Tag Archives: NYC

Walkers in the City

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photo by Derrick Coetzee

The Center for Real Estate and Urban Analysis at The George Washington School of Business has released Foot Traffic Ahead: Ranking Walkable Urbanism in America’s Largest Metros for 2016. The Executive Summary opens,

The end of sprawl is in sight. The nation’s largest metropolitan areas are focusing on building walkable urban development.

For perhaps the first time in 60 years, walkable urban places (WalkUPs) in all 30 of the largest metros are gaining market share over their drivable sub-urban competition—and showing substantially higher rental premiums.

This research shows that metros with the highest levels of walkable urbanism are also the most educated and wealthy (as measured by GDP per capita)— and, surprisingly, the most socially equitable. (4)

This strikes me as a somewhat over-optimistic take on sprawl, but I certainly welcome the increase in walkable urban places over a broad swath of metropolitan areas. The report’s specific findings are that

There are 619 regionally significant, walkable urban places—referred to as WalkUPs—in the 30 largest U.S. metropolitan areas. These 30 metros represent 46 percent of the national population (145 million of the 314 million national population) and 54 percent of the national GDP.

The 30 metros are ranked on the current percentage of occupied walkable urban office, retail, and multi-family rental square feet in their WalkUPs, compared to the balance of occupied square footage in the metro area. The six metros with the most walkable urban space in WalkUPs are, in rank order, New York City, Washington, DC, Boston, Chicago, San Francisco, and Seattle.

Economic Performance: There are substantial and growing rental rate premiums for walkable urban office (90 percent), retail (71 percent), and rental multi-family (66 percent) over drivable sub-urban products. Combined, these three product types have a 74 percent rental premium over drivable sub-urban.

Walkable urban market share growth in office and multi-family rental has increased in all 30 of the largest metros between 2010-2015, while drivable sub-urban locations have lost market share. The market share growth for 27 of the 30 metros is two times their market share in 2010. This is of the same or greater magnitude as the market share gains of drivable sub-urban development during its boom years in the 1980s, but in the reverse direction.

Indicators of potential future WalkUP performance show that many of the metros ranked highest for current walkable urbanism are also found at the top of our Development Momentum Ranking—namely, the metros of New York City, Boston, Seattle, and Washington, DC. This indicates that these metros will continue to build on their already high WalkUP market shares and rent premiums.

There are also some surprising metros in this top tier of Development Momentum rankings, including Detroit, Phoenix, and Los Angeles.

The most walkable urban metro areas have a substantially greater educated workforce, as measured by college graduates over 25 years of age, and substantially higher GDP per capita. These relationships are correlations, and determining the causal relationships requires further research to prove.

Walkable urban development describes trends resulting from both revitalization of the central city and urbanization of the suburbs. For nearly all metros, the future urbanization of the suburbs holds the greatest opportunity; metro Washington, DC, serves as a model, splitting its WalkUPs relatively evenly between its central city (53 percent) and its suburbs (47 percent).

Social Equity Performance: The national concern about social equity has been exacerbated by the very rent premiums highlighted above, referred to as gentrification. Counter-intuitively, measurement of moderate-income household (80 percent of AMI) spending on housing and transportation, as well as access to employment, shows that the most walkable urban metros are also the most socially equitable. The reason for this is that low cost transportation costs and better access to employment offset the higher costs of housing. This finding underscores for the need for continued, and aggressive, development of attainable housing solutions. (4, footnote omitted)

There is a lot of import here. Is there more than a correlation between walkability and the educational level of the workforce and, if so, why? Why don’t more housing affordability studies take into account transportation costs when evaluating the affordability of a given community? What is the trend line of this new direction toward urbanism and how far can it go in the face of decades of investment in car-based communities? This annual study will help us answer those questions, over time.

