Tag Archives: NYC

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.

Economic Factors That Affect Housing Prices

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photo by TaxRebate.org.uk

S&P has posted a paper on Economic Factors That Affect Housing Prices. This is, of course, an important topic, albeit one that is an art as well as a science. While S&P undertook this analysis more for mortgage-backed securities investors than for anyone else, it certainly is of use to the rest of us. The paper opens,

The U.S. domestic housing market has experienced a 23% price increase since the beginning of the housing recovery in 2011. Many local housing markets are now close to or above their peak levels of 2006, which leads us to investigate whether the pace of home price appreciation (HPA) can continue at its current pace. In this paper, we (1) examine the economic factors that influence HPA and (2) forecast HPA for numerous geographic regions assuming various economic conditions over the next five years. While the aggregate national pattern in housing prices is an important reference, we need to examine housing prices at a more granular geographic level in order to understand regional housing market dynamics and learn how these are affected by local macroeconomic factors. This paper demonstrates that several economic variables are needed to predict average home price movements for each of 48 different U.S. metropolitan statistical areas (MSAs).

*     *      *

Factors that influence HPA can be difficult to predict. Therefore, residential mortgage backed securities (RMBS) investors frequently use a range of HPA projections to estimate their potential bond returns. With that in mind, for each MSA, we considered five separate hypothetical economic scenarios, ranging from an “Upside” forecast to an extreme “Stress 3” case. Interestingly, our Stress 3 case forecasts a 28% decline in HPI at the national level over the next five years, which corresponds roughly to the decline experienced in the last recession. Our “base case” scenario leads to forecasts at the national level of a 26% increase in HPI over five years. This represents what we believe to be the most likely economic forecast. (1-2)

S&P’s key findings include:

  • Movement in HPA is primarily influenced by up to five variables, depending on the MSA: housing affordability, changes in shadow inventory, the unemployment rate, the TED spread [a measure of distress in the credit markets], and population growth.
  • HPA in many MSAs has momentum, meaning that it depends on its level in the previous quarter of observation.
  • The mortgage rate generally appears to have little predictive power in connection with home prices.
  • Chicago, Houston, Boston, and San Francisco are projected to appreciate at a greater pace (45%, 40%, 27%, and 36%, respectively) than the 26% forecast for the nation as a whole over the next five years, and New York at a slower pace (21%). Columbus led all MSAs with a projected five-year HPA of 50%.
  • Under our most pessimistic (Stress 3) scenario, Chicago is forecast to experience a greater decline in HPI (34%) over the next five years than the nation as a whole (29%), while New York, Boston, Houston, and San Francisco are projected to experience declines that are less severe than that of the nation (19%, 3%, 17%, and 16%, respectively). Markets that have been vulnerable in the past (Las Vegas, Phoenix, and Riverside) are projected to experience the greatest five-year declines under our Stress 3 scenario (66%, 68%, and 68%). The markets that show the greatest movements are the most sensitive to the five factors and frequently show the greatest upside and downside. (2-3, emphasis in the original)

I found the first and third bullet points to be the most interesting, as many pundits weigh in on the factors that affect housing prices. It will be interesting to see if further research confirms S&P’s findings.

Best Time to Sign a Lease

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photo by Beth Kanter

The Allstate Blog quoted me in What’s the Best Time of Year to Sign a Lease? It opens,

There is no way around it — apartment hunting can be stressful. And the cost of rent can be quite expensive — even outpacing average U.S. salary increases. According to the National Association of Realtors, the cost of rent rose an average of 15 percent while renters’ income only rose 11 percent from 2009 to 2014. However with some planning and negotiating, you may be able to have some more money in your pocket at the end of each month.

Similar to how you can pay more for a winter jacket in October than May, rental rates often vary throughout the year. By planning your move and signing lease terms to help position your next move during the lower rental rate season, you may end up saving some money. 

Research the Demand in Your Area

Just like most things, supply and demand determines prices in the rental market. Not surprisingly, you may get a better deal on renting when demand for condos or apartments are at their lowest. However, if you live in a tight rental market, your choices could be very limited. “In most areas the slow rental season is typically late fall through winter since less people move during this time,” says Scot J. Haislip, vice president, national lease program at the National Apartment Association (NAA).

It is important to understand the rental market you’re looking to move into since rental patterns can vary based on where you live. David Reiss, director of Community Development Clinic in New York City and professor at Brooklyn Law School, specializing in real estate and community development recommends contacting several local brokers to get their perspective on the slower rental periods in your area of interest. He also cautions that some high demand areas, such as New York City or Chicago, currently do not have a slower period for rentals.

