Tag Archives: housing

City Partners With AI to Rework Condo Property Tax Assessments

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New York City HABITAT Magazine

The robots are coming! The robots are coming!

New York City’s arcane, unfair and unloved property tax system is about the get help from a new source: artificial intelligence.

The Department of Finance has partnered with technology firm C3 AI for a six-month pilot program that will explore using AI to calculate the assessed value of the city’s residential condo properties, Crain’s reports. The program will use machine learning along with market and sales data, and it will investigate how practical it is to base property tax bills on sales comparisons for condo buildings with more than 10 units. Under the current system, co-op and condo assessed values are based not on sale prices but on the the value of comparable rental properties. (Assessed values, a fraction of market values, are part of the equation used to calculate property tax bills.)

C3 AI’s “approach is considered a more fair and transparent way to assess properties,” and the program could boost property tax revenues if successful, according to a notice published in the city record.

C3 AI’s appraisal platform would allow the city to identify and resolve data discrepancies, appraise several properties simultaneously and identify sites that require additional judgment, according to a promotional video on the company’s website. Every appraisal comes with “an evidence package and sales comparables that explain how the AI property value was generated.”

Valuations play a huge role in New York’s notoriously byzantine and controversial property tax system. Although officials tend to undervalue buildings, which leads to a lower tax bill, owners still frequently go to court to challenge their valuations.

The city released its tentative property tax assessment roll for fiscal year 2026 in January, which put the overall market value of the city’s buildings at about $1.6 trillion, up 5.7% year over year. It anticipated a 7.3% increase in the market value for condos, co-ops and rental apartment buildings.

If successful, the C3 AI pilot program could lead to a longer-term contract. Meanwhile, the organization Tax Equity Now New York (TENNY) is in the middle of a lengthy legal battle seeking to upend New York’s overall property tax system. The group argues that it breaks federal fair-housing laws by overtaxing neighborhoods where people of color make up the majority of residents and breaks the state real property tax law by overtaxing rental properties compared to owned homes.

The current law puts a cap on annual property tax increases, which has had the effect of lowering tax bills in neighborhoods where property is appreciating rapidly, while punishing neighborhoods that are experiencing slow or no appreciation in values.

The TENNY suit dates back to 2017, and the Court of Appeals revived it last year.

Community Associations on the Rise in 2023

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Ashok Chaluvadi National Association of Homebuilders

In 2023, 64.8% of all new single-family homes started were built within a community or homeowner’s association. This share increased from the 62.6% recorded in 2022, according to data tabulated from the Census Bureau’s Survey of Construction (SOC). This marks the third highest share since the beginning of the series in 2009, after the high point of 67.1% in 2020 and 65.5% in 2021.  Prior to 2021, the share had been on a decade-long upward trend.  In absolute numbers, a total of 601,558 homes were started in community associations in 2023.

The Census Bureau defines community or homeowner’s associations as “formal legal entities created to maintain common areas of a development and to enforce private deed restrictions; these organizations are usually created when the development is built, and membership is mandatory.”

A recent NAHB study, What Home Buyers Really Want,  asked recent and prospective home buyers to rate the influence that 29 community features would have on their purchase decision.  For more than 65% of buyers, being near retail space and park areas, and having walking/jogging trails are the most influential community features. In contrast, only 39% feel the same way about a homeowner’s association.

When analyzed by the nine census divisions, the highest share of new homes started within a homeowner’s association was in the Mountain Division, where 81.9% of new homes were in such communities. In the Middle Atlantic Division, on the other hand, the share was only 28.6%. The share of new homes started within a community across U.S. divisions are shown in the map below.