Why the Plan is Controversial

There are a few main criticisms of Mayor Adams’ plan. First, critics describe the policy as a human rights violation that enables law enforcement to arrest and forcibly detain individuals with mental illness, even if they aren’t an active danger to those around them.

Rising crime and safety concerns are major factors behind Mayor Adams’ decision.

Adams, for his part, responded to his critics by framing the new policy as the most compassionate and humane way of helping people who have chronic mental illness conditions and challenges with substance abuse.

“As a city, we have a moral obligation to support our fellow New Yorkers and stop the decades-long practice of turning a blind eye towards those suffering from severe mental illness, especially those who pose a risk of harm to themselves,” Mayor Adams said at a press conference.

Critics also argue that Adams is putting too much money and emphasis on enforcement instead of addressing the root causes of chronic homelessness among people with mental illness. Adams once again disputed this notion.

“If you cannot take care of your basic needs and you are a danger to yourself- that is the small group that we are talking about,” Adams said in a radio interview. “You will be taken to the hospital where a mental health professional would make the determination on what the next steps.”

There’s also the issue of transparency. Adams said that his administration may not be able to report how involuntarily hospitalized patients are treated due to HIPAA laws and other patient privacy laws. However, activists say that the only way the government can execute the program ethically is through complete transparency.

“We want to know the length of stay, I want to know whether they’re admitted, whether they’re not admitted, whether they’re medicated, not medicated, whether they’re connected with services, what services, for how long, whether the city is finding housing for them,” NYCLU Executive Director Donna Lieberman said in an interview with a local news station.

Are There Enough Hospital Beds?

In the same interview, Lieberman showed concern regarding the new policy’s impact on New York’s hospital system. She argued that there aren’t enough hospital beds to meet the demand.

“It’s like potentially blowing up the whole barn because the mayor is proposing, by his own words, to sweep thousands of people off the streets into the already overburdened hospital system,” Lieberman said. “That means that people who want to go to the hospital for care won’t have any place to go.”

Right now, it’s unclear what the Adams Administration plans to do regarding a shortage of psychiatric hospital beds. DailyMail reported that Adams has an agreement with an undisclosed number of private hospitals to provide psychiatric beds and that Kenneth Raske, president of the Greater New York Hospital Association, supports the mayor’s plan. However, Raske admitted that the new policy would be hard to implement and that there would need to be an expansion of psychiatric beds in the city.

Is Mayor Adams’ New Policy a Blast From the Past?

Critics argue that Mayor Adams’ new plan is reminiscent of former Mayor Rudy Giuliani’s homeless policies that heavily emphasized enforcement over treating the root causes. Giuliani emphasized involuntary psychiatric commitment for the mentally ill during his tenure, according to The New York Times. However, he took enforcement further than that by threatening arrest for any homeless individuals who refused housing or shelter.

Critics of Giuliani’s homeless policies argue that his initiatives didn’t address the root causes of homelessness or provide long-term solutions. Meanwhile, proponents of his policies argue that he made the city much safer by removing dangerous individuals from the streets.

New York City’s crime rate declined considerably during Giuliani’s tenure from 1994 to 2001. Crime incidents in New York fell 41% from 1994 to 2002, the year after Giuliani left office. However, crime nationally fell 36% during that time, so there may not be enough evidence to prove whether or not his “tough on crime” policies made the city safer.

Mayor Adams’ policy has a legal hurdle to jump before officials can implement it. About a week after the announcement of his new policy, homeless advocates filed a lawsuit arguing that the involuntarily committing mentally ill New Yorkers who don’t pose a risk to others violates their constitutional rights.

The post New York Plans to Involuntarily Hospitalize Mentally Ill People Despite Challenges appeared first on CitySignal.

New York City FC currently plays at Yankee Stadium, which isn’t optimally configured to host soccer matches. Overall, this is a mutually beneficial agreement for the city and the team, as a couple of main components of this stadium deal and development will help the community. 

The Largest All-affordable Development in Decades 

Once the 2,500 affordable apartments by the new stadium are complete, it will be the largest all-affordable development in New York City since the 1970s. Eric Adams, who threw his support behind the stadium deal, praised the future development. 

“This is exactly the kind of historic work we must do to tackle the housing shortage at the root of our affordable housing crisis,” Mayor Adams said in a press conference. 

