NYC Housing Affordability: Survey says…it really isn’t!

HAVE YOU EVER BEEN TO A CLOSING WHERE THE TITLE WASN’T CLEARED? WE HAVEN’T!

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For anyone in the market for a rental apartment in New York City, a study conducted by the New York City Comptroller’s Office (Scott Stringer) has found a widening gap between the affordable and the unaffordable!

This affordability gap was particularly true, as one would expect, in the boroughs of Manhattan and Brooklyn and with the hardest hit segment of the populace occupying the lower end of the income spectrum.  The fact of the matter is, however, that no one outside of the very rich is immune to the impact.

This upward spiral in living costs has occurred despite the fact that during the Bloomberg administration billions were earmarked for affordable housing in order to avoid this exact situation.

Said Stringer, “I wouldn’t categorize the city as failing, although rents are going through the roof, while incomes are sinking. And that’s where you get the affordability crunch, and it’s hitting our city at virtually every income level.”

These are some of the findings of the Comptroller’s report concerning the New York City real estate market from 2000-2012 along with some recommendations for the future:

• Median apartment rents in New York City rose by 75 percent, compared to 44 percent in the rest of the U.S. Over the same period, real incomes of New Yorkers declined as the nation struggled to emerge from two recessions.
• Housing affordability—as defined by rent-to-income ratios—decreased for renters in every income group during this period, with the harshest consequences for poor and working class New Yorkers earning less than $40,000 a year.
• There was a dramatic shift in the distribution of affordable apartments, with a loss of approximately 400,000 apartments renting for $1,000 or less. This shift helped to drive the inflation-adjusted median rent from $839 in 2000 to $1,100 in 2012, a 31.1% increase. In some neighborhoods – among them Williamsburg, Greenpoint, Ft. Greene and Bushwick in Brooklyn, average real rents increased 50 percent or more over the 12-year period.
• The elderly and working poor are making up a growing portion of low-income households, with 40 percent of the increase tied to households in which the head is 60 years or older.
• In 2000, renters earning between $20,000 and $40,000 in inflation-adjusted dollars were dedicating an average of 33 percent of their income to rental costs.  Twelve years later that average jumped to 41 percent. Their housing circumstances became more precarious even though their labor force participation rates soared.

At the same time the report makes some recommendations, although they appear to be as vague as they are ambitious:

• 1. Alleviate the crushing affordability squeeze on working families. Working families at the bottom end of the ladder – those making less than $40,000 a year — have seen their incomes stagnate, while the supply of rental apartments affordable to them is rapidly evaporating. Programs need to be geared to the specific income needs of this burgeoning group.

• 2. Invest in the stability and preservation of the New York City Housing Authority. The intensity of the City’s low-income housing situation reinforces the essential civic role played by NYCHA, as well as the need for greater investment in public housing by every level of government. The costs of rehabilitating NYCHA’s housing stock are estimated at less than one-third the costs of replacing it.

• 3. Adopt a new mix of policies to reverse the alarming increase in homelessness. The city’s shelter population currently stands at more than 52,000, including over 22,000 children – an historic high. It is clear that a new mix of policies is needed to minimize the human and budgetary costs of a shelter system bursting at the seams.

• 4. Repair the rent regulation system. New York’s rent regulated housing stock is losing covered units at a faster rate than they are being replaced.  As a result, one of the City’s greatest housing challenges in the next decade will be stemming unwarranted attrition from the regulatory system and replenishing the pipeline of rent regulated housing – either through the preservation of existing housing stock or through new construction.

• 5. Address the special housing needs of the elderly and disabled. The demographic shift in the City’s low-income population towards the elderly will only grow as more Baby Boomers reach retirement age, suggesting that their housing needs should be carefully considered. Many of them are homeowners, and may need specialized services that allow them to remain in their homes as they age. (Source)

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