October 8, 2015
Last Chance to Vote for REFinBlog!
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Please vote for REFinBlog by clicking on the picture above and then clicking on the VOTE button to the right. Voting concludes tomorrow!
October 8, 2015 | Permalink | No Comments
Severe Crowding in NYC
NYC Comptroller Scott Stringer
New York City Comptroller Scott Stringer has issued a report, Hidden Households, that shows that more than one in twelve NYC homes are crowded. The report opens,
New York City is in the midst of a protracted housing emergency. The City’s net estimated rental vacancy rate is the official statistic used to gauge a housing emergency, but there are other important variables that shed light on the state of our housing environment. Chief among these is crowding. Crowding is an established predictor of homelessness and a critical indicator of negative health, safety and economic household risk factors. The City’s “hidden households”, which contain nearly 1.5 million New Yorkers, are the topic of this report.
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Among the most notable crowding trends detailed in the report, we find that New York City’s overall crowding rate, which includes rental and ownership housing units, rose to 8.8 percent in 2013, compared to 7.6 percent in 2005 – a proportional increase of 15.8 percent. The City’s crowding rate is more than two and a half times the national crowding rate of 3.3 percent. The proportion of crowded dwelling units increased in all of the City’s boroughs except Staten Island during this time period with increases of 28.1 percent in Brooklyn, 12.5 percent in Queens and 12.3 percent in the Bronx.
Severe crowding, defined as housing units with more than 1.5 persons per room, also increased substantially, surging by 44.8 percent from 2005 to 2013, with increases seen in every borough. Most notably, the proportion of studio apartments with three or more occupants rose by over 365 percent from 2005 to 2013. All told, 3.33 percent of all dwelling units in NYC were classified as severely crowded in 2013, compared to a national severe crowding rate of 0.99 percent. (2)
The report only focuses on the problem of crowding, but it would be helpful to mention one of the main solutions to crowding — building more housing. To the extent that the NYC Comptroller can push down construction costs in NYC and support increased density in appropriate neighborhoods, he would help reduce crowding in the long run. Lots of people want to be in NYC. We need lots of apartments to house them.
October 8, 2015 | Permalink | No Comments
October 7, 2015
State of Lending for Latinos
The Center for Responsible Lending has posted a fact sheet, The State of Lending for Latinos in the U.S. It reads, in part,
At 55 million, Latinos represent the nation’s largest ethnic group and the fastest growing population. However, Latinos continue to face predatory and discriminatory lending practices that strip hard-earned savings. These abusive practices limit the ability of Latino families to build wealth and contribute to the growing racial wealth gap between communities of color and whites. The Center for Responsible Lending (CRL), along with its numerous partners, has sought to eliminate predatory lending products from the marketplace. High-cost, debt trap lending products frequently target Latinos and other communities of color. (1)
No disagreement there. The fact sheet continues,
Barriers to Latino Homeownership
According to a 2015 national survey of Latino real estate agents, nearly 60 percent said that tighter mortgage credit was the No. 1 barrier to Latino homeownership; affordability ranked second.
In 2014, Latino homeownership dropped from 46.1 percent in 2013 to 45.4 percent. In 2013, Latinos were turned down for home loans at twice the rate of non-Latino White borrowers and were more than twice as likely to pay a higher price for their loans. (1)
I have a few problems with this. First, I am not sure that I would unthinkingly accept the views of real estate agents as to what ails the housing market. Real estate agents make their money by selling houses. They are less concerned with whether the sale makes sense for the buyer long-term. Second, it is unclear what the right homeownership rate is. Many people argue that higher is always better, but that kind of thinking got us into trouble in the early 2000s. Finally, stating that Latinos are rejected more frequently and pay more for their mortgages without explaining the extent to which non-discriminatory factors might be at play is just sloppy.
The fact sheet quotes CRL Executive Vice President Nikitra Bailey, “As the slow housing recovery demonstrates, there is a market imperative to ensure that Latino families have access to mortgages in both the public and private sectors of the market. The market cannot fully recover without them.” (1) But what Latino households and the housing market need is not just more credit. They need sustainable credit, mortgages that are affordable as homeowners face the expected challenges of life — unemployment, sickness, divorce. It is a shame that the CRL –usually such a thoughtful organization — did not address the bigger issues at stake.
