Next Victim in Crashing Market: Affordable Housing
Is New York going to assume Asbury Park’s old moniker, “Beirut by the sea,” so called for the half-built construction projects littering the town? Well, probably not, but now added to the various stalling or halting developments around town are affordable housing endeavors, reports the NY Times. Not all the news is bad — Jonathan…
Is New York going to assume Asbury Park’s old moniker, “Beirut by the sea,” so called for the half-built construction projects littering the town? Well, probably not, but now added to the various stalling or halting developments around town are affordable housing endeavors, reports the NY Times. Not all the news is bad — Jonathan Rose’s East Harlem affordable and market-rate project has secured all its financing, and he thinks he’ll get the money for two more projects soon. “Affordable housing is said to do better than other real estate sectors in a bad economy because government subsidies are available, land and construction costs fall and demand for the apartments rises,” they write. “But because of the toll that the credit squeeze has taken on financial institutions, busy developers like Mr. Rose may be more the exception than the rule.” Even successful projects are plagued by a recurring problem here in New York: there just aren’t enough units to go around. Palmer’s Dock, a building crafted from a former garbage transfer station in Williamsburg, with rents from $398 to $920, saw 13,000 applications for apartments; they have 113 to rent.
Affordable Housing Deals Are Stalling [NY Times]
I love the thought of home prices coming down. At least I will not have to listen to homeowners say how many millions and million dollars their homes are worth
Here is a pbs show about affordable housing that features Rose’s project in Harlem and another one in the bronx.
http://www.youtube.com/watch?v=I3o1cB1RgIY
Benson, MM, this is all very interesting. I know when I was living in Carroll Gardens some Fedders buildings went up. I just could not understand why they didn’t build something with higher ceilings, bigger windows, a profile and footprint that would fit better into the surrounding area, and the AC concealed. They most certainly could have included any extra cost in the price. I think they had a really hard time selling those units.
I think it’s just ignorance on the part of the builders. They don’t know what the market wants. All things considered, Apts & Lofts has done a pretty decent job educating builders about how to build new construction to appeal to their demographic (apparently the single male luxury loft type, not the historic building with family type).
And if the landlords remodeling old buildings could just figure out to use modern Ikea type kitchens and not Home Depot country kitchens, and not to build closets in the middle of rooms, or stain floors pink, already they’d have done a great service to humanity.
The building trades in older cities don’t seem to understand the demographic they’re building for. This seems to be a case where the “market” is not working. There is a demand for a product that is not being addressed at all.
CMU;
BRG and I were discussing “fedders-style” 3 family housing. Typically these homes have three apartments, each at 1000 square feet. Total space is 3000 square feet. Let’s assume the land cost is $70/square feet – which is about right for non-prime Brooklyn neighborhoods- and the developer’s profit is 25%. So, now we are up to $260/square feet, which comes out to $780,000 – which is exactly what many of these homes were selling for (or at least they were selling for this amount prior to the crash).
Prior to the crash, someone in the working class could have put down 10% and swing the mortgage with the help of the two rental apartments.
As to why these type of homes are not built more in “infill” sites closer in, you need to remember three things:
-we are talking private development here. In closer-in areas like Park Slope, the developer can fetch a higher price, and will build more upscale housing, accordingly.
-the land prices are much higher in these prime areas, which throws off the affordability equation above.
-the cost above is for “wood and sticks” construction, which in NYC means Fedders-type homes. Can you imagine the uproar in park Slope if such a home were built??
See this report for further details:
http://www.manhattan-institute.org/html/rdr_04.htm
Am I missing something, benson?
Total costs by your estimate are $156 (does that include financing?) Let’s include 25% profit to be generous. So that’s < $200/ft. A 1000-sq ft 2 br small 3 bed for 200k. Where is that being sold?
And why can’t that be built for a similar price in all the infill lots available closer? Affordable housing needs to be spread out, not ghetto-ized.
