Fewer Mortgages for Minority Communities

You thought I was done with yesterday's conversation about the $400 rebate check... but this article is just another symptom of the bigger ills at work.

The race issue is only marginally at play when it comes to granting of loans etc., though it is obviously a huge issue when it comes to the INCOMES of minority populations...

It is the income part that is huge. Of course Park Slope and Brooklyn Heights and Fort Greene will have more mortgages approved... that is where the folks making $250,000 or more live. Ya know, those folks on here that characterize that as "not a lot of money."

Real Estate ALL OVER the city is overinflated and unsustainable... How could someone with a decent salary even think about saving for a downpayment, nevermind thinking about the mortgage payment. And by decent salart, I mean a family income of $75-100k. Forget single folks making a middle-management salary of $50-60k. And if you make less than that, as many many many people in this city do, you might as well get together 30 of your friends and start a commune in a 3-family home. Modest homes in the "less desirable" parts of Brooklyn are still in the half-a-million-dollar range.

OK - the obvious response is, "Well, obviously you can't buy. You should just rent if you make less than $250k per year."

That's fine - I agree with that statement. I think this need to own has gotten a bit out of whack. BUT... and this is a big BUT... The real estate prices in this city have made the RENT prices outrageously unsustainable. A $1.5 million 3-unit property. What is the rent per unit? Perhaps $3500 or $4000 a month. Can someone making $70k per year pay that... that answer is not even close, if you didn't catch the rhetorical style of the question.

What if it's a 12-unit building that costs the low low price of $2 million... The minimum rent per unit is still going to be around $1,500 if the owner wants to break even.

Yes, you are rich at $250,000 per year because you can actually AFFORD to own or even rent in this city. You have choices... and when you're done paying for the roof over your head you don't really have to hesitate when you make the decision to buy 2 $5 lattes a day or get a handful of baseball tickets on a whim or whithout "saving up" you can enjoy any type of theater outside of the cineplex just cuz. Maybe you don't think you're rich, but guess what... you are.

But I digress. My point is this. The real estate prices are unsustainable -- whether you are a person who has the luxury to buy or are simply a renter.

Soon - in ALL areas of this city - no one except the rich will be able to afford to live in this city. Granted, the $250k per year folks will be the "new poor." But who will run your shops, provide services, support you in your offices (including management), and so on.

Given fuel costs and the inadequate transportation system, do you really think folks are going to commute from far-flung areas for the "privilege" of working in this fair city?!! Do you not think folks will start to resent living like their suffering immigrant ancestors of 50-100 years ago?

Yesterday, under the $400 rebate post, brought up the notion of the "Dutch Disease." Look it up, it's very interesting. He's right - NYC is looking into the face of a "neo-Dutch Disease."

Posted by: tybur6 at November 7, 2008 10:46 AM

So... Xander Crews... to add to my post above.

While I don't condone taking on debt that you cannot afford, isn't there something to be said about the price tags themselves?

Here's a pretty reasonable thought process... I live in a neighborhood; I'm part of this neighborhood. I am stable and earning a "decent wage" to support my family; I should be able to own a tiny piece of this neighborhood.

But the properties in this hypothetical neighborhood have just gone from $275k to $600k in 4 years. The former was affordable, the latter is far from it. BUT, the person I described above is stuck with... "Hey, I'm financially stable and the measure of success is owning my home." So he buys the $600k home in order to own a sliver of the neighborhood he calls home.

I'm not saying he should have bought it, nor should the lender have approved the loan. BUT, the thought process is not unreasonable. It is the price tag.

Who will be the owners and residents of Bed-Stuy, East New York, Brownsville and Bushwick? If the prices remain unsustainably hyperinflated, then folks making $250k or more per year will be told... sorry, you can't afford Park Slope and Fort Greene, you must live in a "fringe" neighborhood.

Funny, right? Rich folks being forced to live in the undesirable areas of brooklyn?! Luckily everyone making less than them will have been forced out to far-flung places... perhaps they can create a utopia. (Of course, it'll be a challenge to pay baristas, dress shop clerks, postal workers and teachers $150,000+ so they can live locally... but I'm sure they'll figure it out.)

I'm not suggesting a socialist plan where there are no "good neighborhood" or "bad neighborhoods." Obviously, if you make more money you can live in a nicer place. I support this. But it's painfully obvious that there are medium-term consequences to unbridled free market activities. Again, not suggesting gov't regulation here... common sense by the folks that are involved in the real estate business! (But self-interest abounds here - so they will be long retired and enriched by the time the Bronx is burning again)

Posted by: tybur6 at November 7, 2008 12:38 PM

It'll be fun. All of the properties in NYC will be converted into 2000-3000 sq ft units. Then the 5 boroughs will have a population of 1.5 million with a median income of $700k.

Traffic will be pleasant. The subways could probably be upholstered in leatherette. Will probably have to home school their kids or have classes taught by teachers being teleconferenced in from the suburbs of Pittsburgh, but everything has sacrifices.

It'll be like Oz! (the Emerald City version, not HBO)

Posted by: tybur6 at November 7, 2008 12:58 PM

OK... you're right dittoburg. There will still be some horribly unmaintained properties that will act as the barracks for the New Utopia workers. Didn't think of that. That works out quite well. Hopefully there is a subsidized cafeteria (a "Worker's Kitchen") in proximity to each of the rent stabilized properties.

In Edwardian times this housing was simply included in your wage and you lived downstairs. That would probably be a simpler solution. The New Utopia citizen would probably want to keep its gov't fairly lean so they don't have to give up their income to the tax man. A big gov't program trying enforce rental rules is a big unnecessary burden if the free market could just take care of it. I mean, homes don't scrub themselves!! :-)

Posted by: tybur6 at November 7, 2008 1:12 PM

Was the barefist fighter your grandma or grandpa? :-)

Posted by: tybur6 at November 7, 2008 1:24 PM

Slick - you're making me rethink my New Utopia structure I laid out above. It's undeniable that the working poor contribute to the city... but these terms, "working poor" "lowest socioeconomic classes" "lower middle class" AARGH! They all sound sort of dirty, right?

Forget the Edwardian upstairs-downstairs scheme -- I don't want icky poor people living in my home. It would be better if they were shipped in from a camp on Long Island or New Jersey in appropriate shifts. Or perhaps we can designate Staten Island or a part of Queens as where the workers would live. It could even be free housing provided by the taxes of their... errr... the property owners.

Posted by: tybur6 at November 7, 2008 5:52 PM