October 7, 2015 | Permalink | No Comments
October 6, 2015
The Next Urban Renaissance
The Manhattan Institute has released an electronic book, The Next Urban Renaissance: How Public-Policy Innovation and Evaluation Can Improve Life in America’s Cities. Ingrid Gould Ellen, the Faculty Director of NYU’s Furman Center for Real Estate and Urban Policy, has a chapter on Housing America’s Cities: Promising Policy Ideas for Affordable Housing. She suggests three reforms:
First, cities could incentivize construction and development—and thereby increase the supply of housing—by more heavily taxing land than property. Such a “split-rate” tax would encourage development of underutilized land by reducing the added tax burden that standard property taxes impose on improving buildings.
Second, cities could reduce (or even eliminate) minimum parking requirements that significantly increase the cost of housing.
Finally, cities could shift some of the public funds currently spent on homeless shelters to time-limited rental subsidies for those at risk of homelessness. None of these ideas is new, but each deserves serious reconsideration as housing affordability problems mount around the country, especially in high-demand, coastal cities. (1-2)
I think the split-rate tax is worth exploring, although it may not be political feasible at this time. The property tax system in NYC is incredibly screwed up, so any proposal that involves scrapping it and replacing it with one that is more equitable is a step in the right direction.
The elimination of minimum parking requirements is a no-brainer. This is not only because they increase the cost of new housing (by increasing construction costs and by reducing square footage that would be available to other building uses). It is also because we should be trying to disincentivize people from owning cars in NYC, not incentivizing them with subsidizing parking.
The last proposal — time-limited rental subsidies — is also worth exploring although it sounds a little too good to be true. Early research indicates that program beneficiaries are unlikely to end up in shelters. If these findings are confirmed by more rigorous studies, then time-limited rental subsidies would be a brilliant policy innovation.
While none of these proposals are going to solve NYC’s affordable housing crisis, they will all have a positive impact at the margins. They are worth further study.
October 6, 2015 | Permalink | No Comments
Tuesday’s Regulatory & Legislative Round-Up
- The Consumer Financial Protection Bureau’s (CFPB) new Know Before you Owe mortgage disclosure rule went into effect this week. The new rule was implemented as a reform under Dodd-Frank. Borrowers now have to be allowed three days to consider a mortgage loan, under certain circumstances, and Lenders are required to make a number of disclosures via forms mandated under the Truth in Lending Act. The CFPB has released this video to explain the new rule.
- The U.S. Department of Housing and Urban Development (HUD) continues its recent flurry of grant making activity by awarding $138 Million to over 100 groups to fight housing discrimination. The grants were made under the auspices of the Fair Housing Initiatives Program (FHIP). The awardees will use the funds to support education, outreach, investigations and capacity building.
October 6, 2015 | Permalink | No Comments
October 5, 2015
Reiss on the Right to Complain
Super Lawyers quoted me in Development’s Back, Baby! But Do Neighborhoods Rights Extend Beyond the Right to Complain? It reads, in part,
The list of what can go wrong during construction is longer than Long Island, and some of the items on it are very bad indeed. Reading Chapter 33 of the New York City Construction Code, “Safeguards during Construction or Demolition,” is like Googling skin diseases: You encounter possibilities that, in your previous blissful ignorance, you’d never worried about.
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So how can citizens stand up for their rights?
“City residents do not have tons of rights regarding construction,” says Brooklyn Law School professor David Reiss, who focuses on real estate finance and community development. But, he adds, “They do have some. Technically, many of them are not rights. Rather, citizens have a right to complain.”
According to Reiss, the Department of Buildings is the agency to call about excessive debris, problems with fences, safety netting, scaffolding or cranes; or work being done without a permit. (The DOB’s phone number is New York’s general information and non-emergency kvetching number: 311.)
To complain about after-hours construction-before 7 a.m. or after 6 p.m. Monday to Friday, or anytime on Saturday or Sunday, unless the contractor has a permit stating otherwise-Reiss recommends contacting the DOB or the Department of Environmental Protection. The latter’s number is also 311.
“It never hurts to start by talking with the contractor and/or owner directly, “ says Reiss, who also recommends talking to your community board and city councilmember. As with most things, there’s strength in numbers. “The more people that complain, the more likely it is to get on the radar of officials,” he says.
He also recommends collecting all the evidence you can, whether to show officials or, if worse comes to worst, to use in court. “Create a paper trail. Pictures, of course, are worth a thousand words, particularly if they are time- and date-stamped and you annotate them as appropriate.”
October 5, 2015 | Permalink | No Comments
