NYC Housing Connect and Affordable Housing
New York City is notoriously expensive for renters, despite laws that cap rent rates. Its residents have long struggled to afford exorbitant rent prices. In response, officials created an affordable housing lottery, but it has its own issues. Residents can remain on the lottery for years before given a chance to prove that they qualify for one of the 40,000 affordable apartments in the city. The city receives millions of applications each year, leading to lengthy wait times. However, officials have revealed a new website and application process that may make applying less arduous for hopeful residents.
A significant improvement to the application system includes the ability not only to apply online but to do so directly from a smartphone. Previously, applications had to start the process in person, which lengthened the process and could increase the risk of spreading COVID-19. Now, they can upload all of their documents directly from their phone. The system will also determine whether applicants qualify for the program based on their income and family size. This helps to narrow down which apartments are appropriate, streamlining the process. Before, applicants applied for every apartment, and qualification as only determined when a unit became available. Rejections will also be made more explicit by the new system, solving a prior problem.
The first apartments will be available starting in July, and a total of 2,500 apartments will be available in the coming months. Additionally, New York City’s mayor Bill Deblasio promises that at last 300,000 affordable homes will become available by 2026, either by procuring existing homes or building new ones. Officials say they’re on track to have 200,000 units by 2022. Since 2014, 164,000 apartments have been added to the system. The new system also re-adds apartments that have been vacated instead of landlords keeping separate waitlists.
Still, critics are quick to point out that more affordable housing units are necessary. Well before the COVID-19 pandemic, New York City was facing a looming housing crisis. The broader issue — a lack of affordable housing — must be addressed to mitigate New York City’s housing crisis.
Impact of the Coronavirus on NYC Real Estate
COVID-19 has been having a significant impact on many areas of life. The real estate market is one of these areas. Stay-at-home orders have prevented agents from providing tours of homes. People are unlikely to purchase a home they have not seen in person, which means the lack of private showings has caused a decrease in sales. Another factor in decreased real estate purchases may be financial reasons. COVID-19 has caused brick-and-mortar stores across the country to shut down, resulting in about 36.5 million Americans losing their jobs.
New York City, which had seen success in its real estate market in the first quarter of 2020, had soon faltered under the weight of the coronavirus. It appears as though the virus will hurt housing markets throughout the rest of the country as well. The downturn in real estate has been especially brutal for New York City, though, which had already been rebounding from incidents such as the September 11th terrorist attacks and the fall of the Lehman Brothers in 2008.
While real estate agents have tried to work around the virus with video calls and other forms of technology, it is not enough. Other factors have impacted the market as well, such as higher transfer taxes for luxury apartments, tenant-friendly rent laws going into effect, possible taxes on pieds-à-terre, and the rising anxiety over a recession. All of these issues created the perfect storm for a failing real estate market.
Donna Olshan, the president of Olshan Realty, remarked that “anything left on the market now, the price is just a suggestion.” Sellers, desperate to sell, have been lowering their selling price. Buyers have been pushing for cheaper real estate as well.
The future of the real estate market in New York City is unknown. Since there is difficulty knowing when COVID-19 itself will stop being a problem, it is hard to predict when the market can recover. The only certain thing, according to Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers & Consultants, is that the impact on real estate is going to be catastrophic. However, there is still a chance the market will recover.
NYC’s Mansion Tax Explained
New York City’s mansion tax is a real estate tax applied to the purchase of property that costs more than a specified dollar amount. When purchasing a home, condo, or co-op in New York, the mansion tax is the most expensive closing cost.
Anyone planning to buy a home in New York City should understand how the mansion tax can affect the sale.
Property and the Mansion Tax
Any residential property that costs less than $1,000,000 isn’t subject to the mansion tax. The mansion tax threshold is $1,000,000 or higher. So even if the property isn’t a mansion, any residential property that costs at least $1,000,000 is subject to the mansion tax.
How Much is the Mansion Tax?
The real estate buyer is required to pay the mansion tax as part of the closing cost. The tax amount depends on the purchase price of the real estate.
