Bill de Blasio Unveils Affordable Housing Plan: 190,000 Units, Legalized Granny Flats and More

 

Until now, Bill de Blasio’s housing platform has mainly consisted of sniping at frontrunner Christine Quinn. But no longer: this afternoon Mr. de Blasio announced measures he would take mayor to curb what he calls the “full-blown crisis” of affordable housing. (Old habits, though, do die hard: Mr. de Blasio did take another shot at Ms. Quinn, saying, “Letting the real estate industry keep calling all the shots with our affordable housing policy isn’t going to deliver what working people need”—an allusion to her tax credits-for-affordable housing plan, which seems cribbed right from REBNY and Steve Ross’s proposals back in 2011.)

Public Advocate Bill de Blasio unveiled his housing platform today in Williamsburg, where housing prices have nearly tripled since 2004.

Mr. de Blasio started out, as all candidates do, with a promise for the number of affordable housing units he’d create: 100,000 “new affordable units,” plus preservation for “nearly 90,000″ others.

As a comparison, Ms. Quinn called for the construction of “40,000 new middle-income affordable apartments.” In 2005 Mayor Bloomberg wanted to build 92,000 units and preserve 73,000 by 2014, but the number of new units was revised downwards to 60,000, with the balance shifted to preservation. In 1985 Ed Koch promised 250,000 new or renovated affordable units over ten years, but only delivered 150,000, the vast majority of which were renovations.

But it’s once you get past Mr. de Blasio’s headline number that things start to get interesting. He calls for “mandating [that] developers include affordable housing in large development” (we used to have a name for this: rent control), which he says will be responsible for half of his 100,000 new affordable units.

He also calls for investing $1 billion from the city’s public pension funds in affordable housing—an interesting proposal, but one that would put city workers’ retirements in jeopardy if this not-highly-remunerative investment doesn’t pan out.

Beyond that, he also has some ideas for how the government can ease constraints on private builders and landlords—a sop to the real estate industry that he decried earlier if you want to be uncharitable about it, or a recognition that the market also has a role to play in creating affordable housing, to put a more generous spin on it.

His first idea piggybacks onto something that Manhattan Borough President Scott Stringer has already gotten behind: legalizing basement apartments and “granny flats” in places where they are currently illegal—namely, the outer boroughs. “Housing experts estimate there are about 100,000 illegal units throughout the city,” City Limits reported back in 2010, unregulated and prone to building and fire code violations, ”housing as many as 500,000 New Yorkers,” with the largest concentration of illegal units in Queens.

(In his press release he mentions bringing them into the “the legal, rent-regulated system,” but his press secretary clarified to The Observer that he would only seek rent controls for units developed through city programs; the rest would simply be brought into “the legal system, like we did with lofts several years ago.”)

His second idea is to allow development rights to be transfered “not just to adjacent properties, but within a neighborhood, in order to encourage more affordable construction.” As it is now, neighborhood-wide transferable development rights only exist within special areas, like around the High Line. Allowing easier air rights transfers across the city—with the vague “affordable construction” caveat—would certainly make it easier to build, though it would also raise the ire of NIMBYs the city over.

Mr. de Blasio also includes a number of other housing issues in his plank, from ”closing the vacant land tax loophole” to “launching a national coalition of mayors and governors to secure more federal investment in affordable housing.”

Though given the secular decline in federal involvement in housing over the past few decades, we wouldn’t hold our breath for that last one. For better or worse, housing is New York City’s problem now.

 

Source: The New York Observer

Who Says New York Is Not Affordable?

By 

One of the first things you learn when living in New York is that what qualifies as wealthy somewhere else seems barely middle-class here. On the Upper West Side, where I live, it’s hard not to feel as if Manhattan is impossibly expensive for young professionals. The average nondoorman, one-bedroom apartment in the neighborhood rents for about $2,500 a month. Oatmeal-raisin cookies at Levain Bakery cost $4 each. A pair of sensible, unstylish walking flats from Harry’s Shoes can set you back $480. I suppose, by comparison, that the $198 chef’s menu at Jean-Georges doesn’t sound so ridiculous.

