Pandemic-driven decline in real estate deals cost NYC $1.6 billion in revenue through November

A pandemic-driven drop in real estate deals cost New York City $1.6 billion in lost revenue so far this year, a sign of the staggering economic fallout of the coronavirus outbreak in the nation’s largest city.

The Real Estate Board of New York (REBNY) said in a Thursday report that investment and residential sales in the city totaled $40.3 billion, a 49 percent drop from the same time period in 2019 that produced a 41 percent year-to-date decrease in tax revenue. The money comes from a bevy of taxes that each transaction generates.

There have been recent upticks in market activity in recent months, with investment and residential sales volume increasing 34 percent in November compared to October, though it has not been enough to offset losses throughout the year. 

“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.

The real estate industry is a key driver of New York City’s economy, generating 53 percent of its total annual tax revenue in the last fiscal year, according to the REBNY. Personal income tax is the next largest economic driver, accounting for 21 percent of the city’s annual tax revenue in the same period. 

Real estate investors have hit pause on many of their transactions in New York City as the pandemic rejiggers several aspects of everyday life, including where residents work and live.

While an upcoming stimulus package is expected to boost unemployment benefits and lawmakers tout the need for rental assistance, Whelan said there needs to be more federal relief to help the city’s flagging economy. The stimulus package that is being hammered out in Congress is not expected to include funds for state and local governments, something local and state leaders have clamored for as the spread of the coronavirus worsens.

“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,” said Whelan.