The Stadium Will be Privately Funded

Ultimately, the taxpayers of New York are winners in this deal, as the city and state didn’t allocate any money to fund the new stadium other than property tax breaks for the stadium and city-funded infrastructure upgrades. Other than that, New York City F.C. will fully pay for the construction of the $780 million stadium. New York City F.C. will also pay the city up to $4 million per year in rent to lease the city-owned land where the team will build the future stadium. 

News of New York City’s future privately-funded stadium comes after Governor Kathy Hochul approved a deal that would use $850 million in taxpayer money to help the Buffalo Bills fund a new $1.4 billion stadium in the Buffalo suburbs. The $850 million in taxpayer money represents the largest ever public subsidy for an NFL stadium. 

The agreement is highly controversial since Bills owner Terry Pegula has a net worth of roughly $6.7 Billion. However, proponents of the deal argue that the Bills would have left Western New York for another market if they didn’t receive public funding for their new stadium. 

The Latest Addition to an Entertainment Hub

Stadiums have a reputation of spurring development in urban neighborhoods with access to public transit. For example, when the NY Red Bulls built their soccer stadium in Harrison, NJ, the city experienced an uptick in new development. The city, which sits adjacent to Newark, welcomed the Red Bulls to the area, as the stadium was the anchor for a $3.5 billion redevelopment plan. 

Since 2010, the city has transformed the formerly industrial neighborhood around Red Bull arena into a growing and vibrant neighborhood. Harrison Mayor James Fife explained the stadium’s impact when speaking to a local news outlet in 2019. 

“Oh I would say yes, we’re in transition. We have the new part and the old part, and we’re trying to get them together,” he said. “We have about 7,000 units of housing, and there’s like a half million square feet of retail, restaurants, things like that are going to be going up in the near future.”

With the addition of New York City F.C.’s new stadium, the city hopes to transform the Willets Point section of Queens into a vibrant neighborhood and a sports and entertainment hub. In addition to the soccer stadium, the area already has Citi Field and the U.S.T.A. Billie Jean King National Tennis Center, host of the U.S. Open. There are also rumors that Mets Owner Steven Cohen could open up a new casino near Citi Field.

The post New York City FC to Build New Stadium Next to Citi Field in Queens  appeared first on CitySignal.

Mayor Eric Adams made addressing homelessness and affordable housing a central part of his campaign and early mayoral tenure. For Adams, building more supportive and affordable housing units was and continues to be a top priority. In an interview with radio host Brian Lehrer, Adams spoke about why it is so important to provide housing for New Yorkers living on the street.

“When I looked at some of those encampment sites — some of them I visited at one, two, three in the morning — looked inside, talked to people who are homeless, I saw people living in human waste. Drug paraphernalia, no showers, no clean clothing, living like that. That is not dignified, it is not acceptable”, Adams said.

Despite efforts to construct and build comfortable, affordable housing units, many occupants experience poor living conditions once they move in. This year, RentHop found that as rental prices decrease, heating violations increase, meaning those in lower-priced units are more likely to experience extreme cold.

Building affordable and supportive housing is the main solution to ending chronic street homelessness, but new city data indicates 2,585 vacant supportive housing units in NYC. Reportedly, the number of vacant supportive apartments has doubled since July, when about 1,100 supportive housing units sat vacantly.

Filling supportive housing units is just as big a challenge as building them in the first place. In January 2022, 3,400 people lived on the streets and subway stations of NYC. If all of the vacant supportive units were filled, 75% of those individuals would be in housing.

So why are there so many vacant supportive housing units in The Big Apple? Bureaucracy and red tape may be the most significant factor.

Getting access to affordable housing is difficult

The application process to acquire an affordable housing unit can be difficult. There is extensive paperwork, a lengthy approval process, interviews, multiple rounds of mental health evaluations, and a waitlist. Even after families and individuals receive approval for supportive housing, most do not actually receive housing. According to the New York Times, between July 2021 and 2022, 7,400 individuals or families were approved for supportive housing, but only 16% of them received an apartment. Some of the 16% didn’t even move in.

The most startling statistic? Only 16 people in that time frame moved into supportive housing from the street and subway stations. The application process for housing isn’t accessible for the most vulnerable New Yorkers living outside. Mayor Eric Adams previously promised to cut the red tape and make the application process more accessible and streamlined, but it hasn’t worked so far.