New Yorkers assume that we live in the most expensive city in the country, and cost-of-living indexes tend to back up that assertion. But those measures are built around the typical American’s shopping habits, which don’t really apply to the typical New Yorker — especially not college-educated New Yorkers with annual household incomes in the top income quintile, or around $100,000. According to a recent study by Jessie Handbury, an economist at the University of Pennsylvania’s Wharton School, people in different income classes do indeed have markedly different purchasing habits. That may not be surprising, but once you account for these different preferences, it turns out that living in New York is actually a relative bargain for the wealthy.

While compiling her research, Handbury looked at Nielsen shopping data for 40,000 American households, across more than 500 food categories, with details on everything from organic labeling to salt content. Remarkably, she found that for households earning above $100,000, grocery costs are 20 percent lower in cities with a high per-capita income (like New York) than in cities with a low per-capita income (like New Orleans). There’s evidence that the same forces hold true for other products that cater to upper-income people, from high-end retail to beauty services. The average manicure, for example, is about $3 cheaper in New York City than in each of the rest of the top 10 biggest cities in the United States, according to Centzy, a company that collects data on the prices of services.

Part of the reason high-income residents get good deals, Handbury explains, results from a particular economic system. Highly educated, high-income New Yorkers are surrounded by equally well-educated and well-paid people with similar tastes. More vendors compete for their business, which effectively lowers prices and provides variety. There’s also a high fixed cost to distributing a niche product to an area; if there’s more demand for that product, then the fixed cost can be spread across more customers, which will justify bringing the product to the market in the first place. That’s why companies go through the expensive hassle of distributing, say, St. Dalfour French fruit spreads in rich cities but not in poor ones and why New York can support institutions like the Metropolitan Opera.

Of course, not everything that wealthy New Yorkers spend money on is cheaper here. Housing, after all, is absurdly expensive, even for the rich. Complex zoning regulations and limited land make it all but impossible for supply to grow alongside demand. Still, it’s somewhat unfair to compare housing costs here to those in a place like Buffalo, or even Atlanta, since perks like access to amenities and unusually lucrative jobs are baked into the cost of New York real estate. Yet those higher rents all but ensure that tenants will appreciate an amazing bakery or a fancy shoe store — and that retailers will have to lower prices to compete for their business. Regardless, the rent burden isn’t actually as onerous as people assume: the typical resident here pays roughly the same share of her income in rent as does her counterpart in Los Angeles, Chicago, Philadelphia and Houston, according to N.Y.U.’s Furman Center for Real Estate and Urban Policy.

Professional-class workers who like to moan about the cost of living in New York — and I’m including myself in this group — don’t realize how spoiled we are by both variety and competitive pricing. Truthfully, things seem more expensive here because there’s just way more high-end stuff around to tempt us, and we don’t do the mental accounting to adjust sticker prices for the higher quality. We see a sensible shoe with a $480 price tag or an oatmeal cookie for $4 and sometimes don’t register that these are luxury versions of normal items available from Payless or Entenmann’s. The problem, in part, is that people tend to anchor their own expectations for what they should buy based on what their neighbors are buying, not what some abstract, median American buys. It’s a phenomenon known by some as affluenza, and it partly explains the overborrowing by the lower and middle classes during the bubble years, when their incomes were flat but their high-income neighbors’ incomes were growing phenomenally.

There is, however, an ominous flip side to Handbury’s findings. When you look at the cost of living for low-income people based on their tastes and preferences, New York’s poor turn out to be even poorer than you think. According to her research, a household earning $15,000 a year faces approximately 20 percent higher grocery costs in cities with relatively high per-capita income. The same is very likely to be true for other essentials, like clothing. Real estate is most crushing for all but those lucky enough to get into subsidized housing. For the poor, it is impossible to unbundle apartments from all the perks that help drive up costs.

