Despite concerns following the passage of New York City's pied-à-terre tax on May 27, luxury real estate sales in Manhattan have remained robust. Brokers and analysts report continued strong demand, with 126 contracts signed for apartments priced at $4 million or more in June, slightly exceeding last year’s figures for the same period. This resilience comes in the face of initial predictions that the tax might drive wealthy buyers out of the city, halt new developments, and hurt the local economy—a phenomenon critics dubbed the “Mamdani effect” after Mayor Zohran Mamdani.

The luxury market has seen notable price increases and rising transaction volumes, with the average price of Manhattan apartments reaching about $2.2 million in the second quarter—a 5% increase year-over-year. Sales of high-end condos have surged dramatically, with those priced between $10 million and $20 million up 55%, and properties over $20 million seeing a 33% rise in sales and a 14% increase in asking prices. Some standout transactions in June include an $80 million duplex penthouse near the West Village and multi-million dollar deals on the Upper East Side, underscoring strong buyer confidence amid fears around the new tax.

Buyers initially hesitated after news of the tax proposal, but returning market strength driven by stock market liquidity and asset wealth has outweighed these concerns. Brokers like Lauren Muss of Douglas Elliman highlight the influx of capital and sustained buyer interest, noting that many wealthy purchasers are primarily focused on market timing rather than taxes. Despite the tax’s recent implementation, many affluent buyers appear undeterred, with some choosing to absorb the additional costs in favor of securing the right property.

Inventory constraints are also intensifying competition in Manhattan’s luxury segment, with available properties down 40% from last year, reaching lows not seen since 2004, according to appraisal firm Miller Samuel. High-end buyers are increasingly paying all cash, supported by wealth transfers and family offices, especially among buyers under 40. While legal complexities around the pied-à-terre tax are expected to unfold in coming years, current market data suggests the luxury sector remains a key pillar of New York City’s real estate economy despite the new fiscal environment.