Efforts to build more affordable housing units continue to stall, decreasing the inventory for newer, up-to-date units that could comfortably house more potential renters. Combine a lengthy application process with lower-quality apartments where renters complain about heat, condition, and accessibility, and the city enters the current situation where too many units sit vacantly.

“How do you have a vacant apartment, when you need people to be in the apartment, and you have so much paperwork that they can’t get in the apartment?” Adams said. “That is not how I’m going to run this city.”

The post Why 2,600 Supportive Housing Units Sit Vacant in NYC appeared first on CitySignal.

Home prices increased nearly 15% from April 2020 through the end of the year, and another 18% in 2021. Collectively, home prices appreciated 40% between April 2020 and April 2022. 2021 actually had the highest level of existing home sales since 2006, the height of the previous homebuying boom.

As a result, the number of people working in the real estate industry exploded. For some context, loan processor employment increased 23% from Q3 2020 to Q3 2021 as companies scrambled to meet the growing mortgage demand.

However, 2022 has not been as friendly to the real estate industry. Rapidly rising home prices, coupled with high mortgage interest rates, greatly reduced homebuying and mortgage demand. After a 15-year high for home sales in 2021, existing home sales fell 23.8% from September 2021 to 2022.

Mortgage applications were also way down from a year prior, falling 42% from October 2021 to October 2022 to a 25-year low. During the same period, refinance applications were down a whopping 86%.

“The ongoing trend of rising mortgage rates continues to depress mortgage application activity, which remained at its slowest pace since 1997,” Joel Kan, Vice President and Deputy Chief Economist at the Mortgage Bankers Association, said in a statement.

Widespread Industry Layoffs

After a recent jobs boom, the number of loan originators or loan processors has been down 10% since the beginning of 2022. According to reporting from NBC News, there are about 1.6 million realtors, but that number could decline by 25% come 2025 or 2026 due to decreasing homebuying demand.

Many major real estate firms will have reduced their workforce in 2022. In July, RE/MAX announced that 17% of its staff, or 120 employees, would be let go by the end of the year. Wells Fargo began reducing their mortgage staff in April and expects more layoffs shortly as mortgage originations at the firm are down an astonishing 90% from a year prior.

In October, Zillow laid off 300 employees, while Realtor.com laid off an undisclosed number of employees in September. Compass, a large real estate brokerage, also announced that they were going through with a round of layoffs in September.

Layoffs from many prominent real estate brokerages and mortgage firms reflect a tightening housing market with declining demand. Unaffordable home prices, high-interest rates, and low housing inventory will keep homebuying and mortgage demand down. As a result, economists predict home prices will decline substantially in 2023. For example, Moody’s Analytics predicts that home prices will fall 10% next year.

The post Large Real Estate Firms Reduce Workforce as Homebuying Demand Cools appeared first on CitySignal.

Home prices rose to new highs during the pandemic. As prices skyrocketed, increasing scrutiny into realtor commissions followed suit. CitySignal previously reported on the 2021 Department of Justice (DOJ) investigation into realtor commissions and fees in the United States. There was a similar federal investigation into broker commissions in Canada shortly after the American investigation commenced.

The DOJ investigation alleged that brokerages and realtor associations made commission rates less competitive through price-fixing. As an example, realtors often steered buyers away from homes listed with low commissions by falsely claiming that the property is overpriced, that the seller won’t negotiate on the sales price, or other potentially fraudulent claims. The federal investigation could potentially lead to an effective net reduction in commission structures. A new report details how this could become a reality.

NYC Realtor Commissions are “an Anomaly”

Real estate commissions for buyer agents are three times higher in Manhattan than in southern and eastern Brooklyn, according to new reporting from the Consumer Federation of America (CFA), a consumer watchdog group. The report “Diverse Real Estate Commissions: The New York City Residential Brokerage Anomaly”, points out some peculiarities in the way New York establishes real estate commission rates.

The main goal of the report was to investigate why the Brooklyn MLS, which operates in Southern and Eastern Brooklyn, could operate with a median 3% realtor commission fee and turn a profit. In fact, buyer agents who operate in the Brooklyn MLS only receive a median of 1% commission.

The report’s author, Stephen Brobeck, refers to the NYC realtor commission structure, and especially the Brooklyn MLS, as an anomaly since nationwide realtor commissions consistently average 5-6% nationally. He reviewed 6 service areas in the NYC area, all with different commission rates. The table below represents the average commission rate for buyer agents in the six listing areas the report analyzed.

