(The Center Square) – The city of Oakland, California, stated that in the second quarter of 2024, only 11 properties valued over $5 million have been sold, compared to the 25 properties previously sold over the same period last year.
This decline has led to a large budget deficit because the city relies on a tax based on property sales, according to the Second Quarter Revenue and Expenditure Report.
Cities across the country are feeling the pain from home sales in 2023, which the National Association of Realtors said fell to the lowest level since 1995. Home sales are down 6.2% since December of 2022, with the overall sales dropping almost 19% in the same timeframe, according to this press release.
The city of Pittsburgh also reported this month that its own tax it receives from the transfer of title deeds also dropped from $65 million in 2022 to $45 million in 2023, according to the city’s 2023 annual comprehensive report.
The city’s deed transfer tax was $36.8 million in 2019 and grew to $43.9 million in 2020. Then the city collected $64.1 million from the deed transfer tax in 2021.
The city of Oakland’s most impacted revenue was the Real Estate Transfer tax, also called a Real Property Transfer Tax (RPTT), which is due when an individual sells or gifts their home. According to the city website, as of Jan. 19, 2019, property valued above $5 million has a 2.50% tax rate.
The city compared the downturn to that of the Great Recession from 2007 to 2009.
Sheila Weinberg, CEO of Truth in Accounting, reviewed the city of Oakland’s financial documents and had concerns. Weinberg stated that the city appeared to overestimate revenues by 20% in 2024.
“That is a big difference,” Weinberg said in an email to The Center Square. “Does this happen often?”
Weinberg noticed the city stated that 2021-22 revenues marked a record high collection for the city.
“Sales tax was probably high in FY2022-2023 due to the re-opening of the economy. Did they project that sales tax would stay at that high level?” Weinberg asked.
The Pittsburgh Mayor’s office did not respond to an email seeking comment.
