Misinformation Monday - Mom & Pop Landlords

Taking a break from taxes (but don't worry, we still have PLENTY to talk about there) to discuss a mythical creature all over the news since the 2019 rent laws, and even more in the pandemic: the mom and pop landlord.

While they do very much exist, they're often used as political props rather than actually listened to or supported. In NYC in particular, the vast majority of rental units are owned by larger organizations, for a multitude of reasons.

Are there plenty individual landlords? Yes. But are they the majority? No. And we need to stop pretending there is a one size fits all solution when there is so little similarity between Joe Shmo and E&M Associates, the same way there's a difference between a tenant who actually can't afford rent and one who wants something for free because it's "only fair," if his neighbor is getting a break.

And we need to stop making this a faux-moral conversation pitting sides against each other, instead looking at solutions that will actually benefit everyone. 

xo

Anna

What's the Deal?

Headline after headline is riling people up all over the country, talking about how the eviction moratorium unfairly hurts "mom and pop" landlords who are unable to pay their bills, mortgages, and expenses. Ignoring the fact that this assumes the owner could replace the evicted tenant with someone else paying enough to cover these expenses, there are other issues with this narrative. Namely, that this type of landlord is the majority and that the eviction moratorium/tenants are the issue rather than a total lack of government support.

Nationwide, a little less than half of all rental units are owned by individuals, including 70% of 1-4 unit rental properties. In NYC, the data shows that on 10% of rental units are owned by a single building/unit owner, and 72% of rental units are owned by landlords with at least 6 buildings. I'm not going to call anyone who owns 6+ NYC properties a "mom and pop" operation.

Because these numbers come from HPD they likely do not include individual condo or co-op sublets or 2-family homes where the owner rents one unit, but include 100% of buildings 3-family or above. Many co-op and condo sublets are not individuals, either, and even if we say that 15% is single-property-owners, that is still a TINY fraction of the city as a whole. 

Institutional/investment landlords are also more likely to own rent regulated units, and are responsible for far more evictions. This is relevant because what everyone is freaking out over is the eviction moratorium, and again, small landlords are being used as props. When I work with an individual owner I am much more cautious about accepting a tenant than with a large company that has a certain element of risk built-in and attorneys on retainer. Which group do you think is more upset that their attorneys' hands are now tied? Which group do you think has the money/time/desire to evict in the first place?

Of course, our government is doing fuck all (technical term) to actually help -- it's easier to parade people around and use them to criticize "lazy" tenants than it is to find a solution -- when they could be either providing aid to people in the form of UBDI or to these small landlords in the form of mortgage and property tax/utility cancellation. They're choosing to do neither.

Yes, let's continue to give the Catholic Church billions of dollars in tax payer money despite the fact that they do not pay taxes. That's a much better choice than giving people $2,000/mo.

From the comment sections on many of these articles, white, middle to upper class Americans loooooove these stories, leaving incoherent responses blasting "socialist" tenants "with no savings" who should just "get a job and be responsible." So of course these magazines and papers, whose readership base is largely made up of these people, continue to publish the same story ad nauseam.

Some of them have good information, but many are written in a misleading way to get a certain emotional response, hiding the actual data between paragraphs of sob stories.

Again, I'm not trying to paint landlords like they're horrible or deserve to go bankrupt, but if a company like Blackstone (who I always pick on because ugh) is trying to increase its portfolio during the crisis, why should taxpayer money go to "bailing it out?" I also know firsthand that they did NOT reduce rents for tenants struggling to pay, and will come out of the crisis with more money and property than they had before.

Why Does This Matter?

Because there is a false dichotomy where either the landlord or the tenant is somehow at fault, allowing the government to abdicate responsibility in a crisis, and there is a false equivalence between all kinds of landlords. There's a stupid narrative that tenants are lazy freeloaders or all landlords are evil. The reality is, obviously, somewhere in between. 

It's frustrating because it's complicated, and Americans HATE complicated. Even the tenant advocacy groups calling for the city to "cancel rent" make exceptions for smaller landlords, but you won't see that in these clickbait articles. And just because a landlord is institutional doesn't mean it's BAD; it just means it doesn't need the same kind of support (and not all small landlords are good, either). 