A concentration of rich consumers should lead to better salaries for low-skilled jobs like waiters or manicurists. But federal programs intended to help the poor, like food stamps or child-care subsidies, are generally not adjusted for the local cost of living. In New York, the poor are “getting disqualified from a lot of these programs because they’re being paid $10 an hour rather than $7.50 an hour,” says David Albouy, an economist at the University of Michigan, “which can sort of artificially put them above the poverty line or wherever the threshold is.”

Between these competing forces of higher-paying jobs and high living costs, the high costs seem to be winning out. As I talked to Handbury, I began to realize why, in part, New York seems so wealthy. It’s not so much that the city has been colonized by hedge-fund millionaires (though it often feels that way) as it is losing its lower classes. The greater New York area now has the longest average commute in the country (35 minutes, compared to a national average of 25). Many of the less-educated are leaving the metro area altogether: from 1980 to 2010, the population of college-educated workers rose by 73 percent, while the population of workers without college degrees fell by 15 percent, according to Rebecca Diamond, an economics graduate student at Harvard.

What’s happening in New York is just part of a national shift. Highly paid, college-educated people are increasingly clustering in the college-graduate-dense, high-amenity cities where they get good deals on the stuff they like, while low-skilled people are increasingly flowing out to cheaper places with a worse quality of life. The end result, Diamond’s research shows, is that measures of the growing income gap between the high-skilled and the low-skilled, which already look pretty shocking, seriously understate the inequality between these two classes.

This two-tier economy can seem inevitable, but other middle-income cities — particularly Sun Belt hubs like Houston and Charlotte — are now offering a third option, says Edward L. Glaeser, an economist at Harvard. A large part of their appeal has to do with policies that make it easier to build homes and expand the affordable housing stock for those people fleeing cities like New York. Places like Detroit are cheap, Glaeser told me, because they have become drastically less attractive locations to live and work. But places like Houston are cheap — and staying cheap, even as they grow — because the local governments have realized their comparative advantage is in deregulation, not in fancy cookies.

 

Source: The New York Times

When ‘Affordable’ Is Just a Word

By 

The spring has the real-estate press enthusiastically reporting on the construction of 432 Park Avenue, an apartment tower that its developers claim will be the tallest residential building in the Western Hemisphere. Apartments in the tower, designed by Rafael Viñoly and to be completed in 2015, are offered in the $20 million to $80 million range, which in the context of Ludicrously Priced Housing for Oligarchs Who Spend Most of the Year in Tax Exile on Mediterranean Yachts isn’t as numbing as it might otherwise be. Such is the historical moment that a few blocks west, in another glass tower, called One 57, apartments have sold in the past year for more than $90 million.

Barbara Cortijo and her sons, Joel, left, and Jomar, live in affordable housing in the Bronx.

Given these perversions, it is hard to understand what affordable housing means in New York, in one sense because the market doesn’t really abide it, and in another because the phrase itself in policy terms has become so amorphous.

Just as shocking, arguably, as the $44 million four-bedroom duplex in TriBeCa that turns up in the real estate listings of The New York Times is the $1,400-a-month, two-bedroom rental apartment in the Belmont section of the Bronx. According to the National Low Income Housing Coalition, which calculates what it calls the housing wage— the earnings necessary to pay no more than 30 percent of your income on rent, the threshold usually used to define affordable housing — you would need to make $26.92 an hour, or $56,000 a year, to afford the apartment. If you held a minimum-wage job, a likely circumstance in a neighborhood where the poverty rate is 43 percent, twice the city’s on the whole, and median household income is just over $22,000, you would have to work 149 hours a week to meet the cost. Alternatively, you could clone yourself 2.7 times.

As it happens, affordable housing was the subject of a mayoral forum last week at New York University. Democratic candidates all expressed the view that despite the Bloomberg administration’s ambitious and lauded affordable housing program — which has financed the preservation and construction of 165,000 units of low-, moderate- and middle-income housing — the city, at a time of record homelessness, soaring rents and stagnating wages, needs to do more and needs to generate affordable housing that is actually affordable.

