By Jeffrey Steele, Contributing Writer
New York—Owners of New York City’s large rental apartment buildings shoulder a disproportionate share of the city’s overall property tax burden, due to the fact they are subject to a higher effective property tax rate than owners of one- to three-bedroom homes. That’s among the top findings of the 10th annual edition of the State of New York City’s Housing and Neighborhoods, released last week by NYU’s Furman Center for Real Estate and Urban Policy.
The Furman Center’s analysis finds the effective property tax rate differs substantially across different types of property. Large rental buildings and commercial/industrial properties are taxed at much higher rates than one- to three-bedroom homes, which are taxed at the lowest effective tax rate.
Also taxed at much lower effective rates than rental properties with similar characteristics are condominiums and cooperative apartments, the report finds.
The inequitable distribution of the property tax burden directly impacts residents of apartment buildings. “Landlords likely pass on some share of their higher tax burden to renters through higher rents, which reduces the affordability of housing, or deferred maintenance or repairs, which may jeopardize the long-run viability of the stock,” Furman Center co-director Ingrid Gould Ellen tells MHN.
This year’s report also analyzed New York City mortgage finance trends, finding the volume of lending is growing, the number of foreclosures has declined from previous years and the number of properties entering bank ownership, known as REO, has decreased.
Properties receiving notice of foreclosure in New York City dropped by about 28 percent from 2010 to 2011. The number of properties entering REO plummeted 81 percent during the same period. And the number of home purchase loans originated in 2010 climbed by 11 percent as compared to 2009, halting a persistent downward trend in annual lending since 2005.
The decline in the number of properties entering foreclosure and REO is a welcome development. But troublesome issues remain, Ellen reports.
“Many borrowers in the city are still at risk of foreclosure, as property values remain well below peak levels in many neighborhoods,” she says. “Some portion of the reduction in auction sales is due to procedural delays, as servicers have been more cautious in the wake of recent scandals.”
Another finding of the report is that more than half of the city’s census tracts were racially integrated in 2010, up from just 38 percent of tracts in 1990. Majority-white neighborhoods fell from 40 percent of all census tracts in the city to 23 percent, while the share of majority-Hispanic neighborhoods nearly doubled from 2.6 percent to 5.1 percent over the same period.
Finally, the number of loans issued to white, black and Hispanic borrowers in New York City all grew in 2010, the Furman Center’s analysis found. While encouraging, this finding again must be considered within a larger context.
“The increased lending is a sign of some renewal in many neighborhoods,” Ellen says. “But lending volumes remain well below peak levels.”