15 minute read
REAL ESTATE WOES
Taking speculation out of real estate
A couple alternative housing models are taking root in New York City.
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By Peter Tomao
OVER THE PAST DECADE IN New York City, a housing shortage, increased investor activity and quickly rising home prices have exacerbated the affordable housing crisis. Today, there are almost no apartments with a monthly rent below $1,500 in the city. Housing advocates and policymakers have been pushing the city to invest in different housing models that prioritize affordability over profit.
Citywide, homeownership declined 33.6% to 31.9% from 2009 to 2019 and during the same time frame, the median sales price of a home nearly doubled to $790,000. Rents have also sharply risen since 2010, increasing faster in the outer boroughs. Rents rose the most in Queens, climbing 30%, followed by 19% in the Bronx. And just last month, the average rent in Manhattan crossed $5,000 a month.
“We’re seeing rents at unbelievable new heights. There’s just obviously such a massive horrifying housing crisis that it’s clear we need to create a different type of system,” said Elise Goldin, community land trust campaign organizer at the New Economy Project. “I think everyone knows that it’s past the moment to be taking land and housing off of the speculative market.”
That’s an idea that’s gaining momentum. On Aug. 11, New York City Council Member Lincoln Restler introduced a bill that would give nonprofits and community land trusts first dibs on developing publicly owned land. It would be a step toward fostering housing that prioritizes affordability and limits profits – models like community land trusts and limited-equity co-operatives. Housing advocates believe these ideas can be part of the city’s future because they present a way to maintain affordability and prioritize housing as a home, instead of as an investment.
SPECULATION IN THE BRONX
The Bronx exemplifies many of the struggles facing New York’s housing system. Cash investors competing with families to purchase homes as well as continually rising rents paired with entrenched inequality.
Today, 18.9% of Bronxites own a home. The borough is also home to the highest share of low-income renters in the city, making residents more vulnerable to price increases.
“From the beginning of the pandemic, the Bronx has been the hardest hit in terms of unemployment numbers,” said Ivy Perez, policy and research manager at the Center for New York City Neighborhoods. “This is also happening in the context of really aggressive speculation.”
A 2020 report from the Center for New York City Neighborhoods found that nearly 40% of New York City home, condo and co-op purchases were cash sales. And the Bronx saw the largest increase in cash activity during the previous decade. Since the Bronx is home to a large portion of the city’s remaining lower priced properties, it can be particularly vulnerable to speculation and investors.
“That takes the form of a lot of cash buyers entering the home space and especially a lot of flippers,” Perez said. “So we see really aggressive, high-frequency flipping, where they buy low, sell high. And in recent years, we’ve seen that accelerating in the Bronx specifically.”
New York City Council Member Pierina Sanchez has seen the fallout from speculative home deals firsthand. Sanchez’s Bronx district is home to many rent-stabilized buildings but other properties – where tenants have fewer legal protections – are vulnerable to flips.
“That one example where you come across a building that is not rent regulated. For some reason, there you have a private equity company coming in purchasing and pushing tenants out. It’s like clockwork, right?” said Sanchez, who also serves as the chair of the New York City Council Housing and Buildings Committee.
Sanchez said long-term solutions for New York’s housing system should involve increasing support for programs that create permanent affordability.
“Focusing on what we have the power to do and do as a city here. What are models that remove speculation from the equation, that remove that profit? And again we always end up thinking about homeownership opportunities,” Sanchez said.
FINDING SOLUTIONS
One piece of the solution to New York’s housing woes can be found right in the Bronx’s backyard. The borough is home to Sydney House, Habitat for Humanity’s largest multifamily development.
The 56-unit, 77,000-square-foot co-op-
Habitat for Humanity’s Sydney House was the first development to receive funding through New York City’s Open Door Program.
erative offers permanently affordable homeownership to middle-class families. Apartments in the building cannot appreciate by more than 2% per year. When residents sell their unit, buyers must meet income restrictions and the sales price adheres to a predetermined formula.
The building, which opened in 2021, was the first development to receive funding from the Open Door Program, a New York City initiative designed to boost homeownership among low- to middle-income households. Sales prices at Sydney House ranged from $188,823 to $326,099, depending on size of the unit.
“There can be no affordable housing policy that is equitable without opportunities for people to build equity,” said Matt Dunbar, chief strategy officer and executive vice president of Habitat for Humanity New York City and Westchester County. “And that is both personal equity and family equity, but also community equity. And cooperative ownership with long-term affordability is the ultimate community equity.”
Dunbar said the project represented a shift in priorities for the city, pivoting from building affordable rentals to providing more affordable homeownership.
Goldin, from the New Economy Project, stressed that community land trusts were not the sole answer to the affordability crisis, but they were a powerful way to buttress affordability. Land trusts differ from the co-ops in that a nonprofit would own the land and operate the building.
