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East New York has historically been one of the most affordable neighborhoods in New York City, where tens of thousands of working- and middle-class families own homes. Eighty-seven percent of these homeowners are black or Hispanic. Today, longtime homeowners, their tenants, and their communities face increasing uncertainty, driven by a fear of displacement and rising costs.
The Challenges: The legacy of the 2007 foreclosure crisis and predatory lending have resulted in thousands of families at risk of foreclosure. Wage stagnation and the hollowing out of New York City’s middle class has made affording rising housing prices a growing challenge. And decades of disinvestment combined with an aging housing stock means homes need critical repairs that, left unaddressed, can threaten financial stability. Meanwhile, property values are increasing dramatically as an influx of new, wealthier homebuyers and investors drives prices up. A rezoning in 2016 to allow larger and denser housing development may spur further price inflation.
About This Report: This report is the culmination of a yearlong investigation by the Center for NYC Neighborhoods into 1-4 unit homes and the families who live in them in East New York and the surrounding neighborhoods of Cypress Hills, Brownsville, and Ocean Hill. More than 280,000 New Yorkers call these communities home. The report seeks to document housing and real estate trends in the neighborhoods and to understand their impact on homeowners and renters. We surveyed hundreds of East New York homeowners, conducted multiple focus groups and in-depth interviews with community members, and analyzed demographics, real estate data, and family mobility patterns.
Why This Matters: While we focus on East New York, the findings of this report speak to the experience of New Yorkers in many Bronx, Queens, Staten Island, and Brooklyn neighborhoods where the first tugs of gentrification are being felt. Because of its concentration of low-rise buildings and low-income residents of color, East New York offers a unique case study to understand trends affecting homeowners and tenants in small buildings across the city.
East New York: Key findings
High numbers of financially-precarious homeowners
In 2014, 24% of borrowers in the neighborhood were at least 90 days late on their mortgage payments. Even greater numbers struggle to keep up with tax and water bills and home repair needs: 63% of East New York homeowners surveyed reporting an unmet home repair need, and the neighborhood has one of the highest numbers of tax and water debt sold through the City’s annual tax lien sale. Financially-struggling homeowners are frequently singled out by scammers providing fraudulent foreclosure rescue services and/or seeking to commit deed theft.
Interdependent landlord-tenant relationships
Owner-occupant landlords in East New York rely on steady rent from tenants to afford their mortgage and housing expenses. They charge their tenants some of the lowest rents in the city, and often keep rents steady over the course of several years. In turn, tenants rely on a homeowner’s housing stability to stay in their own rental units. By stabilizing homeowners, we can stabilize tenants —and vice versa.
Diminished opportunities for homebuyers
A combination of flat incomes and rising home prices have made it increasingly difficult for East New York residents to be able to afford to buy homes in their neighborhood. While wages in East New York have remained stagnant since 2010, the median home price has increased by 39%, from $322,000 to $449,000. In 2010, about half of East New York home sales were at prices affordable to families making 100% of the New York City Area Median Income. By 2016, this number had decreased to 22%. The rise in prices is aided by heavy speculative investment activity in the form of home flipping, where investors (often anonymous LLCs) induce homeowners to sell at below-market prices, invest in superficial repairs, and then resell at significantly higher rates.
East New Yorkers leaving their homes seek affordability, but at a price
Through an analysis of U.S. Postal Service data, we found that most mortgage-distressed homeowners who left their East New York homes tend to go to areas with lower housing costs. However, those gains in affordability are often made at the expense of higher transportation costs and reduced economic mobility. Homeowners who had mortgage difficulties when they moved tended to move to less economically dynamic areas than other homeowners.
Acknowledgments
The Center for NYC Neighborhoods would like to thank the following individuals and organizations for their invaluable assistance in creating this report:
Ana Aguirre, United Community Centers
Brooklyn Legal Services Corporation A
Catherine Green, ARTs East New York
Cea Weaver & Jose Gonzalez, New York Communities for Change
Coalition for Community Advancement: Progress for Cypress Hills and East New York
Cypress Hills Local Development Corporation
Eve Baron & Jessie Braden, Pratt Institute and the Spatial Analysis and Visualization Initiative
Mutual Housing Association of NY (MHANY)
New York City Council Member Rafael L. Espinal Jr.
New York City Department of Housing Preservation & Development
Reverend Dr. David Benke, St. Peter’s Lutheran Church