A new industry report estimates that New York City and state have lost a combined $1.4 billion in tax revenue this year as real estate transactions in the city plunged during the coronavirus pandemic.
In October, real estate sales volume in New York City declined 34 percent from last year, and tax revenue generated by those sales plunged 57 percent, according to data released on Thursday by the Real Estate Board of New York (REBNY).
So far this year, total real estate sales volume has plunged a staggering 50 percent, to $34.5 billion, representing a 39 percent decrease in tax revenue.
The stunning decline in sales of homes and commercial buildings came as residents fled the city, businesses closed and offices went remote after the pandemic, government ordered shutdowns, and soaring crime made life miserable for many New Yorkers.
In October, real estate sales volume in New York City declined 34 percent from last year
Reeling from plunging tax revenue, Mayor Bill de Blasio has said that the city is in a $9 billion financial hole and pleaded for a federal bailout
Reeling from plunging tax revenue, Mayor Bill de Blasio has said that the city is in a $9 billion financial hole and pleaded for a federal bailout, a call echoed by the real estate trade group.
‘This $1.4 billion in lost tax revenue represents another 1.4 billion reasons why the federal government must deliver a new stimulus package to help address New York’s economic crisis,’ said REBNY President James Whelan in a statement.
‘As real estate market activity remains at historic lows, the negative impacts are being felt every day by millions of New Yorkers who rely on publicly funded government services that will continue to struggle without necessary tax revenue,’ he added.
The new data shows that while there was an uptick in real estate transactions from September to October, volume still remains well below the same period a year ago.
From September to October, sales of commercial and multi-family rental properties increased 4 percent to $1.74 billion, though this remained down 52 percent from last year.
People walk past a ‘for rent’ sign of an empty store front last month in Brooklyn
Residential sales volume jumped 61 percent from September to October, but was still down 14 percent from last year.
The mass exodus from the city to the suburbs and beyond has also had an impact on rental prices.
Last month, data released by Realtor.com showed the median studio rent in Manhattan was $2,495, down 15.4 percent year-over-year.
One-bedroom rents were $3,400, down 11.7 percent compared to last year.
Plunging rental prices have already begun to lure younger renters back to the city.
New leases in Manhattan increased 33 percent in October, making it the best October in 12 years, according to a report from Douglas Elliman and Miller Samuel.
New York residents flee the city in May. A mass exodus has depressed property sales as well as rental prices in the city, and taken a big bite out of tax revenues
Cuomo shared this graph of rising hospitalizations in New York as he warned of a looming second wave of coronavirus cases and issued new restrictions on Wednesday
But the good news for Manhattan landlords came just as the city moved toward the precipice of a new round of lockdowns, as coronavirus cases were again on the rise.
On Wednesday, New York Governor Andrew Cuomo announced new statewide restrictions, ordering all bars, restaurants, gyms and liquor stores to shutter at 10pm, starting on Friday.
Melissa Fleischut, president of the New York State Restaurant Association, said Cuomo’s announcement was a ‘huge blow to the restaurant industry that is desperately trying to stay afloat’ during the pandemic.
‘Our members have put in place procedures and protocols to mitigate the spread, and we’ll continue to do so to ensure the safety of our employees and patrons,’ she said.
‘We understand the logic behind micro-cluster restrictions, but at this time we have concerns about blanket statewide restrictions like this.’