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New York City’s Surging Real Estate Sales in January Generated Much-Needed Increase in Tax Revenue
February 18, 2021
Real Estate Sales Tax Drives More than Half the City’s Annual Tax Revenue and is a Key Indicator of Progress on Economic Recovery
But the Road to Recovery is Long: City Still Sees Significant Decline in Real Estate Sales and Tax Revenue Since Start of Pandemic
NEW YORK, NY –The Real Estate Board of New York (REBNY), the City’s leading real estate trade association, today reported that investment and residential sales totaled $6 billion in January 2021, a 38% increase compared to January 2020. As a result of these sales, New York City and New York State collected $190.5 million in transfer tax revenue, a 31% increase compared to January 2020.
From December 2020 to January 2021, investment and residential sales volume increased 21%, resulting in a 25% increase in transfer tax revenue for the City and State, according to REBNY’s Monthly Investment and Residential Sales Reports.
This increase in tax revenue generated by real estate sales is a key indicator of progress regarding the City’s overall economic recovery. The real estate industry is the fundamental driver of New York City’s economy and is projected to generate more than half of the City’s total annual tax revenue in Fiscal Year 2021, which is more than double the next closest contributor – personal income tax, which accounts for 20% of the City’s annual tax revenue.
“As New York City continues to face significant challenges, tax revenue generated by the resurgence of real estate market activity will play a central role in driving the City’s economic recovery and funding basic government services that millions of New Yorkers rely on,” said REBNY President James Whelan. “It is critical that elected officials stay focused on continuing this momentum by delivering additional federal aid, ensuring successful vaccination and rapid testing efforts, and demonstrating leadership with policies that promote job creation, private sector investment and good quality of life for all residents.”
However, historical data provides a reminder of the severe impacts of the pandemic and how long the road to recovery will be. Total investment and residential sales volume from the beginning of the COVID-19 pandemic in March 2020 through to January 2021 totaled $56.4 billion. This represents a 30% decline compared to the March 2019-January 2020 period, causing a 34% decline in tax revenue. As a result, New York City and State experienced a combined $1.6 billion loss in tax revenue in 2020.
Other key findings from REBNY’s monthly special report on investment and residential sales include:
- From January 2020 to January 2021, total investment sales volume increased 11% to $2.85 billion. This represents a 49% increase from the previous month.
- Investment sales transactions increased 26% to 395 total transactions from January 2020 to January 2021. This represents a 49% increase from the previous month.
- From January 2020 to January 2021, total residential sales volume increased 77% to $3.2 billion. This represents a 5% increase from the previous month.
- Residential sales transactions increased 82% to 3,242 from January 2020 to January 2021. However, this represents a 3% decline from the previous month.
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.
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.
For more information about REBNY research reports, visit go.rebny.com/Reports.
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