New Housing and Displacement

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Lsanburn

The Institute of Governmental Studies at UC Berkeley has issued a research brief, Housing Production, Filtering and Displacement: Untangling the Relationships. It opens,

Debate over the relative importance of subsidized and market-rate housing production in alleviating the current housing crisis continues to preoccupy policymakers, developers, and advocates. This research brief adds to the discussion by providing a nuanced analysis of the relationship between housing production, affordability, and displacement in the San Francisco Bay Area, finding that:

• At the regional level, both market-rate and subsidized housing reduce displacement pressures, but subsidized housing has over double the impact of market-rate units.

• Market-rate production is associated with higher housing cost burden for low-income households, but lower median rents in subsequent decades.

• At the local, block group level in San Francisco, neither market-rate nor subsidized housing production has the protective power they do at the regional scale, likely due to the extreme mismatch between demand and supply.

Although more detailed analysis is needed to clarify the complex relationship between development, affordability, and displacement at the local scale, this research implies the importance of not only increasing production of subsidized and market-rate housing in California’s coastal communities, but also investing in the preservation of housing affordability and stabilizing vulnerable communities. (1)

This brief takes on an important subject — the relationship between new housing and displacement — and concludes,

There is no denying the desperate need for housing in California’s coastal communities and similar housing markets around the U.S. Yet, while places like the Bay Area are suffering from ballooning housing prices that are affecting people at all income levels, the development of market-rate housing may not be the most effective tool to prevent the displacement of low-income residents from their neighborhoods, nor to increase affordability at the neighborhood scale.

Through our analysis, we found that both market-rate and subsidized housing development can reduce displacement pressures, but subsidized housing is twice as effective as market-rate development at the regional level. It is unclear, however, if subsidized housing production can have a protective effect on the neighborhood even for those not fortunate enough to live in the subsidized units themselves.

By looking at data from the region and drilling down to local case studies, we also see that the housing market dynamics and their impact on displacement operate differently at these different scales. Further research and more detailed data would be needed to better understand the mechanisms via which housing production affects neighborhood affordability and displacement pressures. We know that other neighborhood amenities such as parks, schools, and transit have a significant impact on housing demand and neighborhood change and it will take additional research to better untangle the various processes at the local level.

In overheated markets like San Francisco, addressing the displacement crisis will require aggressive preservation strategies in addition to the development of subsidized and market-rate housing, as building alone won’t protect specific vulnerable neighborhoods and households. This does not mean that we should not continue and even accelerate building. However, to help stabilize existing communities we need to look beyond housing development alone to strategies that protect tenants and help them stay in their homes. (10-11, footnote omitted)

The brief struggles with a paradox of housing — how come rents keep going up in neighborhoods with lots of new construction? The answer appears to be that the broad regional demand for housing in a market like the Bay Area or New York City overwhelms the local increase in housing supply. The new housing, then, just acts like a signal of gentrification in the neighborhoods in which it is located.

If I were to criticize this brief, I would say that it muddies the waters a bit as to what we need in hot markets like SF and NYC: first and foremost, far more housing units. In the absence of a major increase in supply, there will be intense market pressure to increase rents or convert units to condominiums. Local governments will have a really hard time overcoming that pressure and may just watch as area median income rises along with rents. New housing may not resolve the problem of large-scale displacement, but it will be hard to address displacement without it. Preservation policies should be pursued as well, but the only long-term solution is a lot more housing.

I would also say that the brief elides over the cost of building subsidized housing when it argues that subsidized housing has twice the impact of market-rate units on displacement. The question remains — at what cost? Subsidized housing is extremely expensive, often costing six figures per unit for new housing construction. The brief does not tackle the question of how many government dollars are needed to stop the displacement of one low-income household.

My bottom line: this brief begins to untangle the relationship between housing production and displacement, but there is more work to be done on this topic.

