ousing market seeing less inventory, rising interest rates & fewer mortgages as a result
Erie County Comptroller Stefan I. Mychajliw, Jr. and County Clerk Michael Kearns met with town supervisors across Erie County to discuss the recent decline in revenue generated from the New York State mandated Mortgage Tax due to a drop in mortgage closings. Twice a year, cities, towns and villages receive a check from Erie County for revenue generated from taxes on each mortgage. After reviewing the data from Oct. 1, 2017 to March 31, 2018, the Comptroller is alerting towns and villages that revenue for most municipalities declined.
“Towns and villages should be prepared for this loss of revenue. Some municipalities experienced a sharper decline than others. Supervisors across the county should be aware that the money generated through the Mortgage Tax declined for the first six months of the year. That could negatively impact budgets. The red hot housing market has added to a unique storm of higher interest rates and less inventory on the market,” said Comptroller Mychajliw.
“There are areas, however, that are seeing growth and an increase in Mortgage Tax revenue. Those areas include Clarence, Concord, Evans, Grand Island and the Town of Tonawanda, among others.”
The Comptroller’s Office recently calculated the revenue totals and found that for Oct. 1, 2017-March 31, 2018, the revenue generated from Mortgage Tax was $8,859,942. This is down 5.9 percent compared to the first half of 2017 (October to March), which totaled $9,412,026. That’s a decrease of approximately $552,084. In 2017, the total for 12 months was $18,687,656. In 2016 the total Mortgage Tax collection was $18,292,883.
“Historically, Mortgage Tax revenue has increased in the second half of the year. We saw this occur in both 2016 and 2017. We will continue to closely monitor trends and immediately report information to our towns. As soon as we hear anything or have final numbers later in the year, we will reach out to our Supervisors one more time,” added Comptroller Mychajliw.
“As the Erie County Clerk I am concerned but not surprised about the decline in mortgage tax revenue,” said Erie County Clerk Mickey Kearns. “Through the Clerk’s Office new ALERT program, we are tracking foreclosures when they commence in individual municipalities. My office will be releasing a report on the data collected through the ALERT program. Based on the data from this program, there is no denying that there is a zombie property crisis in Erie County. When banks hold on to foreclosed properties, there is a trickle-down effect on each municipality, as we can see this year with the declining mortgage tax revenue.”
The trend is being closely watched by many professionals throughout the county.
"It is disheartening that the number of mortgages have dropped so significantly. Additionally, the fewer homes sold means less is being spent locally by the new homeowners, that has a major effect on everyone. Statistically, when a home is purchased, more than $45,000, on average, is spent by the new owners locally on appliances, paint, carpeting, furniture, gardening materials, etc.," said John B. Leonardi, CEO of Buffalo Niagara Association of REALTORS. "While I am cautiously optimistic about the second half of the year, inventories remain extraordinarily low and for planning purposes towns that rely on these funds need to plan for less mortgage dollars through 2019."