Dittoburg, MM is not pulling that assumption out of the air…it’s a safe bet that the demographics of this group are solidly in the entitled class. It’s inference based on experience.
Montrose;
Aw come on, a little criticism never did anybody any harm!! I still think highly of you – you seem to be one of the few serious posters left on Brownstoner (recently alot of threads have degenerated into chat lines).
I’m not asking you and others to supply blueprints. I’m asking you to take a step back and apply some perspective here.
Your post above is too moralistic – and as Dittoburg points out – you are too ready to characterize anyone who criticizes these programs as callous folks who have no regard for the less fortunate.
As I stated above, this City spends an awful lot of resources on housing for low-income folks. SIX HUNDRED THOUSAND folks alone are housed in projects – 8% of the city’s population. When is enough enough?? At what point should the private markets take over? Moreover, any attempt by the private market to build moderate-income housing is roundly criticized by you and others on this site, yet you forget that only 10 years ago, folks would have been doing cartwheels at the thought of any private investment in these areas. Why do folks insist on portraying these small-scale developers in simplistic, moralistic terms – yet no judgements should me made about folks who receive housing subsidies from the state? I ask you: what are the obligations of the folks who receive these housing subsidies?
I am also not moved by the argument that working folks may have to commute for -gasp! – an hour to get to their jobs. So what??? As I mentioned in a recent e-mail, I travel often to Japan, where it is the norm for middle-class folks to travel 1.5 hours to work. Why is there such a sense of entitlement in this city? Where is it written in our Charter that everybody should be guaranteed a place to live, at a price they can afford, within 1/2 an hour of work?
Too much utopianism on these threads!!
Have a great day.
Montrose Morris gets my vote for quote of the day with this comment:
“What I can do, with my ignorance, naivety and idealism, coupled with knowledge of building, history, architecture and urban life, is insist that the status quo is wrong…those bricks and nails don’t have to be configured in an ugly way just because the client isn’t rich. I can see other building projects for modest homes that manage to be attractive, contextual and still on budget…It just isn’t enough of a priority…because it doesn’t have a huge financial reward. That is wrong, and if all I can do is point that out, maybe someday someone will listen.”
Montrose – “Secondly, the people who whine on this site about the fairness of the programs for the lower classes are hardly rags to riches success stories. They have been comfortable their entire lives”
Thats exactly what I’m saying – you are just pulling this assumption out of the air.
Do you remember the article here about a successful work mentoring program, where people started by picking up litter. There were plenty of stories by posters accounting for what jobs they did and how they started off before they got to the comfortable position they are in today, plenty of non-privilege. I’m sure you are not one who would otherwise paint a group of people with one stroke.
Benson, I guess no more Kumbaya moments.
If I had the background and wherewithal to put my money where my mouth is, believe me, I would be the face of affordable housing development. I don’t. I only have my belief that we can do better, and my insistence that those who do have the resources and abilities should do so. I am not an engineer, or a developer, or a city planner. Maybe I should have been. I’m a reader on a blog, so I don’t have to come up with an elaborate plan to satisfy your insistence to put up, or shut up.
What I can do, with my ignorance, naivety and idealism, coupled with knowledge of building, history, architecture and urban life, is insist that the status quo is wrong. Maybe I can’t tell you what each brick and nail costs, per sf, but I can still say with confidence and experience that those bricks and nails don’t have to be configured in an ugly way just because the client isn’t rich. I can see other building projects for modest homes that manage to be attractive, contextual and still on budget.
The ways of the DOB and the city may be Byzantine, no argument there, but determined people, such as PACC, Habitat for Humanity and others, manage to get the job done, and renovate and create affordable housing that is worthy of pride of place. We need to spend less time grousing about the unfairness of housing lotteries, and be about the business of creating enough housing so there doesn’t need to be a competition. It just isn’t enough of a priority, as the needs of those who actually make this city run from day to day, aren’t enough of a priority, because it doesn’t have a huge financial reward. That is wrong, and if all I can do is point that out, maybe someday someone will listen.