Real Estate Weekly
Image default
Featured Residential

Shelters are costing home owners

It’s official. Having a homeless shelter near a residential property can reduce the sale price of those properties by 7.1 percent, a study by the city’s Independent Budget Office (IBO) has found. 

The study was requested by Manhattan Borough President Gale Brewer, who for many years has heard from concerned owners of buildings in the vicinity of shelters about the impacts on their property values. However, those owners have never had any stats to back up their beliefs.

Manhattan Borough President Gale Brewer

The study was released as a city plan to open 90 more shelters in the midst of a homeless crisis is being fought tooth and nail by neighbors. Many have expressed worries about crime and a lack of services available for shelter residents. In Manhattan’s “Billionaires’s Row,” a coalition of neighbors have sued to try and stop the opening of a shelter for 140 people in a former hotel, but over the summer, a Appellate Court said the project could move forward.

Using sales data covering the years 2010 through 2018 on condominiums and one to three-family homes in Manhattan, IBO modeled the effect of proximity to homeless shelters on sales prices, controlling for other factors that also influence prices like size of the property, amenities and year of sale. Co-ops were emitted from the study due to a lack of data on sizes of the units. Rental properties were also excluded, since their sales prices depend on the rents that can be charged, which can vary for a multitude of reasons. Shelters the study focused on were congregate, which means that they’re designed to provide temporary rather than longterm housing support. These can include hotels rented out by the city to be used as shelters. However, due to an inability to get operating information on those hotels, the study focused on shelter buildings that were designed for that purpose.

What the study found was that homes within 500 feet of an adult congregate shelter sold for 7.1 percent less than similar homes located 500-1,000 feet away. In dollar terms it’s a difference between $1 million and $929,000.

Proximity to shelters for families with children has had slightly less of an impact with homes within 500 feet of a shelter selling for 6.4 percent less than a comparable home 500-1,000 feet away.
Being near multiple shelters had a far more drastic effect, with the IBO finding that residences within 1,000 feet of two or more shelters sold for 17.4 percent less than those located within 1,000 feet from a single shelter.

The study by the Independent Budget Office comes as the city is planning to open 90 additional shelters.

The study’s results were different from an analysis in 2008 done by the New York University Furman Center that showed the effects of supportive (longterm) housing did not have a negative impact on housing prices. In fact, housing prices increased after those facilities opened, the Furman study found. IBO believes the difference is due to the fact that the accommodations are very different, with supportive housing residents having more onsite services available to them than those in more transient shelters.

“With the perception that supportive housing residents are less likely to be associated with crime and to engage in disturbing behavior on the street, proximity to a supportive housing facility is not considered a liability by property owners in the same way that proximity to homeless shelters is considered a liability,” IBO concluded.

Other stats mentioned in the report:
From 2010 through 2018 there were 6,237 sales of Manhattan residences located within 1,000 feet of one or more of the 39 congregate shelters in IBO’s sample. Just over half the properties sold (51 percent) were located within 700 feet of one or more shelters, with 28.3 percent of all properties located within 500 feet — shares that are about the same for both adult only and family shelters. Nearly one-sixth of all sales (15.7 percent) were located within 1,000 feet of more than one shelter.

The majority of sales in IBO’s sample — 82.3 percent — were of condominiums in elevator buildings. Other condominiums (walk-ups and condos with less than four apartments) accounted for 10 percent of the sales, and one, two and three-family homes accounted for 7.6 percent of sales.

Meanwhile, a spokesperson for the mayor, Avery Cohen, has blasted the study as misleading — and mean-spirited.

“This report is not only wrong on the facts, it’s morally indefensible,” Cohen said. “Anyone who would withhold help from a family in need to make a bigger profit reselling a home has to take a hard look in the mirror.”

The mayor’s office also noted that the study doesn’t account for certain factors that could also impact price, like proximity to transit and commercial corridors and that the sample of housing cited in the study only accounts for 7.6 percent of the Manhattan market. Additionally, the study lacked information comparing prices before and after a shelter opening, a fact IBO acknowledged in its report. According to the IBO, the Department of Homeless Services didn’t have that information available.

In her blog, Brewer said that based on the study’s findings, she believed the mayor should focus on more longterm solutions for the homeless.

“Transitional shelters appear to drop property values only modestly, while permanent supportive housing doesn’t affect values at all,” said the borough president. “Facts unearthed by solid research like this are what public policy should be based on, and permanent shelters are clearly what the de Blasio administration should be focused on.”

Property values in New York City have been on the rise due to a robust economy, while at the same time the residential sales market has been struggling. Reasons for this are believed by industry experts to be fears of a coming recession as well as a glut of overpriced stock.

(Visited 1 times, 1 visits today)

Related posts

Industry leaders pack Hilton Midtown for REBNY Banquet

REW

REBNY to honor industry leaders at tonight’s Annual Banquet

REW

Manhattan market looking up: Correction persists, but brokerages are optimistic about 2020

Sabina Mollot