Remember Comptroller Thomas DiNapoli’s headline grabbing report from earlier this week that Coney Island economy was booming? Yesterday watchdog publication City Limits called b.s. on the claims.
It was an odd moment for anyone who’s actually been to Coney Island lately, since there are few obvious signs of a massive renaissance: Luna Park has effectively replaced the late, lamented Astroland, but at the same time much of the Surf Avenue commercial district has fallen to developer Joe Sitt’s bulldozers, while the much-anticipated construction of condos and mixed-use retail buildings on Coney’s vacant lots — which the city promised would follow its 2009 rezoning — remains vaportecture for now.
Turns out that the headline might have been technically true, but only because it was using 2009 as the comparison year. Versus 2008 and 2007, employment is way down.
Coney Baloney: DiNapoli’s Report Obscures Brooklyn Beachfront’s Rollercoaster Economy [City Limits]
Brooklyn’s doing just fine, if you believe yesterday’s bullish article in Crain’s: In the first six months of the year, almost 25,000 borough residents found work, more than 200,000 square feet of commercial space was rented and retail rents began to stabilize. Why? Brooklyn’s such a desirable place to live now. Certainly, for anyone under 30, Brooklyn is now their first choice and not their second choice, says Doug Steiner, president of Steiner Studios and not totally unbiased given his interests in real estate development (80 Met). Let’s hope Crain’s is onto something!
Brooklyn Feels the Love of Rising Economy [Crain's]
Just as it did a month ago, The New York Times took a stab at classifying Bedford-Stuyvesant, this time as an exception to the ubiquitous economic tumult. Even though real estate prices are dropping faster in Bed-Stuy than in Park Slope, the article argues, the area is ripe for entrepreneurship: commercial rents are lower, attracting new shops such as Therapy Wine Bar or Creative Blossoms. Some of these new businesses are struggling themselves, but the Times points to some optimistic statistics: a 2008 study showing that locals spend $30 million at bars and restaurants outside of the neighborhood (i.e., there is a demand for local venues) and an NYU professor who claims that since residents of Bed-Stuy aren’t as dependent on unstable Wall Street salaries and bonuses as, say, residents of Brooklyn Heights, their spending habits are also more stable. The article does plenty of comparison: Bed-Stuy to Fort Greene, Bed-Stuy to the Upper East Side, Bed-Stuy to Brooklyn Heights. What did you think of it?
Amid a Citywide Slump, a Local Expansion [NY Times]
History, with Hipper Retailing in Bed-Stuy [NY Times]
Photo by Clay Williams
Appraisals, for all their importance in getting a mortgage and buying a home, seem to be rather nebulous. This past weekend, The New York Times ran an article pointing out several gray areas in the art of appraising. First of all, a change in the Home Valuation Code of Conduct that took effect back in May gave banks exclusive power over the appraisal process. The plus side, and intent of the change, is that brokers, builders, and buyers cannot influence the appraisal as much; the down side, according to some appraisers in New York, is that banks are using national appraisal firms that assign appraisers who charge lower feesâ€”i.e., less experienced appraisers who are likely unfamiliar with the local market, something which is essential in New York City’s market of microscopic subclimates. It is common, of course, in a down market for appraisals to come in low, but the combination of inexperienced appraisers and fewer data points due to lower volume might result in inaccurately low valuations. Buffalo News made a similar report about the appraisal industry upstate, and CNN Money reported that the housing industry met with New York Attorney General Andrew Cuomo last week to protest the current Code of Conduct, and the attorney general’s office agreed to consider the matter further. The primary sources for these articles are brokers and local appraisers. We’d like to hear from other players in the game, as well. Any bankers, buyers, or national appraisers out there who want to throw their hat into the ring?