The small landlords deserve a break. I'm not sure the institutions do. You can argue that's unfair, but literally nothing about our society is fair or equal at the moment. If the recovery is K-shaped, aid can be, too. I'm not even a proponent of "cancel rent;" I think that providing cash to people in the short term, directly and consistently, that they can spend on rent would solve the problem far better and everyone, landlords and tenants alike. But if we aren't going to do that, we gotta work with what Congress actually will do (read: almost nothing). 

And in that vein, if we do have state funds specifically earmarked for rent replacement, then rather than doing what NY has done thus far and put the onus on struggling tenants, many of whom don't speak english or know how to navigate complicated processes or even have access to the internet, put the onus on the LANDLORD to show need for aid. 

Further Reading/Watching

For more, please check out the links below.

Time - Millions of Tenants Behind on Rent, Small Landlords Struggling, Eviction Moratoriums Expiring Soon: Inside the Next Housing Crisis (article)

Medium - Examining the Myth of the “Mom-and-Pop” Landlord (blog)

Gotham Gazette - Crown Heights Tenants Say Prominent Brooklyn Couple Tried to Illegally Evict Them (article)

Misinfo Monday - Real Estate Tax Abatements

A lotta tax talk in 2021, but it comes with the territory.

The big real estate tax abatements in NYC are J51 and 421a, which offer owners and developers financial incentives in exchange for either rehabbing or building new affordable housing. 421a is far more common.

Many condo buyers seek these properties out, because NY's real estate tax system is such a disaster that condos are taxed at much higher rates than brownstones. One of these tax abatements can save an owner $10's of thousands, especially after the 2017 tax law changes.

But, naturally, these programs have been rife with fraud and inefficiency, prompting questions over whether the loss in tax revenue is worth the mild gains in affordable housing. In particular, 421a has come under fire, and its fate may be tied (like everything else, apparently) to the upcoming mayoral election.

xo

Anna

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What's the Deal?

Without getting tooooo much into NY real estate tax law, stabilization, etc, J51 and 421a tax abatements were dreamt up in the '70's when "white flight" led to decay and vacancy in the city. It incentivized developers to build/renovate in the city rather than the suburbs by providing massive tax incentives, and these savings were then purchasers (if a condo) or tenants (if a rental).

Just the basics:

J51 abatement -

- rehabilitation to an old building

- up to 35 years of reduced taxes

- for tenants, rent stabilized until phase-out of abatement

- for tenants, some buildings would remain stabilized even after the abatement ends

421a abatement (ended in 2016 but renewed in part, up for reconsideration in 2022): 

- new construction

- up to 25 years of reduced taxes

- on "vacant," "mostly-vacant," or "underutilized" land

- special incentives in lower income parts of Queens, Manhattan, and Brooklyn

- for tenants, rent stabilized until phase-out of abatement

For those who want more of the nitty-gritty: 

"The rules for the 421a tax exemption include several "enhanced affordability areas" in parts of Manhattan, Queens, and Brooklyn. Buildings with more than 300 residential units that are located within these areas would be granted a 100% tax exemption for up to three years during construction, plus a 100% exemption for 35 years after construction is complete, provided that they comply with one of three 421-a options. 

For all other buildings that do not qualify for the enhanced-affordability option, these buildings would have a tax exemption for 3 years during the construction process and 35 years after construction ends, provided that they comply with one of the three other 421a options. However, the 100% exemption would only apply during the first 25 years after the completion of construction.

Throughout the period of the exemption, the developer must pay at least the property taxes paid on the property prior to the exemption being granted. Developers do not have to pay taxes on the increased value of the property for the duration of the exemption period, with a phase out period in which the tax benefit is gradually reduced over years.

The lost property taxes would otherwise go to the city government as property tax revenue."

This costs the city BILLIONS it would normally collect. 

Over the past couple decades, what 421a in particular has done is speed up gentrification in areas the city designated as "underdeveloped," like Bed Stuy and Harlem, ironically making them LESS affordable for residents. Although there are a handful of "affordable" units in each project (if they ever get built -- looking at you, Hudson Yards), the VAST majority are priced at thousands per square foot,.

Gentrification has a negative connotation not always totally deserved, but programs like this lend credence to opponents of luxury development. A lot of these developments are poorly constructed, leading to lawsuits and issues that have in turn led buyers to mistrust new development.