Two months ago, a report issued by the Association for Neighborhood and Housing Development, a consortium of neighborhood housing groups, indicated that out of the 38,670 units developed by the Bloomberg housing plan from 2009 to 2011, only one-third of them were economically within reach of households making the median income or less for the typical household in their neighborhood. Of the units the city developed over the same period, only about 8 percent were intended for households making less than 40 percent of the metropolitan area’s median income, though they make up nearly one-third of all New York City households.

Another dimension to all this is what Alex Schwartz, a professor of urban planning at the New School, likens to a bathtub with a running faucet and an open drain. As the city builds new units of affordable housing, old units age out of the system. Much of the affordable housing isn’t meant to be affordable forever simply because it isn’t financially feasible, so rents go up, tax breaks expire and units nudge toward market rate. Last week, the housing development association issued new data indicating where existing affordable housing had disappeared or was threatened. In the University Heights section of the Bronx, 5,000 units of housing from 2008 to 2011 became unaffordable, with rents requiring incomes of more than 80 percent of the area’s median income.

The New York City Housing Authority, where the average monthly rent as of this year is $436, offers permanent affordability, of course, but there are currently more than 167,000 families on its waiting list (and more than 123,000 families on a waiting list, now closed, for Section 8 federal housing vouchers, which have had their financing reduced by sequestration). One partial solution to clearing the backlog would be to relocate older residents living alone in large apartments in public housing to smaller ones and give over two- and three-bedroom apartments to the families who need them. “It isn’t all that complicated,” Christine C. Quinn, the City Council speaker and a Democrat, said at the candidates’ forum, “even though it isn’t happening.”

Creating actual affordable housing, buildings that can pay for themselves in the absence of growing subsidies, will be a formidable challenge for the next mayor. John C. Liu, a Democratic candidate, proposes to do it with what he calls the People’s Budget, which he unveiled last week and which includes $27 million in housing vouchers for the homeless and $3.7 billion in capital funds to help create 100,000 units of affordable housing over a four-year period. He would finance these and other ambitions through tax increases on those making more than $1 million a year, charging rents to charter schools using city facilities and taxing private equity firms’ carried interest, to cite a few examples.

Advocates and analysts in the affordable housing world have talked about addressing some of this difficulty by cross-subsidizing buildings, a process that would have a mixed-income building in the Bronx, for instance, helping to offset the costs of a primarily low-income building in Brooklyn. I would propose another form of cross-subsidization called the You Don’t Need to Live in a $50 Million Penthouse Tax, which would require anyone buying a property for more than $10 million (of which there are currently about 280 listed in The Times) to pay a percentage of that cost to an affordable-housing fund. And then commit, in writing, to never complain about it.

Source: The New York Times

Rent and the Single Girl

 

 

Posted: March 07, 2013

 

First came Helen Gurley Brown’s “Sex and the Single Girl.”

Then there was Carrie Bradshaw in “Sex and the City.”

Now, we have Hannah Horvath on HBO’s “Girls.”

When will someone get around to what single women in New York really obsess about: a nice apartment in a decent neighborhood at an affordable price?

Today, more than 725,000 never-married women between the ages of 20 and 34 call Gotham home. Many have come here because they believe New York is the place to be. Especially for those just starting out, many quickly learn that life in the big city can mean sharing an East Bushwick apartment with three strangers because it’s the only place you can afford.

If New York’s high prices simply reflected the true market value, that would be one thing. After all, people have been finding roommates to split the rent for years. But the truth is that the young and unestablished are paying more than they should for their apartments, because the rental market and rental prices are being distorted by rent-control and rent-stabilization policies.

Rent-controlled or rent-stabilized apartments are a sweet deal for those who are in on it — mostly older and more established residents. So the wealthy retiree has every reason to cling to his rent-stabilized pad on Central Park South forever. Meanwhile, the young, the new arrivals and often the less-wealthy are out of luck.

Lena Dunham in “Girls”

These people pay in two ways: First, they have fewer apartments to choose from, because rent control and rent stabilization effectively take a million apartments off the market. According to the Furman Center for Real Estate and Urban Policy, that’s nearly half the total rentals.