Instead of having one uniform MLS, there are three main listing services in the New York City area, each with its own rules and mandates regarding commission rates. The report notes the significance of this phenomenon, as each listing service experiments with different commission and service structures. The three main listing services, along with their commission structures and rules, are the following:

• The RLS (Residential Listing Service), formed by the Real Estate Board of New York (REBNY), operates in and commands the vast majority of home sales in Manhattan and the wealthy brownstone areas of Brooklyn closest to Manhattan, with possible plans to expand into other areas of Brooklyn. Commissions for homes sold through the RLS have 5-6% commission rates, with a requirement that half of commissions go to the buyer agent.
• The OneKey MLS is affiliated with NAR and dominates sales in all areas outside Manhattan and Brooklyn. It doesn’t require buyer agent compensation to be the same as the listing agent’s commission, but it does conform to the NAR rule that buyer brokers receive an offer of compensation. If the buyer agent doesn’t receive compensation, the seller’s agent can’t submit a listing.
• The Brooklyn MLS operates predominantly in southern and eastern Brooklyn, and succeeded from the MLS associated with the National Association of Realtors (NAR) to establish their own rules and regulations. The Brooklyn MLS does not require brokers to offer commissions to buyer brokers. Median commissions are 3%, while buyer agents get 1%.

Main Conclusions of the Report

The Consumer Federation of America’s (CFA) 20-page report on commission rates in the NYC area isn’t exactly the most exciting read. However, anyone who wants to sell or buy a home nationwide should pay attention to the conclusions of the report.

The Brooklyn MLS is an anomaly, as listings sold through the service average a median 3% commission, compared to the national median of 5-6%. The report’s author Stephen Brobeck concluded that the Brooklyn MLS proves that realtors can charge a lower commission rate than the typical 5-6% and still make a profit. Most importantly, the Brooklyn MLS is able to charge low commission rates partially because buyer broker commissions aren’t required and are typically low when included.

The Brooklyn MLS operates in areas of Brooklyn that have some of the lowest home prices in NYC, yet agents there can still turn a profit. Home prices in New York City are high but are the lowest in areas with the lowest commission rates.

Brobeck also concluded that “the presence of just one MLS with low commissions in an area can drive down rates in other MLSs operating in the same or nearby areas.”

“The New York City residential real estate market shows that some rate competition among brokers and agents is possible,” Brobeck added.

In the report, Brobeck advocated that a commission structure similar to the Brooklyn MLS be copied on a national level and even called for a complete ban on buyer broker commissions.

“The NYC market shows that when listing agents are not required to offer non-negotiable commissions to buyer agents, rates decline,” Brobeck said. “However, when these commissions are required, and listing agents must provide equal compensation to buyer agents, rates remain high.”

“Uncoupling rates would likely stimulate not only greater rate competition, but also needed experimentation with different rate and service models,” Brobeck concluded.

In short, banning buyer broker commissions would reduce commission rates. Dr. Panle Jia Barwick, a professor in the department of economics at Cornell, came to a similar conclusion.

According to Dr. Barwick’s research, if buyer broker commission rules were eliminated, services would become more competitively priced since buyers would have to pay their agent’s commission fee. They could negotiate the rate, or even elect to go without a buyer’s agent if desired. Sellers would also have the power to negotiate rates with their listing agent. Other countries like Australia and the U.K. have similar rules in place. The change could reduce typical commission rates by one to two percent over a couple of years, according to Dr. Barwick.

Can Home Sellers Negotiate a Lower Commission Rate?

CFA encouraged NYC consumers, especially those who list their property under REBNY, to attempt to negotiate lower commission rates.

“In most instances, those selling homes in Manhattan are being ripped off by high commission rates,” Brobeck said in the report. “On the sale of a $1 million condo, agents rarely deserve $60,000 in compensation, the price of two new economy cars or one expensive one.”

Unfortunately, consumers have very little power to negotiate lower commission rates unless they have a highly sought-after property. However, it’s possible that realtor commission structures could change in the future, and allow consumers greater negotiating power in the process.

The post “An Anomaly”: What the Nation Can Learn From Realtor Commissions in NYC appeared first on CitySignal.

According to a report from the state comptroller, New York State has the lowest homeownership rate in the nation as of the second quarter of 2022, with only 53.6 percent of state residents owning a home. Nationally, the rate was 65.8 percent. West Virginia had the highest share of homeownership at around 75%.