And when it comes to rental properties (because this doesn't just apply to condos), there is a long history of landlords breaking rent stabilization laws and taking advantage of the tax breaks while also charging higher rents. 

Why Does This Matter?

Like many of the things we're talking about, this is part of the conversation about how to bring NY back financially in a way that is effective and also helps reduce growing fiscal inequality. But unfortunately it's been highly politicized and, like the pied-a-terre tax, many of the people with the loudest voices have the least information. The goal should be to look at the benefits vs. costs honestly and holistically. 

My hope is that now the real estate industry seems more willing to play ball and have hard conversations (since basically everyone has turned against it), and we HAVE to think bigger about ways to close NY's budget deficit, and we will elect a new mayor this year, we can actually make some change -- both in real estate taxes and in how the city is developed -- instead of tweaking a broken system. 

Further Reading/Watching

For more, please check out the links below.

Commercial Observer - Split Ticket: New York Politicians and Real Estate at Odds (article)

Gothamist- How Your Tax Dollars Are Wasted To Build Luxury Apartments (article)

Gotham Gazette - Several Points of Conflict and Differentiation at Brooklyn Democrats' Mayoral Candidate Debate (article)

Misinformation Monday - Pied-a-Terre Tax

The proposed pied-a-terre tax, which would be paid annually and affect second (or third or tenth) homes worth roughly $5m or more, is a rare thing that put everyone else is in a tizzy while I really have no strong feelings one way or the other.

I see the arguments on both sides, but mainly I think it's part of a greater conversation about structural inequality, what is owed by people who have benefited greatly from the pandemic at the (direct or indirect) expense of others, and what happens when states are able to compete for residents by undercutting one another on cost of living/doing business and taxes.

The thing I do feel strongly about? That misleading press and grandstanding needs to stop. Do not tell me that this tax impacts "middle class" New Yorkers or that it will somehow magically close the budget deficit. Neither is true.

But again, it's a conversation, and the more open -- and honest -- discussion we can have, the more likely we are to find well thought out, useful solutions. 

xo

Anna

What's the Deal?

The pied-a-terre tax, which was introduced back in 2019 but has recently picked up support, would be an annual tax on homes in NYC with an assessed value of $300,000 or more (roughly $5m market value) that are not the owners' primary residence and are not being rented out or otherwise occupied by the owner's family, instead sitting vacant for the owners' occasional use.

How much would it actually cost these owners? I'm going to quote attorney Andrew Luftig here rather than do my own math:

Property Listed for $7 million (market value) with an assessed value of $672,306 - 

$672,306 (assessed value) MINUS $300,000 (pied-a-terre tax doesn’t apply to 1st $300,000) = 372,000 * 10% (proposed tax %) 

= $37,200 a year assuming the legislation implements the proposed tax in its current form.

Of course, it would be complicated because the city would be tasked with figuring out veteran/senior/disability exemptions, whether someone is using/renting the property enough for it to be considered, etc. It's also become a talking point because of the recent blue wave in Albany and the upcoming mayoral race.

In the "for" corner: New York City is facing a $5.25billion budget shortfall; people who own second homes here do not pay for services they use (police/fire/roads/garbage/etc); these homes are vacant for most of the year while over a hundred thousand New Yorkers, including many children, are homeless; these people made money during the crisis while other New Yorkers stood in hours-long food lines.

Representing the "against" side: high-income New Yorkers already pay more than their fair share (although this tax would be levied against a different group of high-earners); it would decrease price on luxury real estate and potentially hurt long-term NY tax revenue; the estimated annual revenue from the tax is far lower than initially stated ($232m annually down from $390m); this is more political spectacle than useful policy.

As I see it? Everyone's kind of right. To some extent all of these things are true. And I think this is why I don't have a strong opinion on the matter.

One other thing I'll add: To anyone who fears that these people selling their homes would cost NYC tax revenue, I'd argue that, in the short term, the sales of these units could actually benefit the state in the form of transfer taxes. Collecting roughly 2% of every sale would get us way closer to fixing the current deficit than a meager annual tax would. There's also little proof that they would actually bail on NYC rather than pay a few extra grand every month.

