Res. No. 683
By Council Members Nurse, Brooks-Powers, Williams, Cabán, Ossé and Ayala
Resolution calling on the New York State Legislature to pass, and the Governor to sign, A.1023A/S.1569A, known as the end toxic home flipping act, to impose a tax on recently resold residential properties.
Whereas, Home flipping is a term referring to the practice of a home being purchased by a real estate investor, shortly followed by its resale, with the purpose of selling it for a considerable increase in price; and
Whereas, The practice may inflate median home values in New York City (“NYC” or the “City”), which frustrates first-time homebuyers seeking a more permanent residence for their family and an opportunity to build generational wealth; and
Whereas, Home flipping may also contribute to the displacement of Black New Yorkers, worsen outcomes for homeowners going through foreclosure, and has involved the harassment and deception of homeowners; and
Whereas, The median value of a home nearly doubled in NYC between 2010 to 2023, such that only 7,707 of the 24,344 one-to-four unit homes sold in 2017 were found by the Center for New York City Neighborhoods (“CNYCN”) to be affordable to families making the Area Median Income for a family of three, which was $85,900; and
Whereas, In part due to these rising home values, many homeowners in the City experience high rates of housing burden, with nearly 45% of homeowners with a mortgage spending more than 30% of their income in 2022 on housing costs, such as mortgage payments, as well as insurance and property tax payments, which makes first-time homeownership less affordable; and
Whereas, CNYCN has also found that homes flipped by real estate investors were purchased for 20% to 50% less than comparable properties in the neighborhood, which suggests that home flipping increases the demand for affordable homes and thereby reduces opportunities for first-time homeownership; and
Whereas, The inflation of home values due to flipping also harms tenants living in units without rent regulation, as property owners may pass the cost of maintaining more expensive homes onto such tenants by raising rents, which have already increased by more than 40% since 2000 after accounting for inflation; and
Whereas, Home flipping may also contribute to the displacement of Black New Yorkers, as many of the community districts that have experienced the greatest number of flips include predominately Black neighborhoods, and may therefore result in households moving farther away from family, community, education, and employment; and
Whereas, Over the last two decades, the population of Black NYC residents decreased by nearly 9%, and the population of Black children and teenagers in the City experienced an even sharper decrease of more than 19% between 2010 and 2020 alone, a trend that may have been exacerbated by the difficulty of obtaining physically larger housing to accommodate a growing family in a high-priced housing market; and
Whereas, Many historically Black neighborhoods have experienced particularly rapid gentrification in recent years, such as East Harlem and Bedford-Stuyvesant, which experienced 87% and 168% increases in median home values, respectively, between 2009 and 2021, potentially causing residents of these neighborhoods to move within NYC or out of the City entirely; and
Whereas, Home flippers are a nuisance to many homeowners, particularly those in rapidly gentrifying neighborhoods, as they may bombard homeowners with unsolicited phone calls, letters, and leaflets that offer to purchase their property, which has created such inconvenience that the New York Department of State established a Cease and Desist Zone program that prohibits aggressive solicitation in certain neighborhoods; and
Whereas, Some home flippers have engaged in predatory behavior, such as misleading senior homeowners and family members of deceased homeowners, in order to purchase property for less than market price, as well as illegal behavior, such as deed theft; and
Whereas, These aggressive solicitations from home flippers may particularly harm homeowners going through foreclosure, as such homeowners may be persuaded to immediately accept an unfavorable offer instead of the longer process of listing their property on the open market, which would likely yield a higher price and might also incorporate free counseling or legal assistance offered by various not-for-profit organizations in NYC; and
Whereas, A.1023A, sponsored by New York State Assembly Member Catalina Cruz, and S.1569A, sponsored by New York State Senator Julia Salazar, would reduce the financial incentive behind home flipping by imposing a new tax on the sale of one-to-three unit residential properties that are resold within two years; and
Whereas, If enacted, home flippers would be required to pay a tax of 65% on the financial gain from the resale of a property within one year, and a tax of 50% for properties resold within one to two years, with exemptions for owners who: convey property between family members, are deceased, demonstrate a hardship, or earned a financial gain of 10% or less on the sale of a property; and
Whereas, Enactment of A.1023A/S.1569A could facilitate first-time homeownership, alleviate the displacement of Black New Yorkers, benefit homeowners going through foreclosure, and protect homeowners against predatory and illegal behavior; now, therefore, be it
Resolved, That the Council of the City of New York calls on the New York State Legislature to pass, and the Governor to sign, A.1023A/S.1569A, known as the end toxic home flipping act, to impose a tax on recently resold residential properties.
AGB
LS# 17451
09/03/24