The Real Estate Board of New York (REBNY) reported in a May 20 press release that tax revenue generated from investment and residential sales in New York City and New York State decreased by 48% from April 2019 to April 2020, and 64% from March 2020 to April 2020. According to the report, “These decreases represent a nearly $72 million loss in tax revenue for the City and State year over year, and a $139 million decrease from month to month.”
The release stated that REBNY created a new Monthly Investment and Residential Sales Report -- also released on May 20 -- to track and quantify the impact of the pandemic on the city and the state’s ability to generate taxes needed for essential government services.
“This dramatic loss in tax revenue is alarming,” said REBNY President James Whelan. “The real estate sector is the city’s economic engine. The pandemic has caused that engine to stall, and we should expect such alarming trends to carry through May and June in the best-case scenario.”
To put the impact into perspective, the real estate industry is the fundamental driver of New York City’s economy, representing 53% of the city’s total annual tax revenue in the last fiscal year. According to REBNY, the next closest contributor – personal income tax -- accounts for 21% of annual tax revenue. Real estate and real estate-adjacent 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.”
Other key findings from REBNY’s report include:
From April 2019 to April 2020, total residential sales and transactions declined, resulting in a 30% decrease in tax revenue. This represents a combined loss of $25 million in tax revenue at the City and State level compared to the previous year.
From April 2019 to April 2020, total investment sales and transactions declined, resulting in a 71% decrease in tax revenue. This represents a combined loss of more than $46 million in tax revenue at the City and State level.
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. According to the organization’s press release, “REBNY is tracking all revenue generated by each asset class and transaction on a monthly basis to monitor changes as a result of the Coronavirus crisis. 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.”
The full Residential Sales Report can be downloaded here.