NYC homeowners’ property tax delinquencies at the highest level in 10 years
Nothing is certain but death and taxes, and property taxes are no exception.
For a year and a half, New York City homeowners complained that eviction bans would leave them hard pressed to pay their bills. Without rental income, landlords warned they would not have the income to pay property taxes, and without these payments, the city’s finances would suffer.
Recent figures suggest they weren’t entirely bluffing, but the impact on the city has so far been minimal.
Data produced by the Comptroller’s Office shows that the preliminary delinquency rate across all properties in the city averaged 2.1% for fiscal year 2021, which ended in late June.
That’s a few ticks more than the 1.93% calculated for fiscal 2020, which ended three months after the start of the pandemic. For fiscal 2019, it was 1.69%.
In February, Controller Scott Stringer predicted that missed payments were on track to exceed rates not seen since 2011, in the aftermath of the Great Recession, when the city’s delinquency rate peaked at 2.17.
Although below Stringer’s dreadful 3% forecast in February, a delinquency rate of 2.1% is near that ten-year peak. But they’re still relatively small potatoes for the city.
Property taxes represent almost a third of the city’s income; if that 2.1 percent rate holds – the comptroller’s office has said it could drop once late payments are credited – the city risks losing less than one percent of its annual intake.
“People expected much larger increases in defaults, given the news that residential and commercial tenants are not paying rent,” said George Sweeting, deputy director of the city’s Independent Budget Office. . “Part of the story is that homeowners have found ways to track their property tax payments.”
Among owners of one, two and three-family homes – some of whom are family owners – data collected by the OBI found delinquency rates at 4.25%, higher than the city average, but declining compared to last year, when they stood at 4.42 percent.
Delinquency rates among multi-family homeowners edged up to 2.78% in 2021, but remained below the city average calculated by the OBI at 2.84%.
IBO’s data differs slightly from the city’s; Sweeting said the numbers are “different, but not that different”.
Like city, like state
Statewide, researchers expect property tax payments for 2021 to show a relatively healthy collection rate.
Real estate data company CoreLogic found that although delinquency rates in New York City currently tend to be higher than in previous years – 10.1% in 2021 compared to 4.3% in 2020 – this figure is expected to balance out. once all municipalities in the state have finalized their tax rolls. Kirk Randlett of CoreLogic said he expects rates to be near the national average of around 5%.
The hot housing market has helped stabilize delinquency rates.
What Miller Samuel President Jonathan Miller described earlier this month as an “insatiable demand” for housing has resulted in an influx of home buyers who are making mortgage payments and paying their taxes.
“Frankly, I think you see the strength of the economy,” said Randy Kozlowski of CoreLogic, referring to the expectation that defaults will align with previous years.
Property privileges can also follow suit.
In September, the number of properties in the city deemed to be at risk of lien sale exceeded 11,000. That figure includes some rolling properties from 2020, when at-risk liens totaled more than 3,000.
However, at risk does not mean that a property will be in default at the end of the year.
“Many homeowners will update their exemption forms or make overdue payments by December,” said Paula Segal, senior counsel at TakeRoot Justice, which provides legal and research services to grassroots movements.
The additional payments will likely result in a smaller lien list when the sale, postponed since the start of the pandemic, finally hits mid-December. Privileges sold in 2018 and 2019, for example, hovered around 3,000.
Taxed through the nose
Yet landlords say that while they still pay their bills, they’ve had to deal with rising tax rates that exceed rent increases.
Jerry Waxenberg, a longtime municipal owner whose company owns several thousand units, calculated a 40% increase in property taxes from 2016 to 2020 for the same period. In 2016 and 2020, the council voted to freeze rents; in 2021, it opted for a six-month freeze, followed by a 1.5% hike.
At a virtual press event hosted by homeowner group Small Property Owners of New York in May, several landlords turned off their microphones to criticize the gap between low rents, given the moratorium on evictions, and the increase in property taxes. Justin Fong, a third-generation homeowner, said he has seen his taxes rise 65% in the past five years.
It is possible that next year will hit collections harder.
The city’s property assessment for fiscal year 2022, which began on July 1, forecasts a 5% decrease in the assessed value of all buildings. Multifamily should see a drop of 1.2%.
For owners of large buildings, the lower rates will provide some relief, but offsetting this break is a 3.56 percent increase on the assessed tax value of homes with one to three families.
With the state’s eviction moratorium now extended through January and rent increases frozen until spring 2022, mom and dad landlords are saying they’re between a rock and a hard place.
“I just got an appraisal from the city and the city is still raising my property taxes, but not allowing me to earn the money to pay the property taxes,” Fong said last spring. “I don’t know how long I can last. “