“(It) is an incredible tool for communities to have a say in the development in their neighborhood and to (ensure) that land is being used for the benefit of the community and (is) affordable in perpetuity,” Goldin said.
Goldin estimated there are about 15 community land trusts throughout New York City – and three of them currently have land: Cooper Square Community Land Trust (the oldest one in New York City), Interboro Community Land Trust and East Harlem El Barrio Community Land Trust.
Goldin and other advocates are supporting initiatives to help the trusts acquire land, including Restler’s bill to give them the first crack at the development of public land. Another piece of legislation is the city Community Opportunity to Purchase Act, which would give the trusts and other nonprofits the first right to purchase multifamily buildings when landlords sell.
Habitat for Humanity’s Dunbar also emphasized tenant opportunities to purchase programs as an important policy tool.
“A strategy to create new home ownership in the Bronx would be to work with landlords and tenants to sell their buildings to their tenants and create home ownership where people are already living,” Dunbar said.
WHERE ARE WE NOW?
This summer, Adams announced a major new housing plan to turn New York into a “city of yes.” The plan supported a host of items, including increased homeownership and community land trusts but it was criticized as being vague on measuring success.
Sanchez, who was a professional urban planner before being elected, said supporting alternative housing models from the city takes investing in technical assistance for nonprofits or community land trusts, increasing access to land acquisition and new financing through New York City’s capital program.
“We’re certainly at the council … looking at how we can support more on the technical side, how we (can) get more properties into this kind of ownership, and how we (can) make sure that what we’re doing is sustainable,” Sanchez said.
Ultimately, Sanchez said the fight for more community housing was an important part of keeping New York a vibrant city. She pointed to New York’s past successes with Co-op City and the Mitchell-Lama program as inspiration.
“Land trusts and limited equity models come into the conversation because we have seen, in some cases, wild success of limited equity models,” Sanchez said. “But we haven’t prioritized them as we build our arsenal of tools to approach the affordable housing crisis in New York City. ■
– Matt Dunbar, Habitat for Humanity New York City and Westchester County chief strategy officer and executive vice president
IN PARTNERSHIP WITH
HOW CITIES ARE TACKLING HOMELESSNESS
New York City is using pandemic funding to aid renters and build more affordable housing.
By Molly Bolan & Peter Tomao
COMMUNITIES ARE grappling with how to best assist people experiencing homelessness, including with tiny homes, hotel conversions, rental assistance and supportive services. Some of those methods have proven effective in some parts of the country but have been more difficult to implement in some of the largest cities, including New York City.
The challenge
On any given night in 2021, more than 326,000 people were reported to be in an emergency shelter, transitional housing or other temporary housing situations, according to the U.S. Department of Housing and Urban Development. An underlying cause of homelessness is a shortage of affordable housing, said Steven Berg, vice president for programs and policy for the National Alliance to End Homelessness. In an April report, the National Low Income Housing Coalition found that there was a shortage of 7 million affordable rental homes for extremely low-income renters.
Berg said that while the problem is dire and there needs to be more housing built, there were effective strategies that could reduce the most immediate and harmful effects of homelessness.
“This has been many years in the making for many of these cities that just didn’t allow their housing – or didn’t force their housing – supply to keep up with increasing demand,” Berg said in a recent interview with City & State and Route Fifty. “Homelessness is one result of that and (there are) tools available to resolve it. But people have got to have the patience and the willingness to stick to it over time in order to solve the problem that took that long to get this bad.”
Permanent supportive housing
Permanent supportive housing provides low-cost housing in tandem with supportive services, such as health care and counseling. It’s an effective tool for combating homelessness – especially if it were to be scaled up, according to Berg.
Research shows permanent housing is ultimately the most cost-effective approach to addressing homelessness, even in a place like New York City, Berg said.
“The public saves money by getting homeless people, particularly people with the most severe issues, off the streets and into housing. Even though the housing costs money, they save in emergency rooms, jails and homeless shelters,” Berg said.
King County, Washington, home to Seat-
New York City Public Advocate Jumaane Williams speaks at a rally for homeless people who need rental assistance or permanent housing.
tle, has an initiative called Health Through Housing, which aims to create 1,600 emergency housing and supportive housing units by the end of the year for people who are experiencing or are at risk of homelessness. As of April, the initiative included 10 properties, five of which are in Seattle.
Since the beginning of 2021, more than 600 people who were previously experiencing homelessness have been housed, according to Seattle Weekly.
According to a 2019 report from Third Door Coalition – a nonprofit alliance of business leaders, service providers and researchers aiming to end chronic homelessness in King County – 98% of people who are chronically homeless in the county said they would participate in the program if offered the opportunity.
Berg noted permanent housing programs in expensive places like New York City were doable and effective but would take increased resources to scale up. And those extra costs can make the programs more difficult to implement.
