S
an Francisco's real estate transfer tax revenue has hit a 12-year low, plummeting to $177.7 million in fiscal year 2024, down 4.6% from the previous year. This marks the lowest level of transfer tax revenue since 2012, when it was $162.3 million. The decline is largely due to the city's commercial real estate market, which has been heavily impacted by plunging values and discounted deals.

    The transfer tax, a fee levied on property sales, is one of the most volatile sources of revenue for San Francisco. Historically, high-value office building sales in Downtown have driven this revenue, but with many buildings selling at steep discounts due to high vacancy rates and remote work, the city's budget is feeling the strain.

    According to Ted Egan, the city's chief economist, "The fact that the city has a lot of high-value properties makes it... probably much more significant for San Francisco than other cities." The city had projected transfer tax revenues at $222 million for fiscal year 2024, but this was 20% higher than what was actually collected.

    The decline in transfer tax revenue may be compounded by a flattening property tax revenue over the next two years. Properties trading hands in the post-pandemic market are selling at discounts to their pre-pandemic value, which is lowering their taxable value and reducing transfer tax revenues. Over the past decade, San Francisco has collected an average of $314 million in transfer taxes each year.