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The City's housing need
October 23, 2013
Through his multi-billion dollar New Housing Marketplace Plan, Mayor Bloomberg has created or preserved almost 95% of his goal of 165,000 affordable units. As impressive as that initiative was, we must keep in mind that the next Mayor needs to do even more to expand the City’s stock of affordable and market rate housing.
New York City has faced a housing emergency for the last half century. Our vacancy rate remains among the lowest in the country because our ability to produce housing has failed to keep pace with our shrinking household size and growing population. If our city’s economic prosperity is to continue and if we are going to do more for those New Yorkers who are still struggling despite the City’s recovery, policymakers need to recognize the difficulties and high cost in producing new housing.
Simply to meet the needs of our growing population the City will need to build approximately 400,000 units over the next two decades according to both a housing report prepared by Columbia University as well as our separate analysis. Essential to meeting this demand for new housing is the need to control housing costs and to increase densities in suitable locations to enhance affordability and to expand production.
According to a 2010 report by the Association for Neighborhood and Housing Development Inc., the cost to build one unit in a 75 unit multi-family building is approximately $300,000. The monthly rent necessary to cover the debt service, equity return, operating expenses, and real estate taxes for this one apartment would be more than $2,150. At this rent level a household would need approximately an annual income of $86,000. This is well above the approximately $50,000 median income for New York City renter households.
A successful housing plan will need to address rising real estate taxes as well as construction and land costs. In addition to pure demand, the rising cost of land is also due in part to restrictive land use regulations, including landmark designations, which drive up prices in many areas of the City. The housing boom of the early part of the 21st century and rising condominium prices drove up labor costs and land costs. Further, property taxes continue to disproportionately burden income-producing properties, with many rental buildings being taxed at 33% of their gross income.
The next administration will need the help and input of our industry, our friends in labor and the financial world to find solutions to this critical problem of affordable housing. REBNY stands ready to work together with the next Mayor towards creating the needed 400,000+ housing units our residents and future residents require.
In other REBNY News:
The REBNY Residential Brokerage Division Deal of the Year Charity and Awards Gala Committee celebrates their 25th anniversary at this year’s gala. The 2013 Deal of the Year will be awarded along with recognition of all twenty-five years of past winners. The event will begin at 6:30pm and end at 11pm on Thursday, Oct. 24th at the Pierre. For more information, contact Jeanne Oliver-Taylor at firstname.lastname@example.org.
The New York City Housing Authority (NYCHA) requested we remind REBNY members of the Request For Expressions of Interest (RFEI) they issued for 14 development sites on 8 developments in Manhattan, south of 110th Street, and that proposals are due by November 18, 2013. You may download needed documents by going to www.nyc.gov/nycha and clicking on “Preserving Public Housing.” Then click on “Land Lease Opportunity” and then “RFEI”. For more information, contact REBNY’s Michael Slattery at email@example.com.
The REBNY Members’ Luncheon will be held on Tuesday, November 19, 2013 in the Grand Ballroom of the Roosevelt Hotel (new location) from 11:45am to 2pm. Its “trends & observations” discussion will overview sales, leasing, financing, and retail markets for the remainder of 2013 as well as expectations for 2014. Mary Ann Tighe, Chief Executive Officer of CBRE, will moderate a panel featuring Robert Futterman, Chairman and CEO of RFK, Neil Goldmacher, Vice Chairman and Principal of Newmark Grubb Knight Frank, Woody Heller, Executive Managing Director of Studley, and Simon Ziff, President of The Ackman-Ziff Real Estate Group. Tickets are $90 per person, to register please visit the events calendar on REBNY’s website. For more information, contact Desiree Jones at firstname.lastname@example.org.
Please save the following date: on Wednesday, Nov. 20th, Mist Harlem Events will host the Upper Manhattan Roundtable Discussion from 5:30-9pm at 46 West 116th Street.
The Commercial Division Holiday Luncheon will be held on Tuesday, December 17, 2013 in the Vanderbilt Room at the Waldorf Astoria Hotel from 12:00pm-2:00pm. Jonathan D. Gray, Global Head of Real Estate of the Blackstone Group, will be the guest speaker. Tickets are $95 per person, to register please visit the events calendar on REBNY’s website. For more information, contact Desiree Jones at email@example.com.