Why Does This Matter?

Again, because it's part of a larger conversation and debate around wealth disparity, equity, and "building back better." 

We really f*cked up the stimulus because at the time the government was run by garbage monsters (technical term) who still champion trickle-down economics, a model popularized by the Koch brothers, who actually funded business schools to legitimize this laughable, repeatedly proven wrong concept. 

BUT I DIGRESS.

Look, as someone who grew up in Appalachia and has spent eight years living in Harlem, I'm no stranger to the impacts of poverty on communities, whether they're white or people of color. And over my lifetime I have watched the inequality/poverty get worse, especially during the decade-of-a-year that was 2020. We need to do something about it, because this level of inequality is not sustainable. Spend 5 minutes on Gen Z eat-the-rich TikTok and you'll see the ramifications of ignoring the problem. 

So yes, I do think that some people who believe they pulled themselves up by their bootstraps will end up needing to pay more than what they feel is fair. But I'm also not sure that adding this tax will be helpful. Why fuel the narrative that NYC unfairly taxes wealthy residents over a very minimal revenue increase? Seems....bad. Everyone needs to put their egos aside and think, logically and honestly, about what makes the most sense. 

Further Reading/Watching

For more, please check out the links below.

Brick Underground - What is assessed value and how is it used to calculate a pied-à-terre tax? (article)

The Real Deal - Pied-à-terre tax revenue estimate slashed by 41% (article)

Misinfo Monday - NAR Bans Hate Speech

The National Association of Realtors has had enough. After receiving a shocking number of reports of agents using hate speech against protected classes, they've changed their code of ethics.

Am I surprised so many agents are behaving this way? No. I know the industry I'm in, its history and some of the people it attracts.

Am I bummed? By the hate speech, yes, but I'm actually optimistic for my industry's future. I'm seeing brokerages and organizations nationwide start to take ownership of our past (and current) failings. Maybe some things will actually change.

xo

Anna

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What's the Deal?

The National Association of Realtors, or NAR, officially changed its code of ethics this week to prohibit ANY AND ALL hate speech by a licensed agent towards or about a protected class. Prior to this change, a realtor was only held to his or her conduct within the confines of a transaction. 

This change makes sense for a few reasons:

1. We are independent contractors whose product is ourselves, so there is no real on-the-job/off-the-job distinction.  

2. Because of this year's pandemic, agents are posting more of these things online where they can easily be seen and reported.

3. As NAR acknowledged, agents have long been on the wrong side of history when it comes to racial equity. 

And it isn't coming from nowhere; in November an NY agent was fired by a prominent firm after a video of him screaming slurs at/accosting women and tearing up yard signs went viral. Articles have been coming out all year about racism within brokerages (firing an agent and then making disparaging comments about her, in email, based on her race) and within the community (a pattern of refusing to rent to non-white tenants). We are not killin' it as an industry right now. 

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Of course, there was some pushback from the "FREEDOM OF SPEECH!!!!" crowd, but NAR has a right to penalize members of its private, licensed club. Your boss can fire you if you swear at him; your freedom of speech doesn't stop that.

NAR also released a video explaining the move, saying they have received a staggering number of complaints about hate speech posted by realtors online. I've personally been horrified by some of the callous, hateful things I've seen agents post about renters, poor people, and people of color.

And even if you want to argue that agents should only be bound by their behavior "on the job," we are always on the job; that's what being a CEO/independent contractor/business owner means. How would NAR be able to isolate which complaints count? Were you with a client when you were tweeting that? Did you SAY any of this to your buyer?

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Why Does This Matter?

The greater context here is an industry needs to face its past and the horrific things it has done. I've talked about this before (i.e. redlining) and it will come up again as we try to fix these structural problems. 

But the sudden, massive uptick in hate speech itself is, to me, also representative of a more current issue. This year's violent political rhetoric emboldened some people who had, in the past, stayed quiet about their feelings of white/wealthy superiority. 

Realtors as a group are less educated and more white than the country as a whole. Most are taught to act focus on "making deals" and "getting into flow," to put their individual moneymaking goals at the forefront, everything else be damned. And while yes, this Gary Vee-esque attitude has positives, I think we're now seeing some of the downsides. And I'm glad that NAR, along with some individual brokerages, are taking some kind of stand. 

