(Bloomberg)—The value of New York City’s 1.1 million properties is projected to rise 6.1% for the next fiscal year, boosted by single-family home prices.
The city set a market value of about $1.48 trillion for residential and commercial properties and utilities for the fiscal year beginning in July, according to a tentative assessment roll released by the Department of Finance on Tuesday. Citywide assessed values, which determine the value of property for tax purposes, are projected to rise 4.4% to $286.8 billion.
Property values for fiscal year 2024 reflect real estate activity from Jan. 6, 2022 to Jan. 5, 2023.
“The decline in office occupancy continues to impact retail stores and hotels in the city contributing to the sector’s slow recovery,” Department of Finance Commissioner Preston Niblack said in a news release. “At the same time, single family homes, which constitute a majority of residential properties, have exhibited a robust recovery and continued growth,” he said.
Real estate taxes are the biggest contributor to New York City’s coffers, providing about one-third of the revenue for its $106.4 billion budget. Property taxes are also the primary source of funds backing the city’s approximately $40 billion of general obligation bonds.
The market value of single-family properties rose 8.3% citywide to $765 billion, with homes in Staten Island having the biggest increase at 12.1%, according to the finance department. Meanwhile values for co-ops, condos and a rental apartment buildings rose about 1% to $351 billion.
To be sure, the residential market in the second-half of 2022 slowed as a result of the Federal Reserve’s aggressive campaign to raise interest rates and amid declining Wall Street profits.
Home sales in the city have slowed for five straight quarters on an annual basis and slumped to 17% below year-ago levels in the third quarter and are projected to fall about 5% in 2022 and 2023, according to the finance department. Still, transactions are projected to remain above the pre-pandemic average of about 51,000 sales per year.
Meanwhile, New York City’s office market continues to struggle as workers have been slow to return and uncertainty remains about the long-term impact of remote work.
The total market value of commercial properties rose to by 7.4% to $317.2 billion and assessed values rose by 5.2% to $129.7 billion. Market values of offices rose 7.1%, while retail buildings and hotels registered a market value of increase of 5.4% and 9.7%, respectively. The market value for commercial property is still below pre-pandemic levels.
The combination of weak leasing activity and a surplus of new inventory, particularly in Midtown, pushed the vacancy rate to 22% in November.
City officials expect vacancy rates to rise further in 2023 while asking rents are projected to decline to their lowest level in nearly a decade, according to a financial plan released last week as part of Mayor Eric Adams’s preliminary budget.
© 2023 Bloomberg L.P.