Second, the price of artificially lower rents in the regulated sector becomes artificially higher rents in the unregulated sector.

It’s not just single New York women, of course. It’s anyone looking for a place to live here. And so we have a familiar tale: laws promoted as helping average folk actually hurting them.

That’s worth keeping in mind as mayoral candidate after mayoral candidate prattles on about “affordable housing.” Almost always their answer is more of the same interference from government that has created this problem in the first place.

So as HBO gets ready for the Season 2 finale of “Girls,” we’re hoping someone might consider a series showing why, for so many women here, finding a decent, affordable apartment is more difficult than finding a faithful, self-supporting boyfriend.

 

Source: New York Post

Why Your Rent’s Too High

Posted: February 11, 2013

If there were one lesson our mayoral aspirants would do well to learn, it’s this: The reason basics in New York are so much more expensive than they should be — e.g., rent, real estate, education — is because our politicians are limiting supply.

The less supply the city has, the less affordable this city becomes.

That’s especially worth remembering when politicians prattle on about “affordability.” A perfect example: the opposition to a promising move by Mayor Bloomberg to open more city land for housing.

The plan is simple: Lease city land to developers to build luxury apartments, set aside 20 percent for families making less than $50,000, then use the revenues to pay for badly needed repairs for public housing.

Makes sense, right? In the land of common sense it does — but not in New York politics. Already, three likely candidates for mayor — Chris Quinn, Bill Thompson and John Liu — are attacking it. Posing as champions of the people, they claim the city should be building more affordable units, and fixing the ones New York has.

What’s notable is what they don’t say: how to pay for it. The city doesn’t have the cash, and good luck getting it from Washington.

Bloomberg understands this. He understands too that this city desperately needs more housing. Even adding luxury housing helps, because the more units on the market, the more prices go down — and folks have more chances to move up.

In an ideal world, Bloomberg would be selling the city’s land entirely and getting the government out of the housing business. That would include ending subsidies exploited by the rich (e.g., rent control) as well as giving the poor more opportunities to afford private apartments, rather than packing them off to public housing.

Still, the mayor deserves kudos for a plan that represents a huge step forward over the status quo. As for the hapless mayoral wannabes attacking it, a big Bronx cheer — and a free copy of the collected works of Milton Friedman.

 

Source: New York Post

Tiny Apartment Winner Announced—In a Race to the Bottom?

New York City recently announced a winner in its competition to build “tiny” apartments. The winner will build 55 apartment as small as 250 square feet on City provided land with additional subsidies. Yet, rents for these apartments will be comparable to market rate studio apartments in this pilot program to provide more  “affordable” housing.

Any effort to provide more housing in New York City should be applauded, but this pilot program raises questions. Why stop at 250 square feet? San Francisco last year legalized apartment as small as 220 square feet while Paris permits apartments of less than 100 square feet. Of course, there are plenty of “tiny” apartments in existing rental and co-op buildings, many with less than 100 square feet, so it hardly seems necessary to demonstrate that even the tiniest spaces can be livable and are in demand. New York City could produce more housing faster if it simply picked a number, together with minimum habitability standards, and then let the private sector see if it can fill the niche.

But in New York City, it seems, anything called affordable housing requires a City imprimatur. Take for example the history of SRO housing (essentially rooms with common bathrooms) in New York. Decades ago, the City determined that SRO housing was sub-standard and banned any such new construction, except by a non-profit housing entity. But there is a market for such housing, as reflected by the remaining SRO stock, so why not re-legalize a form of housing that has served a distinct segment of the market. Maybe, after a few more competitions, we will get back to where we were.

                               

                                                    – Jack Freund, Executive Vice President, Rent Stabilization Association (RSA)

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

Additional Sources:

In Winning Design, City Hopes to Address a Cramped Future- The New York Times, 1/22/13

Preaching to the Choir on Housing. At last week’s debate, New York’s mayoral candidates sang the same old chorus.