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Further Reading/Watching

For more, please check out the links below.

NAR Website - NAR Board of Directors Approves New Personal Conduct Policy Addressing Discrimination (press release)

The Real Deal - NAR amends code of ethics to ban public hate speech (article)

Misinfo Monday - Is NYC Affordable Now?

Misinfo Monday - Is NYC Affordable Now? ** If you'd prefer not to receive this, please just reply and I'll take you off the list! Monthly REcaps will continue as normal. ** How'd you guys like my clickbait subject line? The answer is, of course, "not really" but there's a lot to dig into.  While you can get massive sales discounts if you're buying in a $15m price point (not affordable), prices have not dropped the way one might expect. And while the vacancy rate is higher and rents are sliding, most landlords are trying to preserve their long-term gains by offering months free for one year rather than actually decrease prices. Plus there are fun, new expenses to come out of this pandemic, like an increased cost for the subway, while millions of people are out of work or had their salaries reduced. So yeah, it's complicated. Scroll down for more. xo Anna What's the Deal? There’s a lot of headlines about record low rents and how NYC has suddenly become affordable, meaning young people can move on in and enjoy the city.  Leaving aside the fact that millennials have 1/4 of the wealth that boomers had at our age, and the fact that more young people have been laid of and forced to move home than the ’08 housing crisis, AND the fact that nothing is open because we are in a pandemic, there are still a lot of issues with this “newly affordable” narrative.  First, there is a kernel of truth to the headline; prices in NYC have declined from their peaks of 2014/15 (sales) and 2018/19 (rentals). But that doesn't mean that everyone can suddenly afford housing.  I've written before about rent burden, and in order to purchase an apartment in NYC you generally need 20+% for the down payment (100k even on lower price points) plus a big chunk of cash post-closing as well. This means owners have a large amount of equity in their homes, and it also means they're likely to be people earning <$100k/year, a group far less affected by the pandemic layoffs than those who typically rent.  And while there are headlines about people selling their homes at a discount, those are mostly people who purchased at the peak of the market in 2014 or are in the hyper-luxury space. This doesn't point to a more affordable option for most prospective buyers. Additionally, if 25% are selling at a discount then 75% are selling at a profit, even during a global pandemic that has disproportionately affected NYC. Rentals are a fascinating situation right now. Landlords are struggling to fill vacancies, but aren't necessarily willing to drop prices. They'd prefer to offer temporary concessions (months free, move-in credits, waived amenity fees) over actually dropping the rent long-term. There are many apartments on the market right now that would cost $2,000 for the first year and $3,000 for the second, even though it's unlikely we will have recovered financially by then. At the same time, some landlords are trying to use the pandemic to justify eliminating all rent stabilization/control. They're already looking at Amy Barrett's confirmation as a way to overturn all rent protections in NYC. Because clearly the issue here is stabilization, not the fact that many of those who need housing in the city can't afford it, including the 100,000 homeless, and many of those who can afford it are taking their money wherever they want to be while they work remote. And, as I mentioned earlier, there are new, additional costs associated with living in NYC. Ridesharing isn't an option and cabs have become much more expensive (in most cases). The subway shuts down from 1-5am (thankfully buses still operate) and they expect to raise fares by a dollar a ride next year. All of this is happening as people are trying to avoid catching a potentially deadly disease. Prices of food and other goods have gone up, people are being billed for COVID tests that their insurance was supposed to cover, people have to take unpaid time off work to quarantine, salaries have been reduced. It's not a great situation for people who aren't at the top, but the ones at the top are writing the "affordability" narrative. Why Does This Matter? Whether you rent or own, while the market is softer and more buyer/tenant friendly than it usually is, that doesn't mean it's affordable for people who need it. It also doesn't mean you'll get a huge discount. As the NY Times put it:  "One in five New York City tenants did not pay rent in September, by one estimate, and there is growing concern of “an eviction tsunami.” As apartment vacancies climb, sale prices and rents are falling, but nowhere near the magnitude needed to compensate for scarce affordable housing options." A buyer's market in NYC basically just means that buyers have options rather than being constantly outbid by all-cash investors. And a soft rental market just means you can get an apartment for a year at about $2,000 instead of $3,000. It may be "more affordable" than it has been for the past few years, but it's far from actually being livable for the majority of people, especially young people who are needed to bring the city back economically. Funny how making up 41% of the workforce but only having 5% of the equity doesn't put millennials in a great position. Who'd have thought? Further Reading/Watching For more, please check out the links below. Brick Underground - A quarter of Manhattan sellers took a loss on deals since June (article) The Real Deal - Supreme Court shift could favor rent law challengers (article)  Anna Klenkar Licensed Real Estate Salesperson M: 540.664.5896 anna.klenkar@compass.com © Compass 2020 ¦ All Rights Reserved by Compass ¦ Made in NYC Compass is a licensed real estate broker. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. All Coming Soon listings in NYC are simultaneously syndicated to the REBNY RLS. marketingcenter-newyorkmetro-newyorkcity

