The Real Estate Board of New York (REBNY) today released two market reports illustrating the challenges the City faces as economic recovery begins.
REBNY’s Monthly Investment and Residential Sales Report showed tax revenue generated from investment and residential sales in New York City and New York State declined 62 percent from June 2019 to June 2020 but increased by 56 from May 2020 to June 2020.
This represents a $120 million loss in tax percent revenue for the City and State year over year, but a $26 million increase from month to month.
Last month, REBNY reported a 76 percent decrease in tax revenue year over year from May 2019 to May 2020, and 40 percent decrease month to month from April 2020 to May 2020.
At the same time, REBNY’s Q2 2020 Quarterly Real Estate Broker Confidence Index, also released today, reported that broker confidence has hit its lowest point on record for the second quarter in a row.
The current real estate broker confidence index is 3.30 out of 10, down from 3.72 last quarter, representing an 11% decrease since brokers were last surveyed in the first quarter of 2020 and a 50% decline since the same time last year.
Additionally, the survey results indicate a decline in brokers’ outlook on the future market six months from now – that index is 3.91, an 11 percent decline from the first quarter of 2020 and a 35 percent decline since the same time last year.
“While we are seeing encouraging signs in both the management of our ongoing public health crisis and restarting the economy in New York City, caution abounds in its real estate industry,” said REBNY President James Whelan.
“Tax revenue generated by real estate appears to have hit its bottom in May 2020 and may be starting the long road back. Broker confidence – or lack thereof – signals the critical need for the federal government to step up to provide the State and local aid required to recover from this pandemic.”
The real estate industry represented more than half (53 percent) of the City’s total annual tax revenue in the last fiscal year, which is more than double the next closest contributor – personal income tax, which accounts for 21 percent .
The industry employs hundreds of thousands of New Yorkers from building service workers to brokers and generates essential revenue for the City of New York to maintain the salaries of first responders, fund infrastructure improvements and provide for public services like schools, libraries and parks.
According to REBNY’s Monthly Investment and Residential Sales Report, June 2020 was the first month to see an increase in residential and investment sales since the beginning of the pandemic, a promising sign as New York City resumed real estate services in Phase Two of the New York Forward on June 22. Key findings from the report include:
- From May 2020 to June 2020, total sales volume increased 100 percent.
- From June 2019 to June 2020, total residential sales and transactions declined, resulting in a 36 percent decrease in tax revenue. This represents a combined loss of $30 million in tax revenue at the City and State level compared to the previous year.
- From June 2019 to June 2020, total investment sales and transactions declined, resulting in an 83 percent decrease in tax revenue. This represents a combined loss of more than $90 million in tax revenue at the City and State level compared to the previous year.
Half-way through the June 15-30 time period when REBNY conducted its Quarterly Real Estate Broker Confidence Index survey, New York City entered Phase Two of New York Forward, allowing commercial office and retail tenants to get back to in-person business operations. Key findings from the Q2 2020 Quarterly Real Estate Broker Confidence Index report include:
- This quarter received a record-low in overall real estate broker confidence with an 11 percent decline between the first and second quarters of 2020. However, the breakout of the commercial and residential sectors indicates different prospects, with residential broker confidence increasing slightly in the same timeframe.
- Commercial broker confidence decreased to a historic low at 1.94. This represents a 40 percent decline from Q1 2020 and a 73 percent decline from this time period last year.
- Residential broker confidence increased 11 percent from Q1 2020 to 4.66. However, the index declined 25 percent from this time period last year.
REBNY’s Monthly Investment and Residential Sales Report is a compilation of transaction activity for both investment sales and residential sales in New York City and New York State.
REBNY is tracking all revenue generated by each asset class and transaction on a monthly basis to quantify the impact of the Coronavirus (COVID-19) crisis on the City and the State’s ability to generate taxes needed for essential government services.
The report is an analysis of official data from the NYC Department of Finance’s Automated City Register Information System (ACRIS) and captures total sales volume, number of transactions and tax revenue.
Download the complete Q2 2020 Quarterly Real Estate Broker Confidence Index here.
Download REBNY’s Monthly Investment and Residential Sales Report here.