The low homeownership percentage in New York state is due to expensive home prices and the high prevalence of renters in New York City, home to around 40 percent of the state’s population. Homeownership rates are the lowest in the Bronx and Manhattan, at 20 percent and 24 percent, respectively. Rates in Brooklyn and Queens were 30% and 45%, while Staten Island beat out the other four boroughs at 69%. On Long Island, both Nassau and Suffolk counties had 81% homeownership rates.

Counties in NYC had low homeownership, largely due to the high percentage of multifamily housing in the city. In 2020, multi-family homes (with 10 or more units) were the most common housing type in Manhattan (90 percent), the Bronx (68 percent), Brooklyn (42 percent), and Queens (36 percent).

New York state also has a larger racial and ethnic homeownership gap than the nation as a whole. In Q2 2022, homeownership rates were 67 percent for white households, 52 percent for Asian households, 34 percent for Black households, and 29 percent for Hispanic households.

The disparity in homeownership between white and black households in New York (33%) is only slightly higher than the national average (29%). The disparity between white and Asian households in the state is 15%, compared to 10% in the nation as a whole. Meanwhile, the disparity between white and Hispanic homeownership in New York is 38%, much higher than the 22% national average.

Asian, black, and Hispanic New Yorkers are more heavily concentrated in NYC. This doesn’t explain the entire disparity but helps explain why the state’s disparity is higher than the nation as a whole.

Besides building generational wealth and economic stability, homeownership is beneficial for several social reasons. The comptroller report points out that “homeownership has social benefits that include higher rates of neighborhood stability, civic participation, and community engagement, as well as better maintained housing stock and greater housing security.”

The report points to historical practices of redlining and racial steering as contributing factors to racial disparities in homeownership in New York and across the nation.

The post New York State Has the Lowest Homeownership Rate in the Nation: Report appeared first on CitySignal.

The report forecasts construction activity in NYC for the remainder of 2022 and the end of 2024. It predicts that construction spending will reach a record $86 billion in 2022, a 19% increase from 2019. This signals a strong comeback in a city badly hurt by the pandemic and subsequent economic restrictions.

However, despite the record amount of construction spending, the total number of housing units forecasted to be built over the next three years is nowhere near enough to keep up with demand. The city must build 560,000 housing units between 2022 and December 2030, or roughly 62,000 housing units per year. The report estimates that NYC will only construct 30,000 housing units annually through 2024, only half of what the city should be building.

The New York Building Congress cites a lack of industry labor as one of the problems keeping housing production down. Construction employment in New York will total 139,000 jobs in 2022, compared to 161,183 jobs in 2019. With an expected surge in construction demand, the industry must recruit enough workers to fill the need for more housing development.

“City of Yes” Zoning Reforms

During a presentation on October 17, the NYC planning commission detailed its reforms to allow and incentivize developers to build more market-rate and affordable housing. Proposed reforms include adding more housing in low-density commercial districts and allowing residential units to be built on top of ground-floor retail in these districts. Another proposal includes removing minimum requirements for apartment sizes so that developers can build smaller (and more affordable) studio apartments.

The Adams administration and planning commission also want to make it easier to convert old office space or hotels into residential units. Other proposals include the following:

• Allowing any residential development with affordable housing to be larger than market-rate buildings. Essentially, this incentivizes developers to construct larger buildings with more affordable and market-rate apartments.
• Reducing parking requirements for new residential developments. The reduced parking would allow for more space for residential development, especially in the outer boroughs and neighborhoods where car ownership is more common.
• Building housing on top of single-story churches.

Ultimately, the NYC planning commission hopes to incentive more housing development, but also a greater diversity of units, including very small units for single professionals.

“We know that a lot of people in New York City want to live alone but can’t,” John Mangin of the City Planning Department’s housing division said during the October 17 meeting. “We force a lot of these folks … to find roommates and take family-sized apartments in neighborhoods around the city. Or we force them into even worse situations.”

The post How the NYC Planning Commission Plans to Address the City’s Housing Shortage appeared first on CitySignal.

NYC and the greater metro area have a massive housing shortage of affordable and market-rate apartments. NYC alone needs to build 560,000 housing units between 2022 and 2030 to keep up with demand, and in 2019, the NYC metro area had an estimated housing shortage of 340,000 homes.

