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In New York City, state legislators are eyeing another tax on home flippers in an effort to end allegedly predatory home-buying practices, particularly in communities of color.
The legislation, still in committee phase, comes as the New York City metropolitan area — along with New York State and the country as a whole — has seen home flipping decline over the past year amid continually escalating costs to buy, renovate and re-sell properties.
In the New York City region in the first quarter, there were just under 1,900 flips, or homes that have been purchased and re-sold within a year, according to data from research firm Attom provided to TRD Data. That was down by 2.8 percent year over year. Meanwhile, New York State saw about 1,800 flips, a decline of 10 percent year over year.
This is consistent with the national home-flipping picture. Across the country, the number of flips fell 3 percent year over year in the first quarter. It also fell in more than half of the metro regions studied by Attom. Quarter over quarter, home flipping was up in New York State, New York City and across the country.
To some industry experts, the yearly drop in the number of flips comes as no surprise. Labor and material costs continue to rise, and elevated interest rates make financing tougher.
“The math has stopped working,” said Frances Katzen, a luxury real estate broker with Douglas Elliman in New York City.
Indeed, profits appear to be shrinking, according to Attom’s data. In the first quarter, typical New York City home flippers took home gross profits — which do not include rehab and other costs — of $165,000 compared to $170,000 the same time the year before. However, the nearly 3 percent drop was nowhere as extreme as the country’s overall, about 11 percent.
NYC flippers’ return on investment in the first quarter also shrank year over year, from 36.6 percent to 33.3 percent. Those were higher than the country’s overall, of 25.4 percent in the first quarter.
The proposed legislation from State Sen. Julia Salazar and Assembly member Catalina Cruz would impose a tax on one- to three-family homes re-sold in the Big Apple within two years. Salazar had introduced a similar bill in 2021.
A report from the Pratt Center for Community Development, which works to ensure the equitable distribution of resources for low-income, BIPOC people, found that from 2021 to 2025, more than 10,000 homes were flipped (bought and re-sold within two years) in the city; the communities with the highest flip rates are those primarily composed of people of color. The center also found that in these high-flip areas, the median price of flipped homes is higher than that of non-flipped properties.
“Wealthy and corporate investors are buying up homes, usually in historically marginalized neighborhoods, and flipping them for quick, huge profits,” Salazar said in a March statement. “It’s a toxic practice that is driving up the cost of homes and rent, pricing out long-term residents, and harming too many Black homeowning communities.”
Katzen said amid the hurdles, she regularly has clients looking to buy and flip properties and who find ways to make deals. Still, another tax wouldn’t help.
“New York already has the highest transaction costs in the country,” she said, adding, “Why are we even trying?”