Investment sales fell by half in December to finish year down 48%
Residential deals fared better last month but were off 43% in 2020: report
For investment sales in the city, a down year finished on a down note.
Sales volume in December was off 51 percent from a year ago, to $2 billion, even as transactions fell by a more modest 7 percent, according to a new report from the Real Estate Board of New York.
For the year, dollar volume plunged 48 percent, to $21.4 billion, and transaction volume slid 20 percent, to 2,579 deals.
Residential sales fared better last month. Sales volume was down only 10 percent versus December 2019, finishing the year at $25.7 billion, off 43 percent. Transactions actually ticked up 2 percent in the month, compared to a year ago, to finish the year down 41 percent.
When the dust cleared on the pandemic-wracked year, the decline in tax revenue from the two kinds of real estate transactions combined was stark: 38 percent for the city and 32 percent for the state. In dollar terms, the calendar-year drop was $1.2 billion in city tax revenue and $368 million in state revenue.
For the state, which has a budget in the vicinity of $180 billion, the drop-off is a veritable rounding error. But $1.2 billion is about 1.3 percent of the city’s annual budget.
Tax revenue from real estate is responsible for 53 percent of the city’s operating budget. That’s more than double the next closest contributor — personal income tax at 21 percent.
Last year, real estate taxes generated $31.9 billion for the operating budget. Property taxes, for which collection remained relatively steady last year, bring in far more money than transfer taxes. But assessments for commercial real estate have since plunged because of the pandemic and will result in lower property tax bills in fiscal 2022, which begins in July.
“With this full scope of real estate activity in 2020, we can fully see the devastating economic impact the Covid pandemic has had on New York,” REBNY President James Whelan said in a statement. “Our city and state are in dire need of the new federal administration to step in with a stimulus package — including state and local aid, rent relief and unemployment benefits.”