New York Appraisals Get Shortchanged [NY Times]
Tougher Appraisals Make Home Sales Harder [Buffalo News]
Housing Industry to Cuomo: Let’s Work Together [CNN Money]
Photo by Richard Wanderman
The Federal Fair Housing Act was passed 40 years ago, points out the Gotham Gazette, which allows the Department of Justice to prosecute “patterns or practices” of “housing discrimination”, and yet housing discrimination persists, according to the Fair Housing Justice Center, a non-profit advocacy organization. There is a significant dearth of affordable housing, for example, and the sales and rental markets are operated by brokers, some of whom use illegal practices and propagate discriminatory concepts such as the idea that it is okay to set a limit on the number of children. The FHJC gave the Gazette several examples of discrimination based on race (NYC is the fourth most segregated metropolitan area in the U.S. for African Americans, and the fifth most for Latinos), disabilities (such as new buildings that
flaunt flout design requirements for access to disabled people), or income source. In July 2008, for example, the FHJC found that close to 400 posts from 161 different real estate companies on Craigslist discriminated on income source alone, using phrases like “no government programs.” As a solution to these violations of rights, the Center is pushing for better training of realtors and brokers, consistent and flexible enforcement of existing laws, and improved regulations towards marketing practices that will make all available units visible to all demographics.
Housing Bias Persists [Gotham Gazette]
Pretty grim. The Times covers it here and its economics blog has this to say: “It’s still too early to call this the worst recession since the Great Depression. But it’s bad, and it’s still getting worse at a rapid rate.” On a more positive note, a Siena College survey just found that New Yorkers’ consumer confidence rose 3 percentage points last month, while the national rate fell 5 points.
We just got around to reading the cover story of the current issue of The Atlantic Monthly called How the Crash Will Reshape America. One of the article’s central points is that while hubs of intellectual and creative capital like New York will surely suffer in the economic crisis, they will suffer a lot less than second-tier cities, the suburbs or industrial areas and therefore benefit on a relative basis. While there has been much hand-wringing about New York’s reliance upon the finance industry, many other smaller cities, it turns out, are much more reliant: Hartford, Des Moines and Charlotte, to name a few. Rather, New York is an incredibly diverse place which should be well-positioned to reinvent itself faster and more efficiently than other places:
New York is much, much more than a financial center…It is home to a diverse and innovative economy built around a broad range of creative industries, from media to design to arts and entertainment. It is home to high-tech companies like Bloomberg, and boasts a thriving Google outpost in its Chelsea neighborhood… New York is more of a mecca for fashion designers, musicians, film directors, artists, andâ€”yesâ€”psychiatrists than for financial professionals…The financial crisis may ultimately help New York by reenergizing its creative economy…Place still matters in the modern economyâ€”and the competitive advantage of the world’s most successful city-regions seems to be growing, not shrinking…Talent-rich ecosystems are not easy to replicate, and to realize their full economic value, talented and ambitious people increasingly need to live within them…Economic crises tend to reinforce and accelerate the underlying, long-term trends within an economy [like the map of per capita patent creation above]… In this case, the economy is shifting away from manufacturing and toward idea-driven creative industriesâ€”and that, too, favors America’s talent-rich, fast-metabolizing places.
Sounds good so far, right? Here’s how the trends will play out on the American landscape, according to the author Richard Florida:
What will this geography look like? It will likely be sparser in the Midwest and also, ultimately, in those parts of the Southeast that are dependent on manufacturing. Its suburbs will be thinner and its houses, perhaps, smaller. Some of its southwestern cities will grow less quickly. Its great mega-regions will rise farther upward and extend farther outward. It will feature a lower rate of homeownership, and a more mobile population of renters. In short, it will be a more concentrated geography, one that allows more people to mix more freely and interact more efficiently in a discrete number of dense, innovative mega-regions and creative cities. Serendipitously, it will be a landscape suited to a world in which petroleum is no longer cheap by any measure. But most of all, it will be a landscape that can accommodate and accelerate invention, innovation, and creationâ€”the activities in which the U.S. still holds a big competitive advantage.
Sounds like we’re sitting pretty, huh?
How the Crash Will Reshape America [The Atlantic]
$275 Billion Plan Seeks to Address Crisis in Housing [NY Times]
O’s $75 Billion Housing Bet [NY Post]
President Obama Unveils $75 Billion Plan [NY Daily News]
“Mr. [John Tepper] Marlin (former Chief Economist for the City Comptroller’s Office) expects that there will be more defaults on buildings as condominium and co-op owners fail to pay their common charges, and also more sales of foreclosed properties. Rents will continue to dip. There will be longer lines at the grocery store, because fewer people will eat out. And he worries about unrest, citing hard-hit Iceland as a recent example. I’m concerned about people being so desperate that they lose the fear of losing their own lives and they become so desperate that they’re willing to endanger other people’s lives, he said.” NY Times
Feb. 12 (Bloomberg) — Sales at U.S. retailers unexpectedly halted a record six-month slide in January, reflecting higher gasoline prices and more spending on items such as clothing and food. The 1 percent increase followed a revised 3 percent drop the prior month, the Commerce Department said today in Washington. Purchases excluding automobiles gained 0.9 percent. Consumer spending, about 70 percent of the economy, is likely to resume shrinking as the year progresses, according to a separate monthly Bloomberg News survey, capping the longest slide on record. Lawmakers are aiming to shore up the economy with a $789 billion stimulus package that’s designed to create 3.5 million new jobs.
