It’s a well-known fact that affordable housing in NYC is hard to come by and for the bulk of us, homeownership is virtually impossible. A new report, released by the Center for NYC Neighborhoods, reveals that neither of these disheartening realities are going to change anytime soon. By analyzing the dire effects of house flipping, the report reveals how it helps spur gentrification in the city’s most affordable neighborhoods and is diminishing the city’s already limited affordable housing stock, reports the New York Post.
The report explains that house flipping, which is the practice of buying properties at low prices and reselling them for a significant profit, is fueled by foreclosures. Thirty-four percent of all homes flipped in 2017 had been in foreclosure, while just 12 percent of all homes sold in 2017 were in foreclosure at the time of sale. This means that a flipped house is virtually three times more likely to have been in foreclosure when an investor acquired it. Often times, investors gain access to these types of sales by involving “unwanted and sometimes deceptive solicitations of homeowners,” which often targets elderly and otherwise vulnerable homeowners, says the report. By gaining access to properties not publicly listed on the market, non-professional buyers are deprived of the opportunity to bid on them.
Because house flipping isn’t illegal, it is hard to prevent, but while the practice is profitable for investors, it is contributing to gentrification and causing displacement. “In 2017, investors purchased over one-third (38%) of the homes that sold at prices within reach of middle- and working-class families in New York City, dramatically diminishing the supply of homes affordable to those households.”
House flipping can also have major impacts for renters. The report notes that “renters who live in 1-4 unit homes...often pay some of the most affordable rents in the city. Once an investor swoops in, these renters can find they’ve lost their leases as the property gets flipped.”
When it comes to house flipping, investors have largely moved on from Manhattan and have set their sights on the outer boroughs. Neighborhoods like Jamaica, Hollis, Queens Village, East New York, Cypress Hills, East Flatbush, Canarsie, and Williamsbridge were found to be home to the highest amounts of house flipping last year.
Deputy Director for Policy and Research, Caroline Nagy, at the Center for NYC Neighborhoods told the Post that the city “desperately needs LLC transparency” in the real estate market. The report also recommends an “anti-speculation tax” that would limit house flipping by taxing speculative transactions at a higher rate, creating cease-and-desist zones where homeowners can “opt-in to a no-solicitation registry to stop harassment from brokers and scammers seeking to pressure them into selling their homes,” and by increasing awareness of homeowner assistance resources that can help those facing foreclosure.
- House Flipping in NYC: How Real Estate Speculators are Targeting New York City’s Most Affordable Neighborhoods [Center for NYC Neighborhoods]
- House-flipping is destroying NYC neighborhoods [New York Post]
- Homeownership is not an option for most New Yorkers [Curbed]