COVID costs New York $1.6B in real estate tax

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The Real Estate Board of New York (REBNY) today reported that year-to-date investment and residential sales totaled $40.3 billion, representing a 49 percent decline compared to the same time period in 2019 and leading to a 41 percent year-to-date decrease in tax revenue.

New York City and New York State have collectively lost $1.6 billion in tax revenue so far in 2020 due to these significant declines in real estate market activity, according to REBNY’s Monthly Investment and Residential Sales Reports.

REBNY’s report does show the market has experienced some continued upticks, as investment and residential sales volume increased for the third consecutive month, with sales totaling $6.2 billion in November 2020, a 34 percent increase from October 2020. As a result, tax revenue increased 12.7 percent from October 2020 to November 2020, totaling $268 million.

Although investment sales experienced an 84 percent increase in sales volume from October 2020 to November 2020, there were three particular transactions that were the drivers of this significant month-to-month increase: Sotheby’s New York office ($830 million); Citi Field ($554 million); and 842 Broadway ($211 million). Year-over-year, investment sales volume increased five percent; however, it has declined 61 percent year-to-date.

“Despite the arrival of a vaccine and minor upticks in recent market activity, New York’s economic crisis grows. The $1.6 billion loss in tax revenue is depleting the fuel that helps government provide vital services to New Yorkers,” said REBNY President James Whelan.

JAMES WHELAN

“From rental assistance and unemployment benefits to state and local aid, New York needs federal relief to keep New Yorkers in their homes, help businesses stay open and support essential government services.”

The real estate industry 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.

From November 2019 to November 2020, total investment and residential sales volume remained flat and tax revenue generated by those sales declined six percent year-over-year. Other key findings from REBNY’s monthly special report on investment and residential sales include:

  • Investment sales transactions increased 17% to 274 total transactions from October 2020 to November 2020. This represents a 5% increase year-over-year and a 56% decline year-to-date.
  • From October 2020 to November 2020, total residential sales volume increased 4% to $2.99 billion. However, this represents a 4% decline year-over-year and a 39% decline year-to-date.
  • Residential sales transactions increased 3% to 3,078 from October 2020 to November 2020. However, this represents a 5% decline year-over-year and a 36% decline year-to-date.

Beginning October 2020, REBNY began incorporating City and State collected mortgage recording tax in the total tax revenue values; historical data has been revised based on this newly available information.

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