Smart Negotiation

Even during the winter months, most landlords are not going to simply hand over a discount — you have to work for it by negotiating with your prospective landlord. Before you broach the subject of price, do your homework by picking up the phone or researching online to compare similar units at the current time. Reiss suggests that you consider asking for a decrease in your monthly rent or a period of free rent.

Dollar Homes

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Packmatt

Realtor.com quoted me in Buy a House for a Buck? The Real Story Behind $1 Listings. The story reads, in part,

Hidden deep within the bowels of real estate listings are a few head-scratchers that would no doubt catch any bargain hunter’s eye. They’re homes for sale for the grand total of one crisp American dollar. So what’s the deal? Are they for real?

I decided to find out by actually clicking, and calling, and learning the stories behind these tempting facades. And it turns out, $1 listings can mean many things. Here’s what this lowball price is actually all about.

*     *     *

Possibility No. 3: It truly is for sale for $1, but…

The next four places for $1 that I check out are all rundown properties in Detroit. They range in description from “fire damage sold as is” (translation: a charred pile of lumber—pic below) to “bungalow with three bedrooms, one bathroom, basement and much more” (translation: “more” means plywood for windows and doors).

Still, some houses sit on decent lot sizes of 3,000+ square feet in neighborhoods that seem habitable at first glance. The listing agent won’t return my call, but I track down an agent willing to show me the various rundown homes. Though back taxes or liens on the property may jack up the price, I ask whether the house will really sell for $1. “Sure,” he says. “This is Detroit.”

Now that I’ve found a true $1 listing, should I hand over a George Washington for one of these fixer-uppers?

“When a house is being sold for a dollar, it means that the local real estate market has cratered,” says David Reiss, professor of law at Brooklyn Law School who focuses on real estate issues and community development. “Land has no value. Or even worse, it has negative value and buyers of $1 homes will end up getting snookered. Owning land comes with various mandatory expenses like real property taxes. It’s possible the true value is even lower than a dollar. In that case, you will see a lot of $1 houses staying on the market, as hard as that is to believe.”

Reiss further explains how the Motor City’s market cratered so deeply: “Real estate’s value typically comes down to location. If jobs have disappeared, if residents have disappeared, if services have disappeared—then value disappears.”

Beyond having zero worth, a $1 home is likely a gaping money pit. When the New York Times ran a piece on the subject in 2007, it found that “the houses often require hundreds of thousands of dollars in renovations.”

Though my search for $1 properties was a bust in the end, there once were $1 homes worth buying. “Think of New York City,” says Reiss. “Homes that were abandoned in the 1970s are now selling for seven figures.”

Bottom line? One-dollar listings may be a risky gamble, but, hey, you never know.

 

Mandatory Inclusionary Zoning in NYC

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"East New York" by MMZach

New York City Comptroller Scott Stringer issued an analysis of Mandatory Inclusionary Housing and the East New York Rezoning. It opens,

In an effort to address the City’s ongoing affordable housing crisis, the New York City Planning Commission is currently proposing a series of zoning changes, including Mandatory Inclusionary Housing (MIH) and Zoning for Quality  and Affordability (ZQA), for potential application in communities across the city. One neighborhood targeted for significant redevelopment is the East New York/Cypress Hill area of Brooklyn. While many Community Boards have already expressed a variety of concerns about the proposed rezonings, the ultimate question comes down to this: does the proposal help or hurt the existing affordability crisis — in East New York and across the five boroughs? (1)

The analysis concludes that “the City’s own data shows that the current plan could inadvertently displace tens of thousands of families in East New York, the vast majority of whom will be unable to afford the relatively small number of new units that will be built.” (1)

In place of the Mayor’s plan, the Comptroller proposes the following principles, among others:

  • target density to sites primed for affordable housing
  • ensure affordability for existing, low-income residents

While the Comptroller is right to highlight the impact of zoning changes on existing residents, his principles do not seem to lead to a better result for a city starved of new housing. Targeting density to sites primed for affordable housing will result in many fewer housing units because it applies to far fewer parcels. Ensuring affordability for existing, low-income residents will mean that subsidy dollars will have to be concentrated on fewer units of affordable housing.

