Could a slowdown in the Philly real estate market impact the city budget?

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The city expects to bring in about $110 million less in transfer tax revenue than initially projected by the end of the fiscal year in June.

A for sale sign outside 4261 Griscom Street in Philadelphia. A slowdown in Philadelphia's real estate market following rising interest rates could have an impact on the city's coffers because of reduced revenue from the real estate transfer tax.is getting ready to unveil her first budget proposal, and she may have less cash to work with than anticipated.

rates mean the resale market for homes has slowed as owners hold on to mortgage rates secured during the pandemic that are 3% or less. “Then there’s been a lack of new inventory that’s hit the market as compared to the last five or six years when townhomes were being built everywhere throughout the city,” said Tuohey, who is treasurer of the Building Industry Association.In fact, the wage tax is the city’s biggest revenue driver, and it’s projected to generate about $77 million more than expected this fiscal year.

The city budget has been a source of pain for past Philly mayors. Under Jim Kenney, it’s been a bright spot., said the city is still projected to have healthy cash reserves that allow it to absorb some revenue volatility. The city ended last fiscal year with nearly a billion dollars left unspent, making for“That net decrease in tax revenue doesn’t immediately spell disaster,” she said. “We do have tools in place to weather this.

 

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