If there was ever an example of what it means to “swim upstream in a river” in life or in business…the below article describes it in detail. Despite what is possibly history’s most ambitious and concerted recent effort to protect and expand affordable housing in NYC (led by Mayor Bloomberg)….the City’s total stock of such housing declined over the past 7 years.
This reduction in affordable rental housing is bad news for the City’s lowest income residents, and generally bad news for our society…as housing costs are most families’ single largest expense…and increasing rents without similar increases in earnings….mean the poor continually get “squeezed”….thereby perpetuating a cycle of financial and personal hardship which makes it difficult for families to lift themselves out of poverty into financial stability and growth.
I have been a keen observer of the situation in NYC, as the affordable housing reality on the ground is similar in my hometown of Los Angeles. Here too, affordable housing stock has not kept up with the need for such housing….and the situation has gotten worse (not better) over the past decade.
Not since the end of the 2nd world war – when a lot of the workforce housing that supported the war was converted into affordable housing for lower income families – has affordable housing been created en masse across the USA. And today…I believe history has presented this country and government with another such opportunity…to try to make a big dent in “solving” our affordable housing needs, particularly in high cost urban areas such as Los Angeles and NYC.
As it did back in the 1940’s, the US federal government today either directly or indirectly “owns” or will own a large number of vacant and foreclosed properties. An example of this indirect ownership are the over 100,000 foreclosures estimated to currently be on the balance sheets of Fannie Mae and Freddie Mac. In fact, some have estimated the total “shadow inventory” of current and future foreclosed properties (not yet listed on the market) to be as high as 7 million properties nationwide.
Many housing market observers, myself included, believe this shadow inventory presents significant ongoing risks to the housing market. In other words, as this shadow inventory turns into actual properties listed for sale on the market, it is likely to drive imbalances in real estate demand vs. supply…thereby resulting in declining home prices…which will present risks to millions of homeowners as well as the broader US housing and economic recovery.
Given the above, perhaps it makes sense for the government to come up with a creatively designed program (i.e., one that minimizes/eliminates taxpayer burden) to convert a large number of the properties they either own or will own (directly or indirectly) into affordable housing? Fannie Mae and Freddie Mac REO’s are one good candidate for this type of policy/strategy…as are REO’s owned by the FHA and other governmental agencies.
If we could design the right program and policy to achieve this, it could have enormous social and economic benefits for the US….including helping move the ball forward on a key goal of de-concentrating poverty outside traditionally large, generally poorly maintained, and often crime-ridden public housing developments (aka “projects”) nationwide.
Is this just a dreamer’s dream…or can and will it become reality?
As City Adds Housing for Poor, Market Subtracts It
By MANNY FERNANDEZ; October 15, 2009
Mayor Michael R. Bloomberg is closing in on a milestone: building or preserving 165,000 city-financed apartments and houses for low-, moderate- and middle-income families, the goal of a $7.5 billion housing plan he announced in 2002 and expanded in 2005.
It has already financed the creation or preservation of 94,000 units, including 72,000 for low-income households, city officials say.
But those efforts have been overwhelmed by a far larger number — the 200,000 apartments affordable to low-income renters that New York City has lost over all, because of market forces, during the mayor’s tenure.
The shrinking supply of these apartments, highlighted by researchers at New York University, illustrates not only the increasing strain that housing costs have had on this city of renters, but also the limits of the mayor’s success in providing the city’s poor with reasonable places to live. While the mayor’s plan has put thousands of low-income families in new or rehabilitated buildings and helped stabilize neighborhoods, it has been nearly drowned out by the twin waves of gentrification and rent deregulation.
“We’re losing units even with additions to the stock under the mayor’s housing plan,” said Victor Bach, a senior housing policy analyst for the Community Service Society, a nonprofit antipoverty group, and a member of a panel that advised the Bloomberg administration on housing in 2002. “I’m not knocking the plan. I’m just saying it hasn’t done much to stop the hemorrhaging of lower-rent units across the city.”
Including public housing, the number of apartments considered affordable to low-income households — those earning less than 80 percent of the city’s median income, or less than $37,000 — decreased to 991,592 from 1,189,962, a drop of nearly 17 percent, from 2002 to 2008. About 42 percent of the city’s households fit in that income category in 2008.
The data were supplied by the Furman Center for Real Estate and Urban Policy at New York University, which analyzed the city’s Housing and Vacancy Survey from 2002, 2005 and 2008. The center and other housing experts consider an apartment affordable if it costs no more than 30 percent of a family’s income, or about $925 a month for a family earning $37,000.
Although the numbers present a gloomy picture, they did contain a glimmer of hope. The worst years were between 2002 and 2005, when the city lost affordable apartments at the highest rate of the mayor’s tenure. In the next three years, as the mayor’s plan took hold, the city actually gained about 8,000.
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