Gentrification in NYC

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Manhattan-plaza

The NYU Furman Center released its annual State of New York City’s Housing and Neighborhoods (2015). This year’s report focused on gentrification:

“Gentrification” has become the accepted term to describe neighborhoods that start off predominantly occupied by households of relatively low socioeconomic status, and then experience an inflow of higher socioeconomic status households. The British sociologist Ruth Glass coined the term in 1964 to describe changes she encountered in formerly working-class London neighborhoods, and sociologists first began applying the term to New York City (and elsewhere) in the 1970s. Since entering the mainstream lexicon, the word “gentrification” is applied broadly and interchangeably to describe a range of neighborhood changes, including rising incomes, changing racial composition, shifting commercial activity, and displacement of original residents. (4)

The reports main findings are

  • While rents only increased modestly in the 1990s, they rose everywhere in the 2000s, most rapidly in the low-income neighborhoods surrounding central Manhattan.
  • Most neighborhoods in New York City regained the population they lost during the 1970s and 1980s, while the population in the average gentrifying neighborhood in 2010 was still 16 percent below its 1970 level.
  • One third of the housing units added in New York City from 2000 to 2010 were added in the city’s 15 gentrifying neighborhoods despite their accounting for only 26 percent of the city’s population.
  • Gentrifying neighborhoods experienced the fastest growth citywide in the number of college graduates, young adults, childless families, non-family households, and white residents between 1990 and 2010-2014. They saw increases in average household income while most other neighborhoods did not.
  • Rent burden has increased for households citywide since 2000, but particularly for low- and moderate-income households in gentrifying and non-gentrifying neighborhoods.
  • The share of recently available rental units affordable to low-income households declined sharply in gentrifying neighborhoods between 2000 and 2010-2014.
  • There was considerable variation among the SBAs [sub-borough areas] classified as gentrifying neighborhoods; for example, among the SBAs classified as gentrifying, the change in average household income between 2000 and 2010-2014 ranged from a decrease of 16 percent to an increase of 41 percent. (4)

The report provides a lot of facts for debates about gentrification that often reflect predetermined ideological viewpoints. The fact that jumped out to me was that a greater percentage of low-income households in non-gentrifying neighborhoods were rent burdened than in gentrifying neighborhoods. (14-15)

This highlights the fact that we face a very big supply problem in the NYC housing market — we need to build a lot more housing if we are going to make a serious dent in this problem. The De Blasio Administration is on board with this — the City Council needs to get on board too.

Lots more of interest in the Furman report — worth curling up with it on a rainy afternoon.

 

All The Single Ladies . . . Buy Houses

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house-insurance-419058_1920

Realtor.com quote me in More Single Women Hunt for Homes, Not Husbands. It reads, in part,

Alayna Tagariello Francis had always assumed she’d marry first, then buy a home. But when she found herself footloose, free, and definably single in her early 30s, she decided to make a clean break from tradition: She started home shopping for one.

“After dating for a long time in New York City, I really didn’t know if I was going to meet anyone,” she says. “I didn’t want to keep throwing away money on rent or fail to have an investment because I was waiting to get married.”

So in 2006, Francis bought a one-bedroom in Manhattan for $400,000—and was surprised by how good it felt to accomplish this milestone without help.

“To buy a home without a husband or boyfriend wasn’t my plan,” she says, “but it gave me an immense sense of pride.”

It’s no secret that both men and women are tying the knot later in life. A generation ago, statistics from the Census Bureau showed that men and women rushed to the altar in their early 20s; now, the median age for a first-time marriage has crept into the late 20s—and that’s if they marry at all.

The surprise is that even though today’s women still make 21% less than men, more single women than men are now choosing to charge ahead and invest in a home of their own. It’s changing the face of homeownership in America.

And while that decision to buy can help build wealth and ensure financial stability, plenty of women are finding the road from renter to owner is filled with unforeseen obstacles—and plenty of soul-searching.

*     *     *

Why women shouldn’t wait

But then again, few of us have fully operational Ouija boards we can pull out of storage to pinpoint exactly when our ideal significant other will arrive on the scene. So putting house hunting on pause is something fewer women are willing to do.