NICOLE GELINAS
28 January 2013

At last Thursday night’s mayoral debate on housing policy at an East New York church, Joseph Lhota, the Republican newcomer to the race,distinguished himself by being quiet. The housing forum showed how hard it is to run for mayor by talking to everyone, and how politically brave one has to be to try. The hosts and the questioners accepted as fact that New York faces an affordable-housing crisis and that it’s the city’s job to fix it. Everyone who spoke wanted the city to build or “preserve” city-controlled housing—whether private, rent-regulated buildings or public units. The first questioner, Erica Townsend of Brooklyn, asked: “Mayor Bloomberg is on the right track to build and renovate 165,000 units of housing, 15,000 per year. . . . Do you agree, and commit to preserving and building a total of 60,000 of housing [units] over four years?”

Not one of the candidates on stage—four Democrats, Lhota, and fellow Republican Tom Allon, a publisher—dared say no. City comptroller John Liu; his predecessor, Bill Thompson; and public advocate Bill de Blasio all agreed that 60,000 new city-supported housing units should be the minimum. Liu said that he had used $440 million in city-guaranteed pension-fund money to invest in 38,000 units of government-controlled housing; De Blasio said Liu hadn’t done enough.

Christine Quinn, the Democratic city council speaker, jumped in, too. Touting her “first job” as a tenant activist, Quinn said, “we’ve lost 300,000 . . . affordable housing [units] in this city” in recent years “because of the way Albany has eroded rent protection.” Quinn cautioned that building new city-controlled housing would not be “cost-free.” Her solution? “You need to decide it’s a priority in your capital budget.”

For a small-l libertarian—as Lhota describes himself—or just someone concerned about groupthink, there was plenty to respond to here. Lhota could have pointed out that when the city devotes taxpayers’ money to building brand-new housing for a few, it does so at the expense of investments in subways or keeping cops on the street—spending that benefits everyone. When Lhota did speak up, he quibbled only with housing programs’ inefficiency. Depending on what your particular subsidy is, he said, “you gotta talk to HPD, sometimes you gotta talk to HDC, sometimes you have to talk to City Planning, you always have to talk to the Buildings Department, you’ve got DEP on water bills, you’ve got . . . the rent-control board, there’s NYCHA, there’s Section 8 from NYCHA or from HPD. . . . The entire housing apparatus of the city needs to be completely reorganized . . . and focused on the problem at hand.”

Lhota showed that he is not politically naive. Politicians must pick their battles. Falling on his sword over public housing inside a church surrounded by public housing would have disqualified him on grounds of political incompetence.

Yet Lhota missed opportunities to turn a debate over one issue into a debate about who can best manage all of the city’s issues. He could have said that, as MTA chief until last month, he learned that public-housing residents needed better bus service to get to their jobs. That’s why he restored service that his predecessors had cut. He could have pointed out that, as deputy mayor in the 1990s, he learned that all New Yorkers—whether they live in public housing or in rent-regulated apartments in poor neighborhoods—deserve a safe, quiet environment. That means fixing the city budget so that we don’t lose another 6,000 cops, as we have under Mayor Bloomberg. The audience might have been receptive to a candidate willing to depart from issue-advocacy talking points.

When Townsend, the first questioner, asked about affordable housing, she also said that “at one time,” East New York “resembled a war zone, burned-out buildings, abandoned buildings,” with “drug dealers” operating under cover of burned-out street lamps. Townsend added that she had fought for “more police patrols in my neighborhood.” Someone on stage could have responded: Your affordable housing isn’t good enough if you can’t send your kids outside without getting shot, or if you can’t get to work without a long delay.

Lhota will have other chances. Nobody will remember that he treated the first debate as an opportunity to watch and learn, whereas everyone would have remembered a gaffe. But Lhota should remember that voters already have access to elected officials who use their current jobs to fight for their favorite special interests. New Yorkers want the next mayor to see the big picture.

