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.