“Women today don’t sit around and wait for Prince Charming,” says Wendy Flynn, a Realtor® in College Station, TX, who has helped numerous single women buy homes. After all, Flynn points out, “The time frame for meeting your dream man, getting married, and having kids—well, that’s a pretty long timeline.” So even if you do meet The One a day after closing on your home, “you could sell your home in a few years and still make a profit—or at the worst, probably break even.” If you buy right, that is.

That said, women who do want to marry and have kids as soon as possible will want to eye their potential home purchase with that in mind. Is the new place big enough for a family? Or, if you think you’ll sell and move into a larger place once you’re hitched, how easy will it be to sell your original home—or are you allowed to rent it out?

And if you marry or a partner moves in, make sure to consult a lawyer if you want your partner to share homeownership along with you.

“You definitely should not assume that your spouse’s home is transferred automatically to you once you get married,” says David Reiss, an urban law professor at Brooklyn Law School.

Buying Into The Sexiest Real Estate

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Metropolitan Transportation Authority of the State of New York - Construction at Hudson Yards

Newsmax quoted me in How to Buy and Sell in the Sexiest of Real Estate Markets. It opens,

With the opening of the 7 subway station at 34th Street last year, more than 100 shops and 5,000 residences, the Hudson Yards neighborhood in Manhattan is creating new demand for housing.

“We’ll likely witness a progression of rising prices as the entire development grows both residentially and commercially,” said Brad Malow, licensed real estate broker with Charles Rutenberg, a real estate firm in Manhattan.

Stretching from West 30th to 34th Streets and 10th to 12th Avenues, Hudson Yards is just one example of how supply of inventory impacts pricing in the world of real estate.

“The problem right now in the sales market is that supply is not catching up fast enough to pent up demand,” Malow told Newsmax Finance. “If supply increases and demand stays the same, what usually results is lower pricing.”

The New York housing market is very different from most others in the U.S. The vacancy rate in New York has hovered at 2% on average, according to a Douglas Elliman/Miller Samuel data and new development inventory is up 101% with supply and demand fluctuating from season to season.

That makes proper pricing important to the marketing of all types of property given the extraordinarily low vacancy rate.

“The supply of new housing is very low given the size of the market and the rental market is heavily regulated, depressing the rents for many units,” said David Reiss, professor of law with the Brooklyn Law School in Brooklyn.

Racial & Ethnic Change in NYC

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Brooklyn's poet, Walt Whitman

Brooklyn’s poet, Walt Whitman

Michael Bader and Siri Warkentien have posted an interesting mapping tool, Neighborhood Racial & Ethnic Change Trajectories, 1970-2010. They had set out to answer the question:

how have neighborhoods changed since the Civil Rights Movement outlawed discriminatory housing? We study how neighborhood racial integration has changed during the four decades after the legislative successes of the Civil Rights Movement. We were unsatisfied with previous studies that focused mostly on defining “integrated” and “segregated” neighborhoods based on only on whether groups were present. We thought that the most interesting and important changes occur within “integrated” neighborhoods, and we set out to identify the common patterns of those changes.

We used a sophisticated statistical method to identify the most common types of change among Blacks, Latinos, Asians and Whites in the metropolitan neighborhoods of the four largest cities in the U.S.: New York, Los Angeles, Chicago, and Houston. We were disappointed to learn that many integrated neighborhoods were actually experiencing slow, but steady resegregation — a process that we call “gradual succession.” The process tended to concentrate Blacks into small areas of cities and inner-ring suburbs while scattering many Latinos and Asians into segregating neighborhoods throughout the metropolitan area.

