Solutions to NYC’s Affordable Homeownership Crisis do Exist
A new study from the NYU Furman Center for Real Estate and Urban Policy and Citi confirmed what many New Yorkers already know: homeownership in this city has been increasingly priced out of reach for all but the wealthiest of New Yorkers.
However, there is nothing inevitable about the daunting rise in homeownership costs that we see in the five boroughs today, and we are not powerless to change the status quo. Rather, we can and must adopt policies and practices to safeguard affordable homeownership.
Two of the most promising solutions — community land trusts and an anti-flip tax — may be considered politically ambitious, but they are powerful tools for controlling speculation and distortions in the city’s real estate market that make it inaccessible to most families.
Decreasing opportunities for affordable homeownership in NYC
The Furman report’s findings paint a grim picture for working- and middle-class families seeking to own a home in a city suffering from growing economic inequality. While certain Manhattan neighborhoods have long been prohibitively expensive, today the price squeeze extends to more modest homes in neighborhoods throughout the five boroughs. It affects current homeowners, many of whom are financially overextended, as well as would-be homeowners, who are almost entirely shut out of the market. The report also raises serious questions about the future of New York City as a place where working families can afford to stay and choose to put down roots.
According to the findings of the report, the cost of New York City real estate has dramatically outpaced incomes, with home sale prices rising 200 percent over the last 25 years while real incomes have remained stagnant, decreasing 11 percent when adjusted for inflation. As a result, working- and middle-class families in New York today have been largely squeezed out of opportunities to own: for the 51 percent of New Yorkers earning less than $55,000 a year, only 9 percent of homes on the market are affordable to them.
So who can afford to buy in New York City today? In 2014, the average sales price of a coop, condo, or one-to-three family home was $575,700. According to the study’s authors, this price is affordable only to the top quarter of New Yorkers who make more than $114,000 a year, and that’s assuming they can save up for a 20 percent downpayment.
And for the New Yorkers who already own their home, nearly half are in a precarious financial position, spending 30 percent or more of their income towards mortgage and other housing costs, according to the study’s authors. Further, an alarming one in four homeowners spend 50 percent or more of their income on housing costs.
Photo credit: Flickr / ryan.dowd. Used under Creative Commons license.