John Petro

NYC: Using the Condo Glut to Provide Middle-Class Families with Affordable Housing

The New York City residential real estate market consists of two separate worlds: the world of luxury housing, and the world of affordable housing. Because of this, the city can experience both a glut and a shortage simultaneously; a glut of luxury apartments and a shortage of apartments that those who do not earn million-dollar bonuses can afford.

The bottom has dropped out of the market for $5 million apartments in Manhattan. In the outer boroughs, where new condos can cost around $750 a square foot (compared to around $1,300 a square foot in Manhattan), things are also going poorly for luxury condo developers.

City Council Speaker Christine Quinn summed it up this way: “Seemed everywhere you looked, from Chelsea to Corona, a new luxury building was cropping up… Thousands of those homes never sold, left like tarnished trophies of the building boom.”

The Speaker’s plan, first mentioned during her State of the City address, is to turn these units into affordable housing for middle-income families and individuals – the Affordable Housing Recovery Program. The plan is still being developed, and details are few, but essentially the city would negotiate a price for a unit from developers, buy the property, and then sell or rent the property to moderate income individuals and families. On the surface, the plan is a good one. Final judgment is reserved for when the details are completed.

According to an article in the Gotham Gazette, the program would use capital funding that has already been budgeted. The city already has a $240 million fund for acquiring private properties and making them affordable housing, the aptly-named New York City Acquisition Fund.

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Posted at 6:45 PM, Feb 23, 2009 in Housing | Urban Affairs
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