Re-examining the Need for 421-a Subsidies
While we weren’t down with their methods, the folks from ACORN who stormed the Beacon in Dumbo a couple of weeks ago did have a point: It’s kinda silly that development subsidies put in place to stimulate building in the depths of the seventies market funk are still being used to put up luxury condos…
While we weren’t down with their methods, the folks from ACORN who stormed the Beacon in Dumbo a couple of weeks ago did have a point: It’s kinda silly that development subsidies put in place to stimulate building in the depths of the seventies market funk are still being used to put up luxury condos in fancy neighborhoods in the biggest real estate bull market ever. Ariella Cohen digs a little deeper on the subject in this week’s Brooklyn Papers and finds that, in addition to the Beacon (which she reveals is 75% sold!), there are another 28 buildings currently in construction in the borough’s more upscale nabes that are benefiting from the same 15-year tax break. Except for the recently rezoned Williamsburg and Greenpoint waterfront, these subsidies carry no requirement to include affordable housing.
Dated Perks Subsidize Luxury Condos [Brooklyn Papers]
What we are debating is (slight topic shift) what this new Fed language means for the housing market. Sounds like one and done is done and we are looking at 1-2 more with the Fed now taking an eye to comodities and housing prices.
What are we going to see happen now to that beautiful house on the park? I’m trowing out there: NYC prime housing goes down 15% this year.
But the reality is this: There are tons of affordable places to live in NYC. I just don’t understand what you all are debating.
These folks here keep quoting their freshman econ textbooks theories instead of dealing with real world economics. Get a life. Deal with reality.
Dave,
We are at a record in permits for the last 25 years or so. But, if you look all the way back to the turn of the century you will see that we are still producing a fraction of the housing produced before the rental regulations and then the rezonings set in.
“And since the demolition clause was added to the rent stabilization laws, we’ve got record demo’s going on.”
Praise the Lord.
“Labor and materials is the biggest hurdle to affordable construction. ”
That is simply not true. There’s a building with units on offer somewhere on Park Ave where they had to pay each RS/RC tenant 1m to leave. Those costs dwarf materials and labor. FYI, the cost is 350/sqft, which is only a fraction of the current sale price of 1k+/sqft.
“Zoning is strict in NYC?”
See all of the other threads on this board re:downzonings.
RC/RS tenancies have made it extremely difficult to add new supply. By far that is the major limiting factor.
As far as the demolition clause, honestly I don’t know that much about it. My understanding is that is has existed since the RS laws in the 70’s, but that only recently has it been used. I think a court case went the right way and now it’s being explored as a possibility. If anyone has more info, I’d love to know.
except, anon 1:48, that the rich places are growing at a much faster rate than the affordable ones, and are encroaching on the affordable areas. And a lot of the neighborhoods you name are gentrifying and the prices are hardly cheap.
There are huge swaths of ‘affordable’ (read ‘cheap’) housing in NYC. Sunset Park, Gowanus, Greenwood, Bay Ridge, East New York, Lefferts Gardens, Bed-
Stuy, Bushwick, Canarsie, Dyker Heights, Astoria, Long Island City, Jackson Heights, etc, etc, etc, etc. The population is growing. That means the rich part of town is getting bigger, so is the not-so-rich part of town. There are plenty of places for everybody to live. This is a stupid blog string…
There are huge swaths of ‘affordable’ (read ‘cheap’) housing in NYC. Sunset Park, Gowanus, Greenwood, Bay Ridge, East New York, Lefferts Gardens, Bed-
Stuy, Bushwick, Canarsie, Dyker Heights, Astoria, Long Island City, Jackson Heights, etc, etc, etc, etc. The population is growing. That means the rich part of town is getting bigger, so is the not-so-rich part of town. There are plenty of places for everybody to live. This is a stupid blog string…
Actually I also think the car example is a bad one for the opposite reason, car manufacturers are saddled with tons of regulations, crazy taxes as well as litigigation costs; and as a result they too (in the US) tend to focus on only the higher end – the average new car is now just over 30,000 and the typical new car buyer makes +60Gs a year.
The real difference is that virtually everyone agrees with the regulations imposed on car manufacturers (due to pollution and saftey concerns) and cars depreciate so that lower economic groups can buy a perfectly good used car.
Iceberg- I didn’t say “should” build. I stated that they do build to maximize profits. So no matter the rules, they will go for the most profits. That’s the way businessmen think. And the proof is that very little affordable housing is being built even with 421(a).
Car styles change every year- their expense is one of their own making and they design and sell cars with the huge amounts of competition in mind. They are fighting for your dollar- they have to appeal all across the board. And they sell all over the world. That makes for some vast differences between cars and real estate. While it’s a nice analogy on the surface, it would hold up under scrutiny.
I can’t imagine what aversion you are referring to. Have you looked around this city lately? And the fact is, as they say, all chiefs and no indians is a recipe for disaster. Yes- pity the poor rich.