As of 2019, the mansion tax rates are as follows:
- 1 percent tax for residential property costing $1,000,000 to $1,999,999
- 1.25 percent tax for residential property costing $2,000,000 to $2,999,999
- 1.50 percent tax for residential property costing $3,000,000 to $4,999,999
- 2.25 percent tax for residential property costing $5,000,000 to $9,999,999
- 3.25 percent tax for residential property costing $10,000,000 to $14,999,999
- 3.50 percent tax for residential property costing $15,000,000 to $19,999,999
- 3.75 percent tax for residential property costing $20,000,000 to $24,999,999
- 3.90 percent tax for residential property costing $25,000,000 or more
Planning for Closing Costs
Anyone planning to buy a residential property in NYC must determine if they’ll pay a mansion tax. If so, they must then make sure to have enough money to cover the expense.
Purchasing a residential property that costs $2,500,000 will result in a $31,250 mansion tax. And there are also other closing costs to consider.
There is a growing debate concerning the fairness of NYC’s mansion tax. With the astronomical rise in NYC real estate prices, some buyers are scared away by the additional expense of the mansion tax.
In the past, it was believed that only wealthy buyers would have to deal with the additional tax. But not all real estate buyers are wealthy. There is a concern that the addition of the mansion tax will potentially make it impossible for non-wealthy residents to buy residential real estate. There is also a concern that real estate buyers who aren’t full time NYC residents will balk at paying the tax.
About Avraham Glattman
Avraham Glattman is the owner of First American Properties Group, a real estate business based in New York City, New York.
Avraham brings over 26 years of experience working as a real estate agent in the city, where he continues to work today. He graduated from Newport University with a Bachelor’s Degree in Business Administration and Management and remained at the university to attain his Masters of Business Administration (M.B.A.). After graduation, he jumped straight into the real estate field in 1992 in the greater New York City area. Throughout his career, Avraham has explored listings across the New York area, keeping a detailed account of the locations, pricing and comparable properties in the housing market.
After gaining a wealth of knowledge about the real estate marketing in New York, Avraham Glattman decided to take it a step further by creating First American Properties Group with his longtime business partner, Pete Jacov in 2008. First American Properties is a real estate and development company that services the five boroughs of New York. The company currently owns residential and commercial properties in Queens, Downtown Brooklyn, Harlem, and Manhattan. The company focuses on monitoring the growth and development in different areas of the city, so they can work to establish more patterns of growth and help revitalize the area.
While monitoring the different areas of New York City, Avraham Glattman consistently keeps an eye out on up-and-coming neighborhoods that he could potentially invest in. For example, after seeing Harlem, Avraham was immediately impressed by the neighborhood’s charm, leading him to invest in properties in the area. With a convenient location next to the subway and charming business like music venues in the area, it was not hard to see what attracted Avraham to the area.
Today, Avraham Glattman continues to find new investments with First American Properties Group, alongside his business partner, Pete Jacov. Together, they are working towards the goals that they set for First American Properties Group. The goals include acquiring property in the Harlem area to renovate and sell, as well as acquiring properties in all five boroughs.
Avraham Glattman is also the proud owner of 1927 Café Bar Popularr. Located in Harlem, the café serves a variety of open-faced Mediterranean sandwiches, called ‘Toastics’, and many types of coffee. Café Bar Popularr is proud of the rich artistic traditions of Harlem, and invites local musicians, authors, and comedians to visit and share their talents with friends.
Avraham was born and raised in Israel, where he went graduated high school. Not long after, he served in the Israeli army for three years, before he was sent to the United States to work with an Israeli newspaper in Brooklyn, NY. Not long after making the move to New York, Avraham met the woman that would become his wife in 1991. Together, they have three children.
In his spare time, Avraham Glattman enjoys spending his time with his wife and three children and loves to explore new parts of New York City. Avraham’s incredible dedication to both his work and family brings him immense happiness and purpose each day.
To learn more about who Avraham Glattman is, visit AvrahamGlattmanNewYork.com.