NYC rents exploded recently due to a lack of adequate housing inventory. For example, the median rental price of apartments in Manhattan and Brooklyn increased around 22% annually between September 2021 and 2022. As of September 2022, apartment vacancy is just north of 2.0% in Manhattan, making the hunt for an apartment extremely competitive.

Because of high rents and low vacancy, Mayor Eric Adams prioritized building more market-rate and affordable housing. The Mayor recently, for the first time, officially endorsed a development in Throggs Neck, a largely suburban, low-density area of The Bronx. The development, which needed a rezoning to achieve approval, plans to add four buildings with 54,000 square feet of retail space below 348 apartments, of which nearly half could be permanently affordable.

Council Member Marjorie Velazquez recently approved an upzoning of an area of the neighborhood to allow for the development, despite strong local opposition. The main opposition to the development is the scale of the project, which would add buildings of up to eight stories to a neighborhood that mostly consists of one and two-story homes and commercial properties. To influence Velazquez’s decision, Mayor Adams officially endorsed the development, the first time he had thrown his mayoral support behind a project.

“This project will bring nearly 350 much needed homes — including affordable housing for seniors and veterans — to a neighborhood that has only added 58 affordable units in the last decade,” Adams said in an official statement. “Just as importantly, it is a sign that our city is once again embracing our identity as a ‘City of Yes.’ The housing crisis impacts all of us, and every community has a responsibility to be part of the solution.”

This isn’t a problem that is specific to NYC. Nationally, some reports estimate that the U.S. has a housing shortage of more than 6 million housing units. As a result, more governors and mayors are taking action to endorse specific development projects and policies that promote more housing production.

For example, California Governor Gavin Newson passed several laws over the last couple of years to address his state’s severe housing crisis. Some of the most ambitious policies include outlawing single-family zoning and forcing each California city to add a specified number of new housing units. As a result, Southern California counties will collectively have to build three times as many housing units over the next decade compared to the previous one. If municipalities don’t change their zoning to accommodate new housing production, they will lose control over their permitting process.

Mayors in California have also endorsed specific development projects and initiatives to help ease their city’s housing shortage and affordability crisis. San Francisco Mayor London Breed recently spoke at the groundbreaking of a 100% affordable and supportive housing project. Meanwhile, Los Angeles Mayor Eric Garcetti spoke in favor of a recently-passed law that will ban parking minimums near California transit stations, allowing for more housing near transit.

With housing becoming increasingly unaffordable nationwide, mayors and governors across the country will likely prioritize supporting controversial new housing developments and policies during their campaign and tenure. In NYC, Mayor Eric Adams wants to transform the city into a “City of Yes,” where every neighborhood does its part to address the housing crisis.

The post Mayor Adams Hopes to Transform NYC into a “City of Yes” appeared first on CitySignal.

Around the time that the Park Savoy Hotel reopened as a shelter, NYC unveiled an ambitious program to convert hotels into affordable housing and supportive units for the homeless. In August 2021, former NY Governor Andrew Cuomo signed a bill that provided funding for hotel conversion into housing.

Mayor Eric Adams supported Cuomo’s initiative and campaigned to convert 25,000 city hotel rooms into permanently affordable apartments and supportive housing. It was a unique opportunity, as hotels were cheap and occupancy was low in the wake of the pandemic.

The city committed $200 million to the effort, but New York hasn’t used the money after a year and hasn’t generated one affordable or supportive unit through the program. Unfortunately, it seems the city lost out on an opportunity to buy hotels when they were cheap and when vacancy rates were high. Hotel occupancy in NYC was 39.1% in September 2020, increased to 64.5% in September 2021, and was 81.2% this past September. Because of this, the program will likely not gain much momentum, if any, in the future.

Why Didn’t the Program Succeed?

Andrew Cuomo initially funded the hotel-to-housing program with $100 million, but the state legislature later added an extra $100 million in available funding to make conversions financially feasible. Unfortunately, the program never used the money, netting no new affordable or supportive housing units. There are a couple of main reasons for this.

First, the strong influence and power of the hotel trade’s council union proved a major roadblock. As part of the bill, hotel owners with union staff had to get approval from the hotel workers union, which meant converting union hotels was very unlikely. The hotel union remains largely opposed to converting hotels to housing since it jeopardizes hotel workers’ jobs.