Income levels that would enable a very comfortable lifestyle in other locales barely suffice to provide the basics in New York City, says the the Center for an Urban Future in a new report that merely provides data to back up what all city residents already new. The group estimates that the same quality of life that costs $50,000 a year in Houston will run you $123,322 in the Big Apple; San Francisco is a distant second at $95,489 with LA at $80,583 and Philadelphia at $69,196. In addition, many New Yorkers put up with commutes that double the national average of 25 minutes. One Brooklyn Bridge Park even gets an unnamed reference: “If it wasn’t already clear that the cost of living in New York City is greatly out-of-whack with the rest of the country, it certainly became apparent in early 2008 when a new condo development in Brooklyn Heights began selling individual parking spacesnot apartments, parking spacesfor as much as $280,000.” So it’s no surprise that the report finds that many people have been giving up on New York. In fact, twice as many people with bachelor’s degrees left New York in 2005-2006 than in the prior two-year period. So what’s to do: Among other recommendations, the report suggests diversifying the economy, focus on basic infrastructure and quality of life issues rather than building flashy new projects and increase housing stock that is affordable to the middle class.
NEW YORK (CNNMoney.com) — The U.S. economy suffered its biggest slowdown in 26 years in the last three months of 2008, according to the government’s first reading about the fourth quarter released Friday. Gross domestic product, the broadest measure of the nation’s economic activity, fell at an annual rate of 3.8% in the fourth quarter, adjusted for inflation. That’s the largest drop in GDP since the first quarter of 1982, when the economy suffered a 6.4% decline. Still, the decline was less than the 5.5% drop forecast by economists surveyed by Briefing.com. The fourth quarter plunge followed a more modest decline of 0.5% in the third quarter.
Photo by Atlantic Yards web cam.
Since 2004, $400 rebate checks have been sent out to homeowners courtesy of the Bloomberg administration. Well, no more. The mayor is immediately axing the program, reports the NY Times, to help shore up the expected $4 billion budget deficit. Other quick fixes: raising personal income tax by as much as 15 percent; hiking the city’s portion of the state sales tax by as much as three percent; and charging a nickel for every plastic bag a consumer picks up at a store. “The mayor also detailed $1.5 billion in proposed budget cuts that would affect virtually every agency in city government,” they write. “The measures include closing libraries for a half day, eliminating dental programs and closing a clinic in East Harlem.” Should Wall Street rally and the economy heal, the mayor said, checks will go out again.
Mayor Cancels Rebates for Homeowners [NY Times]
Photo by tienmao.
That’s the subject of a NY Observer piece, which asks what effect Wall Street’s downturn will have on the portion of our population that works in the financial industry, and thus our high-end housing boom; those are the folks responsible for snatching up a lot of the inventory, apparently. “Brooklyn may not be where the top executives or VPs live,” worries one financial industry worker, “but a ton of back office employees live in the borough and will be out of jobs.” Still, the article assumes a relatively optimistic tone. Brooklyn is still a bigger bargain than Manhattan; contractors still maintain a backlog of work; big projects have a long enough time line that the economy could pop back up by the time they get to the offering phase. And apparently we’ve learned our lessons from the city’s last serious downward spiral. As one fellow put it, “I can’t see New York going into this huge kind of 1970s-city-going-to-shit type of thing.”
Wall Street Views From Another Bank [NY Observer]
Keap/Ainslie. Photo by kenyee.
Brooklyn Could Lose 6,000 Jobs, Report Says [NY Times]
Now Hiring. Photo by modernmonk.
Unaffordable NY: Tough Choices at $150,000 [Crain's]
Photo by ultraclay!
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… (more…)
Bloomberg’s Housing Horror [NY Post]