Over the past decade, the demand for larger ultra-luxury co-ops and condos, not to mention townhouses, has surged in Manhattan and parts of Brooklyn. These units comprise the city’s robust super-luxury market —that is, they are properties worth $4 million and up. If you’re lucky enough to be looking for a super-luxury residence, the city provides no shortage of options. Still, deciding what type of property is the best match for your budget and lifestyle can be challenging. This article outlines five things to consider before investing in a New York City super-luxury unit.

Cost of Closing

As a rule, count on your closing cost coming to 2 to 4 percent of your purchase price, whatever type of property you buy. Closing costs include but are not limited to transfer taxes, mansion taxes, bank fees, attorney fees, and broker fees. There are also a few costs that are unique to each property type.

Townhouses:

• Mortgage recording fee (buyers must pay a state and city mortgage tax of 1.925 percent on loans over $500,000)

Condos:

• Upfront building fees (board application fee and move-in charges)
• Transfer taxes (only applies to new units)
• Mortgage recording fee

Co-ops:

• Upfront building fees (board application fee and move-in charges)
• Transfer taxes (only applies to sponsor units)
• Escrow (some buildings may ask for an Escrow ranging from 3 months to several years)


Generally, the highest closing costs are incurred when buying new condos. Coops (except sponsor units and those that require a large Escrow) will result in the lowest closing costs.

Taxes

There are two classes of property in New York City. Class 1 properties contain three or fewer units. Class 2 properties contain four or more units. Single-family townhouses are class 1 properties and coops and condos are class 2 properties. Depending on your class or property and borough, your property taxes can vary widely.

First, consider class 1 properties. Buying a class 1 property in an upscale Brooklyn neighborhood versus Manhattan will result in a much lower tax liability. This reflects the different state equalization rates set for Brooklyn versus Manhattan. The state equalization rate refers to the percent of one's home value on which one pays taxes. In Brooklyn, the rate was just 11.89% in 2020. In Manhattan, the 2020 state equalization rate was set at 36.21%. This means that brownstones in neighborhoods like Park Slope or Cobble Hill are taxed on a substantially lower percentage of their home value than brownstones on the Upper West Side or Harlem.

Brooklyn townhouse owners aren't the only property owners who seem to benefit from the city's and state's unusual property tax laws. Thanks to an outdated law, class 2 properties (coops and condos) are assessed as rental properties. As a result, assessors input the value of coops and condos based on rents in comparable apartment buildings. Generally, this leads to coops and condos being assessed far below their actual value, which generally benefits coop and condo owners, especially those who occupy luxury units.

Coop and Condo Fees versus Maintenance Cost

Coop and condo fees vary widely, even at the luxury level, but only two things are certain: In a coop, fees include taxes, and in a condo, taxes are paid separately. In addition, the more amenities offered, the more fees you're likely to pay overall. But how does this compare to owning a townhouse?

If you own a townhouse, you won't need to pay for amenities you don't plan to use (e.g., a shared roof deck, gym, or playroom). But owning a townhouse does bring many expenses about which coop and condo owners never have to worry, even if they are lumped in with their fees. These expenses range from sidewalk repairs to snow removal to façade repairs. Over time, incidental maintenance on one’s townhome can add up. Even if money isn’t a concern, as a homeowner, you will be solely responsible for ensuring that your property and the sidewalk in front of your property meets city standards.

Insurance

When you insure a coop or condo, you’re only insuring your own unit. Anything outside your unit is covered by the building’s insurance. While your coop or condo fees are theoretically still helping to pay for this insurance, even when this is taken into account, insurance on a coop or condo is generally significantly lower than insurance on a townhome.

Lifestyle

The final and most important consideration, especially if you’re buying a luxury unit, is always going to be lifestyle. Vickey Barron, a licensed real estate broker at Compass explains buyers shopping in the city's super-prime market are looking for space, quality, and of course, location.

Townhouses offer greater privacy and typically more square footage. Vickey emphasizes that the width of a rowhouse is crucial. "High-end buyers are not going to settle for a 17-foot townhouse." Luxury buyers are generally seeking greater volume, which comes from both square footage and ceiling height to create graciously proportioned spaces.

Townhouses are also more likely to provide access to a multi-level living space with greater character. The main downside of purchasing a townhouse, even if maintenance and insurance costs aren’t a concern, is that they tend to demand more attention. So, unless you also employ full-time staff to manage your home's day-to-day upkeep, it can be difficult to put a townhouse on autopilot (e.g., when you retreat to a summer home).

If you’re looking for the charm of a pre-war structure but without the high-level attention needed to manage a townhouse, a classic six in a pre-war coop on Park Avenue, Central Park West, or West End Avenue may be a better option. The major downside of moving into a pre-war coop is that many of these buildings are plagued by aging infrastructure (e.g., they don’t have central air and can’t support in-unit washer and dryer units). Many also offer only limited amenities. For this reason, if you place a high value on convenience, a new luxury condo is likely the best option.

As a New Yorker, your apartment must have some personality. Regardless of its size, your city sanctuary should remind you that you are alive, creative, and living your dreams in the greatest city in the world. Below are two dozen new high-end listings that reflect the seller's creative vision and showcase inspiring spaces crafted by the city's talented designers and artisans.