(Bloomberg) — Luxury developer Toll Brothers Inc. has a deal for those shopping for a condo in Manhattan: buy something soon, and we’ll pay the taxes on your purchase.
The publicly traded homebuilder is offering to pay the city transfer tax and the New York state “mansion tax” — an effective discount totaling almost 2.5 percent — on deals made at three of its developments by Feb. 20, the company said in a statement Wednesday. The closing incentives apply to any apartment bought at Toll’s under-construction projects at 100 Barrow St., in the West Village, and 55 West 17th St., in Chelsea. The deal is also being offered at the Sutton, a development in the East 50s, where sales began in early 2015.
Toll’s offer comes as Manhattan developers contend with a market brimming with costly condos and buyers tepid about committing. Builders hoping to boost sales in their projects are doing what they can to attract interest without officially lowering their prices — everything from offering gift cards and upfront commission to brokers, as well as payment of transfer taxes that, in a healthier market, are passed on to buyers, said Joshua Stein, a Manhattan real estate lawyer.
“Developers like to pretend that values haven’t gone down,” said Stein, who’s not involved in the Toll Brothers projects. “Eventually you’ll see discounting off the face price. But this is a form of denial.”
Contracts for luxury homes — those at $4 million or higher — are seeing a spark of revival in the early months of 2017 as sellers fine-tune their asking prices, according to data from Olshan Realty Inc. In the first seven weeks of the year, there were 154 luxury deals, a 33 percent jump from the same period of 2016. Those properties, however, spent an average of 412 days on the market before finding a buyer. Their median asking price was $6.3 million, down 6 percent from a year earlier.
“Developers went out at numbers that were too aggressive, and are still too aggressive,” said Donna Olshan, president of the brokerage that bears her name. “Toll Brothers is a public company, and they have realism. If it’s not selling, they’ll adjust — and they’ll adjust quicker than somebody else.”
A representative for Horsham, Pennsylvania-based Toll Brothers didn’t comment beyond the company’s statement. On Toll’s earnings call in December, Chief Executive Officer Doug Yearley said “demand at our New York City projects is not as strong as it was several years ago when the market was on fire.”
The incentive, which Toll Brothers says is part of a national sales event, will cover the costs of New York City transfer taxes, which is a levy of 1.425 percent on properties of more than $500,000, according to the Department of Finance. The developer will also pay the the state mansion tax, which is an extra levy of 1 percent on homes $1 million or higher.
Units where the offer might apply include a 1,428-square-foot (133-square-meter), two-bedroom apartment at the Sutton, which is listed at $2.36 million and has been on the market by Toll Brothers for 680 days, according to listings website StreetEasy. At 100 Barrow St., where sales began last year, a three-bedroom apartment listed for $6.34 million would also be subject to the deal.
“They’re signaling to the market, ‘We want to move our product,’” Olshan said. “Developers who take prices down are the ones who’ll get rewarded.”
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