Misinfo Monday - 1031 Exchanges

Last week was a little more "big picture" so today we are digging into a very specific real estate topic: 1031 exchanges and their possible elimination.

A 1031 exchange allows an owner of an investment property to avoid capital gains taxes by taking the proceeds of a sale and putting it towards another purchase. 

This has helped some small investors, but massive organizations have used a string of exchanges to defer tens (or hundreds) of millions of dollars in taxes that cities need for their budgets, especially now. And there is a renewed push to adjust or eliminate the option.

xo

Anna

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What’s The Deal?

1031 or "like kind" exchanges allow an owner to avoid paying capital gains taxes (20%) on the increased value of their home. For example, if you bought a condo for $100k and now it is worth $200k, you would owe $20k in capital gains taxes, but you could get out of it by putting the proceeds towards a new purchase. 

This has a few main conditions: 

1. It must be an investment (rental) property or a "productive" property (ie. farmland), and you must have a history of declaring/paying taxes on the income from this investment. 

2. You must identify three properties of interest within 45 days of selling your original property, and close on (buy) one of those three properties within 180 days.

3. Both the purchase price and the loan on the new property must be larger than the original (ie. a $1m property with an $800k loan for a $1.1m property with a $900k loan). 

Again, note that 1031 exchanges are only allowed on investment properties. Avoiding capital gains on your primary residence is simpler but more limited; I'll write something about that in the future!

Like kind exchanges have been around for decades, but have recently found the spotlight. In 2017, the new tax law eliminated this kind of tax-deferral exchange EXCEPT for in real estate transactions. Before that, companies were able to do "like kind" exchanges on everything from rental cars to farm equipment.

The 1031 exchange is a HUGE financial boon to real estate investors, and it isn't the only one. From Bloomberg: "The exemption is projected to save property investors $51 billion between 2019 and 2023, according to Congress’s Joint Committee on Taxation. It’s not the only benefit in the tax code that primarily favors property investors. Real estate developers can claim write-offs for losses on borrowed money. They also get to claim depreciation on buildings, which, unlike farm equipment or factory machinery, generally increase in value."

While I know some small investors who would benefit from the 1031 exchange option, many of the NYC beneficiaries are billionaires with massive portfolios. These types of exchanges aren't necessarily easy or straightforward, so the savvier investors tend to be the ones utilizing them. Said investors already take advantage of every loophole mentioned above to lessen their tax burden, as is their right. But with all their other options I'd argue they don't need this one.

Why Does This Matter?

1031 exchanges have made headlines recently for two reasons:

First, in June the Trump Organization discussed selling two properties in NYC and SF for roughly $2billion. These buildings were purchased in a like kind exchange with proceeds from an earlier UWS sale. His position in government could make using these proceeds for yet another 1031 exchange difficult, and if the exchange doesn't happen the organization would owe tens of millions in taxes. 

Second, Biden recently proposed eliminating the 1031 for real estate the way Trump's administration eliminated it for all other businesses. Of course certain people in real estate (like reason I just quit Equinox Stephen Ross) are yelling about how this is unfair, but again, it was Trump's administration that dismantled the program. Biden would simply be finishing the job. 

We as a country will need to make some tough decisions over the next few years to undue the damage the GOP and coronavirus have done to our finances. No one is excited about paying higher taxes and most of us are already hurting financially, so closing loopholes and funding the IRS so it can actually go after companies/individuals avoiding their fair share may be our best bets. 

