Nearly half of all poor, urban renters in the United States live in rental buildings of fewer than four units, and such buildings make up nearly half our nation’s rental housing stock. Yet small rental properties remain largely overlooked by researchers. We present two reports—from New York City and Baltimore—both providing suggestive evidence, drawn from a variety of sources, about the characteristics of small rental housing. We find that while small buildings offer lower rents and play a crucial role in housing low-income renters, these lower rents are largely explained by neighborhood location. Ownership matters, however. In New York, lower rents are associated with small buildings with resident landlords. Further, we also find better unit conditions in small rental buildings when compared to most larger properties, especially in small buildings with resident landlords. In Baltimore, we find that smaller-scale “mom-and-pop” owners dominate the small rental property market, but that the share of larger-scale owners increases in higher poverty areas of the city. The properties owned by these larger-scale owners receive fewer housing code violations and that these owners appear to invest more frequently in major improvements to their properties.
Some of New York City’s most valuable properties in its highest-cost neighborhoods are significantly and persistently undervalued, according to Shifting the Burden. The report identifies 50 individual co-ops in 46 buildings that were sold in 2012 for more than the New York City Department of Finance’s estimate of the market value of the entire building. This undervaluation has significant consequences for the distribution of tax burdens in New York City.
Many tax enforcement regimes incorporate taxpayer-initiated administrative procedures for adjusting tax liabilities. Using a novel dataset, this article examines the property tax appeals process in New York City and finds that the salience of the property tax (its visibility or prominence to taxpayers) has a large effect on the probability of appealing. I find that differences in salience across property owners, unwittingly induced by government policy and private actors, effectively shifts the property tax burden toward certain mortgagors, who are more likely to be racial minorities, foreign-born, and working families with children.