The numbers don’t lie – New York City is in the midst of a housing crisis.
New York University (NYU) Furman Center released its annual State of New York City’s Housing and Neighborhoods in 2017 report last week, a comprehensive analysis on the state of housing in the five boroughs, revealing in detail the critical need for more housing in the rapidly growing city.
While the housing stock in NYC grew by about eight percent between 2000 and the end of 2016, the adult population of the city grew by almost 11 percent, and adult-only households made up almost 71 percent of all the households in the city in 2016. In the same time period, the number of jobs in the city grew by more than 16 percent, according to the report.
The growing population and growing number of jobs have led to an increasing demand for housing.
And despite the headline-generating mega luxury condo buildings that seem to always be rising in Manhattan, of the units built between 2010 and 2016, 80 percent were occupied by renters in 2016, according to the report.
A panel featuring developers as well as community-minded housing advocates discussed the report and how to move forward, the biggest question being, how exactly can enough housing be built to serve the needs of the city?
It’s a tough question for real estate developers in NYC, who for years have lamented about the high cost of land in the city, which is becoming less and less available.
Meredith Marshall, the founder and president of BRP Companies, a for-profit affordable housing developer, told Real Estate Weekly that income wages remaining stagnant over the last two decades is one of the biggest reasons.
“We’re not creating additional land,” said Marshall. “We started in this business in New York maybe 15 years ago, prices were half or 25 percent what they were today.”
A takeaway from the report that was surprising to many on the Furman Center panel, was that periods of big housing supply increases over the last two to four decades were met with big price increases, instead of decreases.
“It’s an interesting phenomenon,” said Andrew Haughwout, senior vice president at the Federal Reserve Bank of New York. “Not completely impossible to understand, but surprising.”
The in-depth report highlighted the mismatch between incomes and the cost of housing. While median monthly rents have risen by about $300 since 2000, the median income of a renter household has only increased by $145 per month since 2000.
David Kramer, president of the Hudson Companies, an affordable housing developer, found the report dismaying.
“Hudson has been doing affordable housing for decades,” he said. “It’s hard to imagine us being more productive. It’s distressing to think about after all this construction, that overcrowding is up, rent is up, vacancy is down. It’s hard to think we’ll do much better in the next 30 years than we’ve done in the past 30 years. It’s a lot of effort for not really moving the needle.”
Kramer characterized the NYC residential landscape as two separate and almost parallel markets; new construction and existing housing, most of which was largely built before 1960.
“We think of the buyers and renters pyramid,” said Kramer. “At the top are the fewest number affording the highest prices. At the bottom, the most people are competing for a shrinking supply. There’s pressure on both sections of the marketplace and they aren’t helping each other.”
Marisa Lago, the director of the Department of City Planning, suggested a regional approach by the city and the state to address the housing crisis, including zoning tools like Mandatory Inclusionary Housing (MIH), which Lago said is broader in scope than most people realize.
“What attracts the most media is neighborhood re-zoning, but there is a stream of private applications that don’t get attention but are producing affordable housing,” she said.
Lago suggested protecting the existing housing stock through preservation programs that “protect tenants in those units,” and use the valuable data they have collected to look at the problem through a wider lens.
“We have to look beyond our city,” she said. “The state plays a role, in particular rent regulation laws set at the state level. We have to look at the federal government when it comes to the lowest income people. At that point is becomes an issue of poverty.”