Further Reading/Watching

To read more about 1031 exchanges and other ways real estate moguls avoid taxes please check out the links below.

Bloomberg - What Is the Like-Kind Exchange Rule That Biden Wants Dead (article)

Pro Publica - Here’s How Trump Transferred Wealth to His Son While Avoiding the Usual Taxes (article) 

NY Times - How Loopholes Help Trump and Other Real Estate Moguls Avoid Taxes (article)

Misinfo Monday - Affirmatively Furthering Fair Housing

This week on "Ben Carson is unqualified for his job" and should "find something new," HUD is aiming to remove an Obama-era program to enforce and further the fair housing laws passed in 1968. 

As we've discussed before, many policies that violate fair housing are still being practiced. In 2015, Obama's administration began requiring communities to show how they are addressing the problem head-on. But now HUD is trying to remove all oversight.

As always, the discussion is complex, due in part to liberals who support desegregation -- as long as it isn't in their own backyards. Thankfully the data shows that desegregation helps much more than it hurts. And others in the government are already taking steps to avoid this rollback from occurring.

xo

Anna

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What’s The Deal?

Fair Housing, as it is known today, passed as part of the 1968 Civil Rights Act, but its enforcement -- sometimes described as "affirmatively furthering fair housing" -- has been uneven at best. And, as we have seen in the wake of George Floyd's murder and the resulting outcry, America has remained pretty racist and segregated over these past fifty years.

The Obama administration in 2015 passed a law requiring local governments to show how they are actively furthering housing equality and ensuring all community members are following fair housing laws. Because, as we know, banks, developers, and real estate agents need oversight.

Now, captain babyhands wants to eliminate this as part of an appeal to his vision of the suburbs -- a vision increasingly inaccurate as suburbs become less and less white. He and Mike Pence seem to think Mad Men is a documentary from 2016. 

HUD says that it is simply giving communities more time to show they are complying with fair housing laws. But lil T's tweet says otherwise: his racist statement shows the real reason is to "reassure" white voters afraid of non-white people moving into their communities. Statements like this are exactly why fair housing laws are needed in the first place. 

But I want to make it clear that this isn't just a GOP problem; some of the "wokest" liberals also freak out at any mention of low-income housing coming to their communities. A new "project" or shelter brings higher density and lower median income, which causes some to worry. There's a fascinating Bloomberg article from 2015 that dives into this further (linked at the bottom).

The good news? These fears are actually pretty unfounded. A study released in 2016 showed that adding low-income housing to poor neighborhoods lowers crime and boosts property values. The situations where it has led to problems were when it was built in areas already struggling with high crime rates, underfunded schools, and no job opportunities, isolating people and exacerbating existing issues.

AOC has already attached to a Senate bill two provisions that would defund HUD's new plan. If these pass they would effectively end the HUD initiative, since no federal funds could be used for this ridiculous rollback. 

And even NAR, the National Association of Realtors, is pushing back against HUD. After a reckoning within the real estate community about how many agents violate fair housing policies, the industry seems to be putting its money where its mouth is and fighting for stronger fair housing protections throughout the US.

Why Does This Matter?

It's mind-blowing that the government would seek to revoke this program now, right when many people have finally woken up to the ongoing inequality and inequity caused, in part, but unequal access to land ownership between white and non-white communities. 

But it makes sense -- blockbusting was effective for a reason. Tell someone comfortable that they will be made uncomfortable and you may be able to convince them to stick with the status quo.

Thankfully, it feels like the tide has turned and this is a poorly-timed attempt at sowing division and distrust. It has been an effective tool in the past for winning the white vote, but as empathy begins to outweigh fear and the facts show that integrated communities are actually a positive, it's lost its edge.

Further Reading/Watching

To read more about the Obama administration's 2015 rule and HUD's recent dismantling, as well as the changing demographics of the suburbs, please check out the links below.

Bloomberg - How Fair Housing Will Turn Liberal Cities Conservative (article)

Chicago Reporter - Immigrants and some people of color are moving to the suburbs – but life there isn’t as promising as it once was (article) 

Pro Publica - Separated by Design (article)

Bloomberg - What Does Trump Think the ‘Suburban Lifestyle Dream’ Means? (article)