While we reserve a healthy dose of pessimism about long-term integration, we also find neighborhoods experiencing long-term integration among Blacks, Latinos, Asians, and Whites. We call these “quadrivial” neighborhoods, which derives from Latin for the intersection of four paths. We thought that seemed appropriate given the often different paths different racial groups took to these neighborhoods. (emphasis in the original)

I was, of course, interested in the New York City map. While NYC is highly segregated, it was interesting to see the prevalence of these so-called quadrivial neighborhoods. The authors find that

About 20 million people call the New York metropolitan area home. The metro area is one of the most segregated in the United States and, as a result, New York has a large proportion of neighborhoods following stable Black and stable White trajectories. Some of the segregation came about because of White flight during the 1970s. Black segregation following this path clusters in the Lower Bronx, North Brooklyn, and in and around Newark, New Jersey.

Large-scale Latino immigration to the New York metro area has been relatively recent, and the number of recent Latino enclaves bears out that pattern. Neighborhoods experiencing recent Latino growth are scattered throughout suburban New Jersey, Long Island and northern New York neighborhoods. New York also experienced high levels of Asian immigration relative to other metropolitan areas. Neighborhoods experiencing recent Asian growth are scattered throughout the metropolitan region.

New York also contains a large number of quadrivial neighborhood and the highest proportion of White re-entry neighborhoods. The latter are found near transportation to Manhattan in the gentrifying areas of Jersey City and Weehawken, New Jersey and the Brooklyn terminals of the Manhattan and Williamsburg Bridges.

New York, therefore, contains the contradiction of containing a large number of segregating neighborhoods along with a distinct trend toward integration.

I am not sure that I have any insight to explain that contradiction, although Walt Whitman, Brooklyn’s poet, notes:

Do I contradict myself?

Very well, then I contradict myself,

(I am large, I contain multitudes).

Vacant Land in NYC

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photo by Eric Fischer

NYC Comptroller Stringer has released an Audit Report on the Development of City-Owned Vacant Lots by the New York City Department of Housing Preservation and Development. Stringer has  taken some cheap shots on Mayor DeBlasio’s housing plans before (here for instance). This report amounts to another one. The Audit Findings and Conclusion read,

Our audit found that the City owns over a thousand vacant lots that could be developed under existing urban renewal programs, but many of these lots have been allowed to languish and remain undeveloped for up to 50 years or longer.  While HPD contends that over the years it has disposed of most of the lots it has been responsible for, we found that as of September 18, 2015, HPD listed 1,131 vacant lots under its jurisdiction.  Further, we found that although HPD solicits developers to build on these properties, it has not established plans with realistic time schedules to actually transfer City-owned vacant properties to developers.

Pursuant to General Municipal Law § 502, HPD has devised urban renewal plans for areas that include its vacant properties.  However, we found that the projected schedules are often pushed to a later date and sometimes no date is specified at all, notwithstanding the fact that the law requires “a proposed time schedule for the effectuation of such plan.”  Accordingly, it appears that schedules with adequate procedures to enable the transfer of City-owned properties to developers in accordance with those schedules have not been consistently formulated.  Finally, we identified an additional 340 City-owned vacant lots under the jurisdiction of other City agencies that could be considered to be used for residential construction. (2)

Even the language of this summary reveals the Comptroller’s spin. It is laughable to say that the City has allowed vacant land “to languish and remain undeveloped  for up to 50 years or longer.” The fact is that the City took ownership of much of this land during the ’60s and ’70s because it was abandoned by the owners who did not pay their property taxes. Much of the land had absolutely no value for decades.

This has certainly changed in the last 20 years or so, so it is worth evaluating whether the City should be taking more aggressive steps to get this land developed. Certainly one would think that this Mayor would want to do just that. And indeed, the Comptroller’s report shows that the Mayor has slated over half of those parcels for development over the next few years. The City’s response to the Audit indicates that many of the remaining parcels pose development challenges for residential development.

My take (having written extensively about abandoned land in NYC, here for instance) is that Stringer is making a mountain out a molehill. Every mayor from Koch through De Blasio has attempted to develop or sell much of the vacant land owned by the City. This audit fails to demonstrate that the City has a serious problem on this count.