East New York, Cypress Hills, East Flatbush and Canarsie have experienced some of the highest amounts of house flipping last year.
A new report, released by the Center for NYC Neighborhoods, analyzes the effects of house flipping and reveals how it boosts gentrification in the city’s formerly most affordable neighborhoods, reports Curbed.
House flipping is the practice of buying properties at low prices and reselling them for a significant profit. This practice, as the report reveals, is fueled by foreclosures: 34 percent of all homes flipped in 2017 had been in foreclosure. The report states that investors often gain access to these sales by involving “unwanted and sometimes deceptive solicitations of homeowners;” they often target elderly and otherwise vulnerable homeowners.
Additionally, by gaining access to properties not publicly listed on the market, non-professional buyers are deprived of the opportunity to bid on them. But because house flipping isn’t illegal, it is hard to prevent. Furthermore, it is spurring gentrification which causes the displacement of the local community.
“In 2017, investors purchased over one-third (38 percent) 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 also affects renters. The report finds 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.”
Currently, investors are largely moving into neighborhoods like East New York, Cypress Hills, East Flatbush and Canarsie which have experienced some of to the highest amounts of house flipping in 2017.
According to the Center for NYC Neighborhoods, an “anti-speculation tax” could limit house flipping by taxing speculative transactions at a higher rate. The report also recommends 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 increasing awareness of homeowner assistance resources that can help those facing foreclosure.