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Monthly Investment and Residential Sales Report: Snapshot of January 2021
February 18, 2021
The Real Estate Board of New York (REBNY) has tracked transaction activity as well as the tax revenue generated by real estate transactions on a monthly basis since March 7, 2020, when Governor Cuomo announced a state of emergency in New York due to the Coronavirus (COVID-19) crisis. REBNY has increased the frequency of its reporting in an attempt to understand the impact of the crisis not only on the industry but also on the City and State budgets. Beginning October 2020, REBNY began incorporating City and State collected mortgage recording tax in the total tax revenue values; historical data have been revised based on this newly available information.
From December 2020 to January 2021, REBNY reports increases in transaction activity for both investment sales and residential sales. Total investment and residential transactions increased 73% from the same time last year and increased 1% from the previous month. Total investment and residential sales volume, or consideration, increased 38% year-over-year and increased 21% month-to-month. Total transfer tax revenue generated from these sales to the City and State increased 31% from January 2020 to January 2021 and increased 25% from December 2020 to January 2021. Total mortgage recording tax revenue generated from mortgages to the City and State declined 37% from January 2020 to January 2021 and increased 4% from December 2020 to January 2021.
Overall tax revenue for January 2021 declined 6% year-over-year but increased 17% month-to-month. Since the beginning of the COVID-19 pandemic in March 2020 to January 2021, investment sales and residential sales volume totaled $56.4 billion, which represents a 30% decline compared to the period of March 2019 to January 2020. From March 2020 to January 2021, investment sales and residential transactions totaled 48,132, representing a 27% decline from the previous 11-month pre-pandemic period. Declines in both total transactions and sales volume resulted in a 34% decline in tax revenue, causing New York City and New York State to experience a combined $1.6 billion loss in tax revenue in 2020.
Tax revenue contributes to NYC’s essential services, such as salaries for first responders, building service workers, MTA employees, the maintenance of public parks, and vital repairs and maintenance of the public transportation system. For Fiscal Year 2021, real estate taxes are projected to account for more than half of NYC’s total tax revenue, more than double the next closest contributor – personal income tax at 20%. The health of the real estate industry is critical to the health of both our City and State.