Shutdowns have consequences. Year-to-date investment and residential sales in New York City declined 49% year over year compared with 2019, leading to a 41% year-to-date decrease in tax revenue, reported the Real Estate Board of New York (REBNY). 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.
The real estate industry is the fundamental driver of New York City’s economy, REBNY notes, generating more than half (53%) 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% of the city’s annual tax revenue.
“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. “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 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% increase from October 2020, the report noted. As a result, tax revenue increased 12.7% from October 2020 to November 2020, totaling $268 million.
Although investment sales experienced an 84% increase in sales volume from October 2020 to November 2020, three particular transactions were the drivers of the increase: Sotheby’s New York office ($830 million), Citi Field ($554 million) and 842 Broadway ($211 million). Year-over-year, investment sales volume increased 5%; however, it has declined 61% year-to-date.
From November 2019 to November 2020, total investment and residential sales volume remained flat and tax revenue generated by those sales declined 6% year-over-year.