Second, the hotel-to-housing push didn’t resonate with developers. Hotel conversions in NYC are difficult and expensive, and developers didn’t believe they could break even. As of September, five New York developers submitted proposals to purchase and convert hotels, four of them within NYC. Those five proposals are still in the early stages of approval, and some may never come to fruition.

Right now, the city is leasing space from hotel owners for temporary supportive housing units for the homeless. Purchasing these properties would allow the city to convert the units into affordable and supportive housing permanently. While hotels are more expensive now than they were during the height of the pandemic, Eric Rosenbaum, president and CEO of the homeless services provider Project Renewal, thinks that the city should still consider buying specific distressed hotel properties.

“As expensive as they might look today, the alternative will be increasingly expensive,” he told Politico. “Even if these hotel deals got more expensive, they would still be better deals than ground-up development.”

How Do NYC’s Affordable Housing Efforts Compare to California’s?

Other places have successfully implemented similar programs. In California, state and local governments provided temporary shelter to 48,000 people through “Project Roomkey,” which focused on temporarily leasing hotel rooms for unhoused residents. “Project Homekey,” a similar initiative, was successful. The program focuses on purchasing cheap properties and converting them into permanent supportive and affordable housing.

Between July and December 2020, the city purchased 94 properties, primarily hotels, through “Project Homekey”, creating over 6,000 permanent and interim supportive housing units. The cost was a major selling point — the average cost per unit was only about $148,000. In comparison, California pays an average of nearly $500,000 per unit to develop new affordable housing. By August 2022, the program had successfully created 12,500 permanent and interim supportive housing units for individuals experiencing homelessness.

The post Why NYC’s Pandemic Plans to Convert Hotels Into Affordable Housing Failed appeared first on CitySignal.

Consider this startling statistic: in the 1960s, land accounted for less than 20% of housing costs but jumped to 38% in 2012. In 2022, land represents 47% of the cost of housing on a national level. At this rate, land could be the majority cost of housing within the next several years. This is a significant reason why buying or renting a home is so insanely expensive now and why housing costs have outpaced inflation post-Covid.

Why is land so expensive in a country with so much of it? Put simply, America’s land use regulations have not kept up with population growth. The US population is now nearly double what it was in 1960, but our land use policies haven’t kept up. Instead of building housing that takes up less land, America keeps prioritizing low-density suburban development that takes up massive amounts of land and requires a ton of infrastructure relative to the population.

This zoning practice made buildable land around America’s largest cities more and more scarce. Because developers aren’t legally allowed to place many housing units on an acre in many places, each housing unit takes up a large amount of land. This means that developers need more land for each housing unit, therefore driving up the demand and cost of each acre.

How Expensive is Land in NYC?

If any American city runs exceptionally low on land, it’s NYC. New York is by far the densest big city in America, at nearly 30,000 people per sq. mile. However, rising prices are pushing people out of The Big Apple. In Manhattan, a borough with almost now vacant land, rents rose 26% from August 2021 to August 2022. In Brooklyn, they rose by 25% and nearly 14% in Northwest Queens.

The Wall Street Journal article doesn’t touch on the percentage of housing costs that come from land in NYC, but there is ample reporting on how expensive land is in NYC and in Manhattan in particular. For example, a 2018 paper in Regional Science and Urban Economics estimated that in 2014, the developable land in Manhattan was worth somewhere in the neighborhood of $1.74 trillion. This factor includes land not zoned for development, such as parks and roads.

At the time, $1.74 trillion was roughly equivalent to the GDP of Canada, the tenth largest economy in the world. And this only accounted for buildable land in Manhattan, which is by far the smallest borough in NYC by geographic size.

Considering the astronomically high land cost in Manhattan and NYC, it’s no wonder why many politicians are now advocating for more density in neighborhoods across the five boroughs. For example, the rezoning of Manhattan’s Soho and Noho neighborhoods, passed in 2021, allowed for more dense development to add 3,500 apartment units to the two neighborhoods.

There is still much opposition to higher-density development in New York. Detractors often point to city neighborhood character, crowding/traffic, or gentrification as reasons to oppose high-density development. Supporters of the rezoning argue that NYC needs more density to regulate housing costs and build more affordable units. When the Noho and Soho rezoning passed, former Mayor Bill de Blasio praised the legislation.

“This rezoning victory sends a powerful message that every community can and should join the fight to help solve our affordable housing crisis and make this city accessible for working families,” de Blasio said.

The post How Expensive is Land in NYC appeared first on CitySignal.