Democratic Socialist from New York Mayor Zohran Mamdani issued an ultimatum to Albany: tax the ultra-rich or face a 9.5 percent property tax hike as a “last resort” to close a $5.4 billion deficit.
While Mamdani claims to protect the working class, real estate experts say the plan is a math-defying disaster that will drive up rents and accelerate taxpayer flight to low-tax states like Florida and Texas.
“Even the talk of a 9.5% hike is enough to influence buyer behavior and cause irritation in the market,” Ben Jacobs of Douglas Elliman told Fox News Digital. “Some buyers have considered Nassau, Westchester, Long Island and even Florida or Texas as alternatives because they simply don’t agree with [NYC] policy.”
“The mention of a 9.5% hike can interrupt decision-making, especially for those evaluating options in suburban or out-of-state markets. We’re already seeing clients seriously evaluating alternatives in Nassau, Westchester and beyond, factoring taxes heavily into affordability calculations,” Michelle Griffith of Douglas Elliman also told Fox News Digital. “In some negotiations, this ‘Mamdani effect’ is tangible, slowing down transactions or prompting buyers to consider properties outside of New York.”
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Earlier this week, Mamdani released a preliminary budget for fiscal year 2027 that includes a property tax increase, a prospect he described as a “last resort.”
New York City Mayor Zohran Mamdani held a press conference at Coney Island on February 15, 2026. (Getty Images)
“Today, I am releasing the city’s preliminary budget. After years of fiscal mismanagement, we face a $5.4 billion budget deficit – and two paths. One: Albany can raise taxes on the wealthiest, most profitable corporations and address the fiscal imbalance between our city and the state. The other, a last resort: balance the budget on the backs of working people using the only tools at the city’s disposal,” Mamdani said. a Tuesday article on X.
“Having no other choice, the city would have to exercise the only lever of revenue entirely under our own control. We would have to raise property taxes. We would also be forced to plunder our reserves,” Mamdani also said during his speech on Tuesday. “It would effectively be a tax on working-class and middle-class New Yorkers, whose median income is $122,000.”
Both officials warn that taxing high earners could trigger a new exodus of wealthreducing the tax base and ultimately leaving middle-class families “holding the bag.”
“Higher corporate and wealth taxes can set off a chain reaction,” Jacobs said. “Reducing investment and relocating high earners reduces the city’s tax base, often indirectly affecting middle-class households. Even if not the direct target, these economic impacts can, over time, influence affordability, property values and access to services.
“In many cases, property tax increases are ultimately absorbed by tenants, especially in rent-stabilized or market-rate housing where landlords factor operating costs into pricing,” Griffith added. “While the Mayor’s promise of ‘rent stability’ is admirable, history shows that higher property taxes can translate into additional rent increases fairly quickly, sometimes within a year. Working families may eventually feel the impact, even if it’s not immediate.
Jacobs and Griffith’s respective clients would also be aware of the risks associated with Mamdani’s economic proposals.
The average cost of rent in New York City is $3,454 per month, according to the latest data from Zillow. (Getty Images)
“Many of my clients view a flat rate increase to a system they already view as inequitable as a band-aid solution. Buyers and sellers would likely welcome a complete overhaul of revaluation that reflects true property values and promotes fairness,” Griffith explained. “Temporary spikes tend to create uncertainty in the market, whereas a transparent and balanced approach would stabilize it in the long term.”
“A flat rise in a system already misaligned with real property values risks exacerbating inequality,” Jacobs said.
Real estate is a game of certainty, and Mamdani’s proposal has created the opposite as agents contemplate the future of the New York market.
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“Buyers and sellers are focused on affordability and long-term predictability. Without clear direction on taxes and contributions”The market is slowing and buyers are becoming cautious, which is especially true for middle-class families,” Jacobs said.
“Ultimately, buyers want predictability. When policy proposals create uncertainty, whether it’s taxes, rents or regulations, it has a direct impact on the market. People don’t just look at the price of a property,” Griffith said. “Stability and transparency in tax and assessment policies are essential for middle-class New York families to make big housing decisions with confidence. »
Fox News Digital reached out to Mamdani’s office for comment but did not receive a response at the time of publication.
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Alex Nitzberg of FOX Business contributed to this report.