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Real estate sales drought costs city $755M in lost taxes

The Real Estate Board of New York (REBNY) today reported that total September investment and residential sales volume declined 47 percent and tax revenue generated declined 36 percent compared to September 2019, resulting in a $61.6 million loss in tax revenue for the City and State year-over-year.

Taken over the year, investment and residential sales year-to-date totaled $21.5 billion, a 45 percent decline compared to the same time period in 2019, causing a 42 percent decrease in tax revenue.

This resulted in New York City and New York State combined experiencing a $755 million loss in tax revenue.

Since the beginning of the public health crisis in March, total investment and residential sales volume declined 48% compared to the March-September 2019 time period, according to REBNY’s Monthly Investment and Residential Sales Reports.

The real estate industry is the fundamental driver of New York City’s economy, generating 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.

After a slight decline in investment and residential sales in August 2020, sales volume increased nine percent from August to September, totaling $3.5 million. As a result of this current month-to-month increase in sales activity, tax revenue generated from investment and residential sales increased 13 percent from August 2020 to September 2020, totaling $108 million.

“This historic decline in market activity due to the COVID-19 pandemic isn’t just affecting the real estate industry – it’s hurting millions of New Yorkers who rely on the publicly funded government services that have been devastated by a loss of $755 million in tax revenue,” said REBNY President James Whelan.

JAMES WHELAN

“New Yorkers are not only counting on the federal government to deliver the financial aid that is desperately needed to address our economic crisis. They are also counting on City and State elected officials to focus on sensible, data-driven policies that advance our City’s recovery without causing further harm.”

Other key findings from REBNY’s monthly special report on investment and residential sales include:

  • From August 2020 to September 2020, total investment sales volume increased 43% to $1.68 billion. However, this represents a 47% decline year-over-year.
  • Investment sales transactions remained flat at 195 total transactions from August 2020 to September 2020. However, this represents a 32% decline year-over-year.
  • From August 2020 to September 2020, total residential sales volume decreased 11% to $1.8 billion. This represents a 47% decline year-over-year.
  • Residential sales transactions decreased 12% to 1,749 from August 2020 to September 2020. This represents a 12% decline year-over-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. REBNY is tracking all transactions by asset class on a monthly basis to monitor the economic health of the industry and 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 REBNY’s Monthly Investment and Residential Sales Report here.

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