New York City is coping with a nationwide exodus of residents from big, expensive cities to lower-tax states -- a trend that gained momentum after state and local tax (SALT) deductions were capped at $10,000 under the Tax Cuts and Jobs Act. Because of this, money flow into the luxury real estate market is changing.
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Billionaires are packing up their belongings and fleeing to Florida, which has no state income tax, estate tax, or inheritance tax. New York's top income tax rate is more than 8 percent.
According to U.S. Census data, Florida received more movers than any other state last year, with New York outflows to the state being the highest – 63,772 people. New York had the third-largest outflows of any state, with 452,580 residents relocating within the past year.
In addition, foreign buyers have retreated from the market.
"The thing is, you don't have the Chinese buyers anymore,” said FOX Business' Cheryl Casone from inside a Meatpacking District penthouse that saw its price slashed by $3 million. “You don't have the Saudi buyers, don't have a lot of the Russian money flowing into New York because there was a law change -- and that has changed the story.”
The property, which was originally listed for $29 million, takes up the entire floor of the building -- over 5,000 square feet. Casone said this may not seem like much but in New York City, “this is the lap of luxury.”
The unit includes:
- Five bedrooms
- Six and a half bathrooms
- 200-pound front door
- 300-pound sink valued at $40,000
- Floor-to-ceiling windows
- Italian marble