The city’s tax purse took a $100 million hit last month as
property sales were cut in half by the coronavirus pandemic.
With real estate representing more than half of New York’s annual tax revenue, the Real Estate Board of New York is warning that the local and federal governments need to right-side the industry to stave of long-term economic harm.
“As tax revenue
remains at historically low levels, federal relief in the form of state and
local aid, expanded unemployment insurance and effective management of
municipal affairs are critical to saving New York from further economic harm,”
said REBNY president James Whelan.
Today, REBNY reported that while total investment and
residential sales volume increased 11 percent from June to July 2020 to more
than $3.95 million, transactions decreased by 52 percent compared to the same
time last year.
July was the second consecutive month that investment and
residential sales activity increased since the start of the Coronavirus
pandemic — a positive sign that the industry is inching towards recovery, said
Whelan.
According to REBNY’s Monthly Investment and Residential
Sales Reports, sales activity and the accompanying tax revenue generated hit a
bottom point in May and have slowly begun to climb the past two months as New
York continues to make public health strides.
“As New York State continues to successfully manage the
ongoing public health crisis, we must also focus on managing the ongoing
economic crisis using strong leadership and smart, thoughtful policymaking
based on data,” said REBNY President James Whelan
As a result of this month-to-month increase in sales
activity, tax revenue generated from investment and residential sales increased
16 percent from June 2020 to July 2020 to $119 million. However, this
represents a 46 percent decrease in tax revenue generated compared to July
2019, a more than $101 million loss in tax revenue for the City and State
year-over-year.
The real estate industry, which serves as the fundamental
driver of New York City’s economy, generated 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 of the City’s annual tax revenue.
Other key findings from REBNY’s monthly special report on
investment and residential sales include:
From June 2020 to July 2020, total investment sales volume
declined 14% to $1.3 billion. This represents a 57% decline year-over-year.
Investment sales transactions increased 21% to 211 from June
2020 to July 2020. However, this represents a 35% decline year-over-year.
From June 2020 to July 2020, total residential sales volume
increased 29% to $2.7 billion. However, this represents a 50% decline year-over-year.
Residential sales transactions increased 17% to 2,568 from
June 2020 to July 2020. However, this represents a 37% decline year-over-year.