This debate between the Mayor and the Comptroller highlights two key issues. First, every plan to increase affordable housing has winners and losers. Second, affordable housing policies almost always have to choose between providing moderate subsidies to many units or deep subsidies to fewer units. While the Comptroller’s analysis highlights those tensions in the Mayor’s plan, it does not acknowledge them within its own. There are no easy answers here and those who are truly committed to increasing the supply of affordable housing in NYC must make sure not to let the perfect become the enemy of the good.

The Marvel of NYC’s Water Supply

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Rocket Thrower & Unisphere by Jim Henderson

Another school holiday, another museum. The family and I went to the Queens Museum. Although I am a lifelong New Yorker, I had never been there before. It is a great, small museum, with just a few galleries. It is right smack in the middle of Flushing Meadows-Corona Park. The museum is a stone’s throw of the majestic Unisphere, which is even more amazing from close up. We had gone to see the survey of Zhang Hongtu‘s work, which was very good. But readers of this blog would likely be more interested in two exhibits on long-term loan to the museum. The first is From Watersheds to Faucets: The Marvel of New York City’s Water Supply System:

For the 1939 World’s Fair, city agencies were invited to produce exhibits for the New York City Pavilion, now the Queens Museum. Each exhibit shared “what the various branches of municipal government are doing to serve the citizens of today.”

To educate New Yorkers about the water supply system, the Department of Water Supply, Gas, and Electricity, created the relief map now displayed at the Queens Museum. A team of cartographers began work in 1938 with a depression-era budget of $100,000, roughly $1.5 million in today’s dollars. But at 540 square feet, the model was too big for the allotted space. Ten years later, it made its only public appearance in the City’s Golden Anniversary Exposition at Manhattan’s Grand Central Palace.

In 2008, after decades in storage, the 27-piece relief map was in desperate need of conservation. The model was sent to McKay Lodge Fine Arts Conservation Lab in Oberlin, Ohio and restored to its original brilliance. In collaboration with the New York City Department of Environmental Protection, it will now remain on long-term loan in its originally intended home in the New York City Building.

The second exhibit is pretty famous and it is very cool to see up close: the Panorama of the City of New York, the biggest full-scale architectural model in the world. The Panorama was commissioned for the 1964 World’s Fair. The museum has kept the Twin Towers on the Panorama, which is pretty powerful, once you notice it.

The two exhibits together give you a sense of the grandeur of a world-class city both in itself and within its broader physical context. Another thing to put on your NYC bucket list.

Affordable New York

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Beyond My Ken

I just came back from a great couple of exhibits at the Museum of the City of New York that would be of great interest to the readers of this blog. The first, Affordable New York: A Housing Legacy, provides a history and education of affordable housing programs that have been integral to the development of the City:

New York City has a long history of creating below-market housing for its residents. Today the city offers subsidized housing to families across a wide economic spectrum; more than 400,000 in public housing, and many more in privately or cooperatively owned apartments. With affordable housing a cornerstone of Mayor Bill de Blasio’s administration, New York’s housing legacy—often overlooked and little understood—is more relevant than ever.

Affordable New York traces over a century of affordable housing activism, documenting the ways in which reformers, policy makers, and activists have fought to transform their city. A focus on current and future housing initiatives demonstrates how New Yorkers continue to promote subsidized housing as a way to achieve diversity, neighborhood stability, and social justice.

The exhibit has a lot of good pictures that give a sense of the range of options that exist for affordable housing development. It also provides a condensed history of the NYC experience with subsidized housing.

The other exhibit, Jacob A. Riis: Revealing New York’s Other Half, is a bit more somber, but when viewed in the context of the first it shows the great progress we have made in providing decent housing to a broader range of City residents:

Jacob Riis (1849-1914) was a pioneering newspaper reporter and social reformer in New York at the turn of the 20th century. His then-novel idea of using photographs of the city’s slums to illustrate the plight of impoverished residents established Riis as forerunner of modern photojournalism. Jacob A. Riis: Revealing New York’s Other Half features photographs by Riis and his contemporaries, as well as his handwritten journals and personal correspondence.

This is the first major retrospective of Riis’s photographic work in the U.S. since the City Museum’s seminal 1947 exhibition, The Battle with the Slum, and for the first time unites his photographs and his archive, which belongs to the Library of Congress and the New York Public Library.

The pictures of the homeless kids are heartbreaking — Newsies without the songs — and the recreation of one of Riis’ public talks is pretty extraordinary. The shows are running for a few more months, so there is still plenty of time to see them.