- REAL ESTATE EDUCATION
- GIVING BACK
Encouraging signs, tough challenges ahead for housing market
August 22, 2014
By Steven Spinola
Mayor Bill de Blasio’s bold and aggressive new housing plan, “Housing New York: A Five-Borough, Ten-Year Plan,” calls for the creation and preservation of 200,000 units of housing, including 80,000 new affordable housing units.
A rendering of Pacific Park, which is set to bring 2,250 affordable apartments to Prospect Heights
As we work together with government to tackle the housing crisis, there are both reasons to be optimistic as well as steep challenges ahead.
The first challenge is to address the needs of our growing population.
As the Columbia University’s Center for Urban Real Estate’s Vishaan Chakrabarti and Jesse Keenan projected in their report last fall, “NYC 2040: Housing the Next Million New Yorkers,” the city will need to create approximately 20,000 more housing units per year for the next 0 years to accommodate the population growth.
This increase in housing production will meet new population demand, but not increase our vacancy rate or increase our supply to lessen price pressure or bring down rents.
The other challenge is to achieve the level of housing production we experienced prior to the financial crisis at the end of 2008.
Since then, New York City has been slow to return to the pre-recession housing production levels of 2005 through 2008. The Wall Street Journal’s recent look at the number of new housing units permitted in San Francisco, Seattle, Boston and Washington D.C. shows that new residential permits in 2013 have matched or exceeded their pre-recession peak year for new permits in these other cities.
A growing population and a decline in production will place greater pressure on the city’s housing market. This will make the task of producing more affordable housing more urgent and more difficult.
For housing production to reach a level suitable for addressing the housing shortage that our city is experiencing, we need to return to pre-recession production levels. In the first decade of the 21st Century we were permitting more than 23,000 units a year, and have been permitting under 20,000 units since 2009.
However, the permit information for the first six months of 2014 offers an encouraging sign. The total number of permits is 2,500 more than the first six months of last year.
If we can match 2013’s pace of housing production for the second half of the year, the totals for 2014 will exceed the annual average we saw during the housing boom of the last decade.
This level of production must be sustained for a decade or more if we want to build 200,000 total units in ten years. Nevertheless, the priority that the de Blasio administration has placed on addressing the housing and affordable housing crisis; the comprehensiveness and thoughtfulness of their housing plan; and the knowledgeable and experienced staff in City Hall and the planning and housing agencies are good reasons to be optimistic that we can effectively address our housing and affordable housing problem.
In other REBNY news:
August 20 from 9:00am – 10:30am is REBNY’s Residential Ethics Course for New Members, a non-credit course required for new REBNY members. To register, visit REBNY.com, or contact ResidentialEthicsCourse@REBNY.com.
September 3 from 12:00pm – 2:00pm is the next meeting of REBNY’s Commercial Retail Committee at the Cornell Club. For more information, contact Desiree Jones at DJones@REBNY.com.
September 4 is the Lower Manhattan Office Building Luncheon. The Luncheon takes place from 12:00pm – 2:00pm, at Delmonico’s, and is open to Lower Manhattan Committee members and their guests. For more information, contact Desiree Jones at DJones@rebny.com.
September 9 is our Residential Breakfast Club Seminar. The seminar takes place from 9:30am – 11:00am in the Mendik Educational Center, and is free for REBNY members only. Registration is required. For more information, contact Yesenia Perez at YPerez@REBNY.com.
September 11 from 12:00pm to 2:00pm is our Residential Sales Council. This event is open to all REBNY Sales Agents and Broker C members, and provides an opportunity to be more active and share ideas concerning business practices and examining market trends. Meets monthly in the REBNY Boardroom. For more information, contact Yesenia Perez at YPerez@REBNY.com, or Angela Donovan at ADonovan@REBNY.com.