Source: City Journal

Housing Affordability is in the Mind of Observer

The release of a recent report by the Center for Housing Policy highlights one of the themes of this blog — what does housing affordability mean. The report, entitled “Losing Ground: The Struggle of Moderate-Income Households to Afford the Rising Costs of Housing and Transportation”, looks at the combined cost of housing and transportation as a percent of income in the 25 largest metropolitan areas in the U.S. In general, the report finds that housing and transportation costs since 2000 rose faster than the increase in income, creating greater burdens for moderate income households. Interestingly, by including transportation costs as well as housing costs, the report finds that the metro areas with the highest housing costs do not necessarily have the highest combined burdens. For example, New York, San Francisco and Boston “are some of the least affordable regions for local moderate-income households when just housing is considered but are among the most affordable when housing and transportation costs are considered together.”

Despite the Report’s focus on overall rising housing burdens, the Wall Street Journal (WSJ) focused on a different angle headlining its press coverage of the report “Despite Pricey Image, New York Affordable for Middle-Income Families”. The WSJ honed in on the report’s finding that middle-income families across the country could spend as much as 69% of their income on shelter and transportation while New York middle-income families spent just over 50% of income on housing and transportation. The WSJ coverage also emphasized that New York would be the fifth least affordable place to live based on housing costs alone but jumps to the 10th most affordable when housing and transportation costs are counted together.

Of course, there are several other caveats that need to be considered in evaluating this study. First, the metro areas considered in this study are defined by the Federal government and contain much larger areas than we would generally consider. The New York metro area, for example, contains portions of New Jersey, Pennsylvania, and Long Island which means that the overall transportation costs measured are much higher than they would be for New York City alone. In other words, housing burdens in central cities with effective mass transit systems, such as New York City, are much lower than indicated by the metro area data.

Looking just at housing costs as percentage of income, it is worth noting that nine of the 25 metro areas have housing burdens of 30% or more of income. Only one metro area has housing costs of less than 25% of income. As I have previously noted, housing costs as a percent of income are rising and the 30% percent standard which is often used to evaluate housing burdens is quickly becoming a relic of the past.

Finally, the Report makes the point that the overall reported numbers do not apply to specific neighborhoods within the metro areas. In New York, for example, we know that affordable housing for moderate-income families is much more prevalent in the outer boroughs than it is in the Manhattan core. It is equally true that such overall findings apply to all moderate-income households. Some households may choose to pay more than they need to for rent to obtain the benefits of location or housing quality.

                                             – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

Additional Sources:

Why Downtown’s Cool to Rent Control

Here’s an interesting piece by the Post’s Steve Cuozzo commenting on an issue raised in a recent Wall Street Journal article regarding rent stabilization coverage in the Financial District.

It seems that old-line tenant advocates, steadily losing their traditional constituency, are looking for new constituencies to support rent stabilization. The advocates are failing to find support in FiDi for the same reason they are losing support in the outer boroughs– in most of the City there is little difference between market rents and regulated rents.

                                            – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

Why downtown’s cool to rent control

By Steve Cuozzo, October 12, 2012

It’s great news to most New Yorkers that the Wall Street area has become one of the city’s best places to live — evidenced by a Financial District population that’s nearly doubled to 57,000 since 1999 and will soon hit 60,000.

Just about every apartment that comes to market is swiftly snatched up. People love the new FiDi — anchored by the country’s healthiest office market, now also throbbing with families, shops and amenities.

It’s so popular that the rental apartment vacancy rate is below 1 percent.

But to “tenant advocate” reactionaries, the picture is bleak.

Now a family-friendly ’hood: Crossing the street near Battery Park.

Why? Well, tenants there won’t fight to have their market-priced apartments rent-stabilized.

Paul Newell, a Democratic district leader who is trying to inflict rent-stabilization on thousands more apartments downtown, whined to The Wall Street Journal last week that a mere 10 residents responded to his campaign.

Stabilization, the ruinous residue of World War II-era “emergency” rent-control law, to this day warps the city’s housing scene by keeping 1 million apartments effectively off the market — sometimes for decades.

