Carol Staab’s Q3 Luxury Real Estate Outlook: Can Trump’s Tax Plan Reenergize the Softening Luxury Real Estate Market?

Business Wire

Average sales price of Manhattan apartments drops 8% from prior quarter to just over $2 million

NEW YORK--(BUSINESS WIRE)-- Carol Staab, top 1% luxury real estate agent at Douglas Elliman, just released her Q3 Luxury Real Estate Outlook, “Can Trump’s Tax Plan Reenergize the Softening Luxury Real Estate Market?”

According to the report, as luxury real estate markets continued to weaken this quarter, the prospect of Trump’s tax reform being passed became increasingly attractive to high end buyers. The tax reform proposes that the top individual tax rate be lowered from 39.6 percent, to 35 percent, freeing up a significant amount of cash flow for New York City’s wealthiest residents. Foreign investors are particularly excited about potential tax deductions as there has been an increasing number of foreign high net worth buyers looking to preserve their wealth and invest in Manhattan real estate.

“Many luxury real estate investors are choosing to heavily finance their luxury real estate purchases,” said Carol Staab, a top Manhattan luxury residential real estate broker with Douglas Elliman. “Record low interest rates are motivating borrowers to seek financing in order to free up money for tax purposes or other investments. Banks have changed their mindsets about granting jumbo loans to qualified buyers.”

“Wealthy buyers seeking jumbo loans are fueling a mortgage boom. Trump’s tax reform will hopefully free up additional cash flow and incentivize high end buyers to leverage less, ultimately negating a potential mortgage crisis down the road” adds Staab.

Pricing pressures seem to be the highest at the top of the market with luxury prices having dropped 13%. Inventory also dropped sharply this quarter, which is partially attributed to a number of luxury sellers taking their properties off the market. New development saw prices drop by 27% and inventory rose for the fifth consecutive quarter. These indicators point to a weaker new development market.

As Trump continues to undo a large number of acts under Dodd Frank, lending standards at many banks are loosening and becoming increasingly more flexible. While it was once next to impossible to get a mortgage, given the strict requirements, now, it’s almost easy.

Unfortunately, should the plan come full circle, buyers in the lower end of the market will not reap any benefits. On the upside, non-luxury buyers experienced an upswing during this past quarter. For buyers in the lower price range, the median price for resales rose just shy of $1 million. Resale inventory fell by 4.1% resulting in a low 5.2 months’ supply. Non-luxury buyers also benefited this quarter as listing discounts more than doubled and co-op boards started loosening their restrictions, which allowed for more sales to close. In this quarter alone, the median sales price of co-ops set a 28-year record at $850,000 representing an 8% increase from last year. Luxury co-op sales continue to suffer.

About Carol Staab

Top producing luxury real estate professional Carol Staab is renowned for having excellent business savvy when it comes to the fine “art of the deal.” Buyers benefit from her encyclopedic knowledge of Manhattan that was honed from her 20 plus years working in various neighborhoods and buildings. Carol has worked with clients from around the globe. She has traveled to every continent in her previous career with Pan American Airlines. Clients appreciate her knowledge of their countries and unique cultures. Carol authored a chapter on Manhattan luxury real estate in the best-selling book “Luxury Home Selling Mastery,” and has been approached by the OHM network to be featured in a segment in the new series. She has also been quoted in The Wall Street Journal, The New York Times, The New York Post, Avenue, Quest and The Real Deal.

Carol has lived on Manhattan’s Fifth Avenue for 20+ years and is a long-standing member of her condo’s Board of Directors. Carol is a member of the prestigious Core Club In Manhattan. She also has a home near Southampton, and is a member of Burning Tree Country Club in Greenwich. She is an avid skier who loves Aspen and plays tennis. Carol also volunteers for the Ronald McDonald House and Central Park Conservancy.

About Douglas Elliman Real Estate

Established in 1911, Douglas Elliman Real Estate is the largest brokerage in the New York Metropolitan area and the fourth largest residential real estate company nationwide. With more than 6,500 agents, the company operates approximately 90 offices in Manhattan, Brooklyn, Queens, New Jersey, Long Island, the Hamptons & North Fork, Westchester, Greenwich, South Florida, Colorado and Beverly Hills. Moreover, Douglas Elliman has a strategic global alliance with London-based Knight Frank Residential for business in the worldwide luxury markets spanning 59 countries and six continents. The company also controls a portfolio of real estate services including Douglas Elliman Development Marketing; Manhattan's largest residential property manager, Douglas Elliman Property Management with over 250 buildings; and DE Commercial. For more information on Douglas Elliman as well as expert commentary on emerging trends in the real estate industry, please visit www.elliman.com.