Economics
January 7, 2008
Stuck in the Middle
An article in this week’s Crain’s looks at how real estate prices and taxes are making the city increasingly unaffordable for the middle class. The rising cost of housing, in particular, has meant that families making between $80,000 and $150,000 a year are finding it more difficult than ever to make ends meet. Higher real estate costs in Brooklyn, for example, have put the borough out of reach for many middle-income earners. A person profiled in the article who makes $60,000 a year “looked all over Brooklyn” before deciding to rent in Astoria. "Five years ago, [landlords] in Park Slope would have come to you," he says. Interestingly, the story also notes that the city’s recent prosperity has contributed to a widespread sense of entitlement, thus making people believe that their incomes should stretch farther. "People used to squeeze kids into one bedroom; now everybody thinks every kid should get his own bedroom," says Nicole Gelinas, a fellow at the Manhattan Institute.
Unaffordable NY: Tough Choices at $150,000 [Crain's]
Photo by ultraclay!
July 25, 2006
Residential RE Squeezes Industrial Nabes
A lot of concern has been raised about the survival of the industrial sector in the city, and much of the worries stem from the encroachment of residential property on land used primarily for industrial uses, whether it be through zoning variances, or illegal conversions. The residential real estate market has put enormous pressure on the industrial sector. In response, Bloomberg - in cooperation with advocacy groups and business leaders - has created a centralized agency to coordinate the effort to help the sector, initiated protective boundaries around the city called Industrial Business Zones, and has increased penalties and patrolling for illegal residential conversions.
A more complete look at the issue after the jump...
Commentator Balks at Mayor's Housing Plan
Arguing that Bloomberg's affordable housing plan will in effect increase housing costs for middle-income New Yorkers, Nicole Gelinas, of the Manhattan Institute, outlines the theory that regulating prices acuses supply to become restricted. The result? Housing becomes more valuable and prices rise for living space still on the free market. She also makes the generalized argument that rent stabilization leads to the deteriorization of housing conditions by depriving landlords of revenue needed for upkeep, forcing them to cut corners. Granted, some single mothers may not be able to afford their apartments without government regulations, she says, but that's "a problem of the dysfunctional underclass."
Bloomberg's Housing Horror [NY Post]
July 21, 2006
Brooklyn's Labor Market
Brooklyn is not fulfilling its potential in the retail market, and construction jobs are not keeping pace with the number of construction projects in the borough, says a recent report on the labor market in Brooklyn, published by the Brooklyn Chamber of Commerce. While the number of jobs in Brooklyn grew 1% in 2005 - the highest percentage occuring in culture and recreation - the 6.2% unemployment rate still lags behind the citywide average of 5.5%. Commanding the labor market is still the public sector, at 41% of all jobs in the borough. Wages have kept pace with inflation, but also remain below city average. The overall number of residential building permits issued almost doubled between 2001 and 2005. In 2005, 1,600 were issued, at a total of 9,000 units - coming in just over Manhattan, which totaled 8,500.
Brooklyn Labor Market Review [Brooklyn Chamber of Commerce]
Chamber's 'Target': Shopping [Brooklyn Papers]
Photo by Rob Innes.
November 17, 2005
NYT: Limiting Mortgage Deduction Wise, Unlikely
Hal Varian, a professor of business, economics and information management at the University of California, Berkeley, weighs in on Bush's proposal to limit the mortgage interest deduction in an editorial in the New York Times:
An excessive subsidy on one asset means that less will be invested in other assets. The money put into building those huge villas on the hillside could have been put into factories, office buildings and schools. Investment in physical capital and human capital makes the economy as a whole more productive, unlike investment in housing.
Given the huge subsidies to housing, it is likely that we as a country have overinvested in this area. Cutting back some of those subsidies would be good economic policy. That being said, I hasten to add that this is unlikely to happen anytime soon. People have put substantial amounts of their wealth into housing in large part because it has been so highly subsidized. The housing tax subsidy has been built into housing prices, to some degree, and cutting back could lead to painful capital losses on home values.
If you give a lollipop to a baby, it may make him smile, but you will pay dearly for that smile if you try to take the candy away. The best thing to do is to distract the baby with other sweets, while you gradually extricate the lollipop from that sticky hand.
An Opportunity to Consider [NY Times]