Housing prices, income inequality, and the racial wealth gap are on the rise throughout the US, and this is especially true in New York City. However, we can and must confront these trends head on by charting a new path to dramatically expand affordable homeownership opportunities for working- and middle-class families by building at a scale that meets the size of this enormous challenge. This means investing in and developing multi-story buildings for affordable co-ops and condos.
We’ve tackled problems this large before and found solutions that met the challenge. Through the Mitchell-Lama housing program, enacted in 1955 by the city and the state, hundreds of thousands of affordable homeownership opportunities were built for low- and middle-income New Yorkers. And there are other examples. Co-op City houses 35,000 residents in limited cooperatives, making it the largest housing project of any kind in the country and the largest cooperative in the world. And Rochdale Village in Queens was a pioneering experiment in racially integrated housing and continues to provide a home to 25,000 residents.
The stakes could not be higher: homeownership is a crucial building block of a more inclusive and equitable New York City, and a tool for opportunity that cuts across economic, racial, and ethnic boundaries. Working- and middle-class communities depend on homeownership as an engine for asset-building and economic mobility. Homeownership offers stability, forced savings, and shelter from New York’s rising rents for those of all backgrounds — and a pathway to a secure future for their families.
“Discrimination and racist policies have kept too many from ownership opportunities for too long,” said Christie Peale, CEO/Executive Director of the Center for NYC Neighborhoods, during a speech to the New York Housing Conference earlier this month. “If we focus at scale, we can create equity for so many New Yorkers who have been locked out of our high cost market.”
“If we focus at scale, we can create equity for so many New Yorkers who have been locked out of our high cost market.”
While the Center has traditionally focused on working with homeowners in 1-4 family homes, it is clear that we need to expand our sights and our efforts if we want to continue to provide new opportunities for homeownership at scale — there simply are not enough existing 1-4 family homes or lots zoned for those homes that are able to be developed. With that in mind, we need to find pathways to successfully spur development of affordable co-ops and condos both because there are few remaining publicly-owned parcels of land to be developed at that size, and because it is the fastest and most effective way to generate new units at the scale necessary to meaningfully address the racial wealth gap.
In fact, coop units are often the only affordable homeownership option for working- and middle-class families in New York City today. In 2017, the average sale price for a condo was $1 million, $613,000 for 1-4 family homes, and $450,000 for co-ops. Yet that same year, only 5,800 out of the 48,304 total home sales were within financial reach of New York City households who earn $60,000 or less, roughly half of all New York households. Of those 5,800, the vast majority (4,505) were coop units.
Coops are also relatively insulated from the investor market, e.g., private equity firms, real estate speculators, and other investors whose models are at odds with low- to moderate-income buyers. This is due to the difficulties that investors face when passing the coop board approval process. In 2017, more than 20 percent of 1-4 family home sales and 18 percent of condo sales were to investors, compared with only two percent of coop sales.
Unfortunately, there has been relatively little new construction of affordable multi-family homeownership developments recently, whether coops or condos, because of limited financing, zoning, and a lack of vacant municipal lots to cite prospective projects.
However, these challenges are not insurmountable. During her speech to stakeholders at the New York Housing Conference award ceremony, Peale called on leaders in finance, city and state government to join the Center in crafting tools to create affordable homeownership at scale in 2020 and beyond. “Yes, this will be challenging work. But we have a moral responsibility to address our city’s inequities,” she said.
To learn more about how you can get involved in spurring this critical work, go to our Equitable Homeownership website and sign up or send us an email at email@example.com. And if you’d like to invest in or underwrite these transformative opportunities, please reach out to firstname.lastname@example.org. Image credit: Eric Gross/Flickr