A 2010 court ruling left some 5,000 more downtown units potentially subject to stabilization (on technical grounds involving landlord receipt of a tax benefit). But to win stabilized status, tenants must prove an “overcharge” to the state Department of Homes and Community Renewal or sue their landlord.

Newell, a leftist activist who sued the NYPD over “illegal” arrests (including his own) involving Occupy Wall Street’s Zuccotti Park takeover, is dismayed that FiDi residents haven’t taken up the rent cause in droves.

To explain it away, he absurdly claims the area is full of short-term residents who just have no interest in trying to reduce rents long term. Community Board 1 member Tom Goodkind echoed him, “Our area has always been quite transient,” and lamented, “We don’t want 15 college kids crashing in an apartment. We want people to hunker down and stay.”

Newell and Goodkind claim that people don’t stay long because it’s a lousy place to live lacking “basic trappings” like grocery stores.

Huh? What neighborhood are these guys talking about?

A 2009 poll by the Downtown Alliance found two-thirds of respondents had lived in the district for five years, and most intended to stay. More recent data from the Alliance show a median FiDi household income of $143,000 and average household income of $188,000. Some bunch of student drifters.

If FiDi were a transients’ camping ground, would Rose Associates spend a half-billion dollars to convert 70 Pine St. into a luxury address with 750 apartments at the highest rents in the area’s history?

Food shortage? The area’s proliferating choices range from huge new 55 Fulton Market to supermarkets to scores of gourmet shops.

Well, then — if it’s laughably false that residents want to bolt as soon as they can, why are they failing to fight for rent stabilization?

For one thing, the gap between market-rate and stabilized rents in the area is so small as to make the time and legal fees to seek stabilization not worth the struggle.

But there might well be a deeper explanation — anathema to activists who’d turn the clock back:

Maybe young, affluent residents dwelling amidst capitalism’s nerve center don’t buy into the culture of housing dependency and subsidy that animates “make our landlord beg” activists.

Very possibly, unlike 1960s rent-strike leaders, they recognize greater value in a building priced by the law of supply and demand.

Just as possibly, they understand that lower rents compromise a landlord’s inclination to provide the best service and maintain properties in the best condition.

And they love Downtown the way it is — striving and growing with no need for help from “advocates” whose day is long over.

Source: New York Post

Here’s a shocker: New Yorkers Unfazed by High Rents!

Rent too damn high? New Yorkers don’t care

A surprising new survey has revealed that New Yorkers are unfazed by the city’s sky-high rents.

While the rest of the country’s apartment dwellers cite rent is the number one factor in deciding what and where to rent, residents of the Big Apple rank it just seventh in the survey by Rose Associates, the New York-based real estate firm.

Throughout the year, Rose works with research group Kingsley Associates to track the satisfaction of residents living in their buildings and to track a number of performance metrics. Rose then compares the findings to the Kingsley Index, which is based on surveys at over a million apartment units in the U.S.

“While we do this survey to ensure we’re providing the best service possible to our residents, it’s sometimes fun to look at the secondary data that’s gathered,” said J. Brian Peters, chief operating officer of Rose.

“In a city where the average one bedroom apartment rents for north of $3400 a month, it is interesting to learn that rental rate is not the renter’s chief concern.”

Other findings uncovered by the survey:

• New Yorkers are three times more concerned with an apartment’s floorplan than their national counterparts.

• The quality of property management is more than twice as important to New Yorkers as it is to renters outside of New York.

• When asked for the strongest factor when deciding to renew or not renew a lease, 67% of New Yorkers cited location of a building and just 26% cited the cost of renting in a building.

• New York renters especially value apartment features and finishes — these attributes are 10% more important to New Yorkers than their national counterparts.

• New Yorkers don’t like to move; the bother is more of an issue than the rent they pay.

Rose has been conducting its surveys since 2007. So far this year,  8,000 have been given to residents in Rose-managed properties.

For the first time, Rose is also surveying tenants in buildings it manages in Brooklyn and Westchester County, areas where the company is increasing its activities.

 

Source: Real Estate Weekly