“High rents are correlated with homelessness everywhere in the country. Places with the most homelessness are the places with the highest rents,” Berg said. “A place like Houston has housing policies that cause rents to be lower. It’s just going to be easier to get homeless people housed than it is in New York City or Los Angeles.”
Using one-time funds
Since the onset of the COVID-19 pandemic, the federal government has released trillions of dollars in emergency funding. These allocations were well suited for “rapid rehousing,” a model that involves short-term rent paired with services, Berg said. Participants are housed and after a few months, once they’re settled and employed, they’ll be expected to cover rent themselves without the subsidy.
In July 2020, Houston announced its Community COVID Housing Program, a $65 million plan coordinated by the city, Harris County and Coalition for the Homeless, a local nonprofit that aims to move people experiencing homelessness into permanent housing. That initiative was in part funded by the CARES Act.
In addition to offering permanent supportive housing, the Community COVID Housing Program helped support rapid rehousing. Under the plan’s rapid rehousing program, people were expected to be able to support themselves after a 12-month period of rental assistance and light case management. Between Oct. 1, 2020, and July 12, 2022, 3,683 people had been housed under the rapid rehousing program, according to
This former Motel 6 in Oregon was converted into supportive housing.
the Coalition for the Homeless. Several municipalities have gotten creative with their use of COVID-19 relief funds. In Madison, Wisconsin, the city allocated nearly $9 million in American Rescue Plan funds for addressing homelessness. Of that, $2 million went toward creating a tiny house village. Denver, meanwhile, approved $3.9 million to expand temporary housing areas – called “safe outdoor spaces”– where people experiencing homelessness could connect with support services.
Noncongregate housing
During the pandemic, many communities reconsidered the layout of their homeless shelters, which often relied on large shared rooms for sleeping, Berg said. But as that became a significant health risk during the pandemic, many places began exploring noncongregate options, such as using hotels as temporary housing.
“I think the idea is that shelters need to be designed by talking to homeless people and figuring out what will make the shelter feel like a safe and helpful place to them,” Berg said. “And I think that the noncongregate model often met that objective.”
It’s an approach that has been utilized across the country, from Los Angeles to Vermont. In some communities, the strategy has been successful enough to justify continuing it beyond the pandemic. In 2020, Oregon allocated $65 million for Project Turnkey, an initiative that involved purchasing hotels and motels for people experiencing homelessness or who had been displaced by wildfires. In less than a year, Project Turnkey secured 19 properties, resulting in a 20% increase in that state’s supply of shelter beds. In March, the state Legislature allocated another $50 million for Project Turnkey 2.0.
How does New York compare?
In New York City as homelessness increases and the red-hot pandemic housing market makes affordable housing even more scarce, policymakers have attacked the problem with varying degrees of success. And unlike in other jurisdictions, residents have a legal right to shelter. When the pandemic began, single adults who were homeless were moved into hotels and noncongregate shelters. But last summer, then-New York City Mayor Bill de Blasio ended the program after pushback from wealthy neighbors, which disappointed advocates who believed the program showed promise.
“In terms of how New York City is doing when it comes to noncongregate options, like hotels and motels, I would say it’s very
mixed,” said Jacquelyn Simone, policy director at Coalition for the Homeless. “The continued spread of the virus has underscored the inherent vulnerabilities that people who are without safe, private indoor places to sleep at night face.”
New York state utilized federal stimulus money to create the Emergency Rental Assistance Program, which has distributed $2 billion in aid to renters. Lawmakers hoped the emergency aid – in addition to a temporary eviction moratorium – would help keep residents in their homes. Despite a bumpy start, the program was able to distribute the funds to nearly 190,000 New Yorkers. And the high demand for the program underscored the need for more robust housing aid.
In addition to the emergency aid, Simone noted that both the city and state have housing voucher programs for people experiencing homelessness, but the programs have encountered administrative hurdles.
“The eligibility categories for people to use those vouchers as homelessness prevention is relatively narrow,” Simone said, adding that there’s often waiting periods in shelters before residents are eligible for aid.
In an attempt to cut through the red tape, New York City Mayor Eric Adams recently eased rules that prevented homeless people outside of the city’s shelter system from accessing aid. Additionally, the mayor has committed to a host of other initiatives to ease homelessness, from accelerating the delivery of 15,000 units of supportive housing to reforming zoning laws and preserving existing below-market-rate units.
Advocates applauded the mayor’s steps to eliminate administrative burdens but cautioned that the devil was in the details.
“It sounds promising, we just need to see the fine print,” Simone said. “I think it’s great that this administration does seem focused on reducing bureaucratic hurdles. But we don’t see the impact yet of how any reforms are being implemented on the ground.” ■
Oregon Community Foundation’s Megan Loeb announces a $6.8 million hotel conversion for transitional housing.
