Despite decreased real estate activity and social distancing restrictions to prevent the spread of COVID-19, the state collected millions more in real estate excise tax (REET) revenue during February and March than it did during the same months last year, following a recent restructure of the tax.
According to the state Department of Revenue (DOR), real estate sales in February generated $67.7 million in REET revenue – a $5 million increase from February 2019. Last month, REET revenue was $95.7 million, which is $14.8 million more than the $80.9 million collected in March 2019.
That may be the last upbeat real estate report until the lockdown is lifted.
Although real estate transactions are currently allowed to operate as an “essential activity” under Governor Jay Inslee’s “stay at home” order, industry members are restricted in how they can interact with clients and physically view properties for sale. Among other guidelines, no more than two people are allowed on site and must remain six feet apart.
The Northwest Multiple Listings Service reports that statewide residential real estate activity in March was down from March 2019 for single family homes and condos.
Perhaps Bill McBride’s Calculated Risk post on real estate gives a better glimpse into the near future.
Housing economist Tom Lawler has send me some housing data from a few areas:
The data reflect newly ratified contracts in the week ending 4/11/2020 compared to the comparable week of a year ago.
Northern Virginia, down 35%
Loudoun County, down 37%
Prince William Count down 43%
Prince George’s County down 44%
Montgomery County down 44%
DC down 58%.
From the Long Island Business News: Long Island home sales down nearly 67%
There’s more, but the trends are clear, even allowing that many of those places are among the nation’s pandemic hot spots. He concludes.
CR Note: It looks like both sales and new inventory will decline sharply in April.
And, as Martinell writes, the state’s REET structure may contribute to future problems.
The commercial real estate side of the industry appears to be stable at this point in time. National Association for Industrial and Office Parks (NAIOP) Washington State President Tina Pappas wrote in an email statement: “it is encouraging to see that sales are continuing and those who can work and have the capital and flexibility to act now are pursuing real estate here.”
However, Pappas says that despite the increased REET revenue for the past two months, that may not continue into the future. “We’re concerned that Washington State having one of the highest real estate excise taxes in the nation will significantly dampen investment in the state, and that REET revenue to offset both anticipated and unanticipated state needs will be lower than predicted.”
Something to watch.