled by work from home opportunities, the fact that most people thought for a very long time they had to be in New York City and now they get to have the beach, there’s great schools and then there’s the tax savings, no income tax, capital gains tax, no state estate tax, there’s great opportunity in states like Florida,” Serhant explained.
He went on to point out “the most attractive incentive,” is the lack of the state income tax.
“If you stay in New York, New York State, near a certain income bracket, you’re going to pay almost 14% in additional taxes to the government,” Serhant noted.
“And so a lot of clients are saying, ‘Ok, if I’m going the pay that money to New York, if I don’t have to be in New York, at least not for the near term, I can go and live for two to four years in a state like Florida and I’ll have those taxes of New York pay for my new beach house. That sounds like a pretty great deal.’”
According to a post-move customer survey conducted by United Van Lines, the nation’s largest household goods mover, between March and August 2020, there was a 4 percentage point uptick in actual moves to Florida from New York, New Jersey, Connecticut and Massachusetts, collectively, compared with last year.
United Van Lines previously told FOX Business that Florida was a top destination for people fleeing the Northeast, with moving interest to Florida from New York City up 10% year over year as of September.
Serhant said he doesn’t think the trend will last forever.
“We personally have been involved in just over $200 million worth of transactions outside of New York in the last 45 days alone due to this trend, but I think over the next 12 months you’re going to see people realize that the energy in New York City, once it’s back, it’s unlike anywhere else,” he said.
Serhant went on to say “there’s a reason cities are here,” which includes hiring new workers, training new people as well as for the “energy” in the restaurants and streets.
“That’s why economic activity will always be the best in the cities, but, for now, we’ll take as much advantage as we can of the low-taxed states, bringing our buyers there,” he said.
Serhant believes that New York City will start to turn back into a seller’s market by the end of 2021.
“The buyer’s market in New York, we feel based on the numbers, basically hit its bottom last summer,” he explained. “That was the most negotiable market we’ve seen.”
“We represented buyers who were buying on Central Park for 50% off, in SOHO for 25% off and that started to tighten now as a lot of the inventory has been cleared from the board,” Serhant continued.
He noted that “since the beginning of 2021, we’ve seen more contracts every week, year-over-year across all price points.”
He also believes “that’s going to continue as the year goes on as more and more people start to come back into the city and realize they’re going to have to come back to the office, they want their kids to be back with their friends.”
Last month, Serhant, a multidimensional real estate brokerage, announced the release of its Year-End 2020 Signature Report, which details sales activity of $10 million and above in the Manhattan and Brooklyn real estate market.
The report noted a decrease in the overall number of transactions with 106 transactions in 2020 priced at $10 million and above, a decrease from the previous year, which the company attributed in part to the “stay-at-home orders early in the year that prevented in-person showings.”
The report also pointed to record prices noting that the luxury real estate market saw a median sales price of $16,050,000 and an average sales price of $22,658,414, both record highs.
“I think people with the means to purchase over $10 million are seeing great opportunity,” Serhant told host Maria Bartiromo on Monday.
He then provided an example.
“We just closed in a property in SOHO, the asking price was $30 million, our purchaser was able to get it for $22.5,” Serhant said.
“The comparables show that three years ago, that property was worth $32 to $33 million,” he continued.
“Somebody with that purchasing power, which is the majority of our clients, are seeing that as incredible opportunity that they might never get again, maybe not in the next 10 to 20 years and so they’re taking advantage of it.”