A leading housing advocacy organization has completed an exhaustive look at threats to affordability in every community in the five boroughs, and has found that Lower Manhattan in under pressure, as measured by three metrics.
The Association for Neighborhood and Housing Development (ANHD), an umbrella organization of 100 non-profit affordable housing and economic development groups that serve low- and moderate-income residents in all five boroughs of the City, recently published the 2018 edition of its annual roundup, “How Is Affordable Housing Threatened In Your Neighborhood.” For this report, Lower Manhattan was defined as the catchment of Community Board 1, a collection of neighborhoods encompassing 1.5 square miles, bounded roughly by Canal, Baxter, and Pearl Streets, and the Brooklyn Bridge.
ANHD’s Lucy Block: “People who have lived in Lower Manhattan for many years are more likely to have rent-regulated apartments, while people coming here for the first time are usually moving into very expensive homes.”
ANHD’s analysis finds that Lower Manhattan housing has, in recent years, become markedly less affordable in a pair of key respects. “The first is per-square-foot change in residential sale prices,” explains Lucy Block, ANHD’s Research and Policy Associate, and the report’s primary author. “This figure jumped 42 percent from 2015 to 2017.” This adds to the 87 percent increase that the 2017 edition of ANHD’s report documented between 2014 and 2016, and this trend places Downtown in the top 20 of all neighborhoods throughout the five boroughs, when ranked by increase in the price of homes.
The second is, “the portion of properties sold that went to buyers who meet the definition of low income households,” says Ms. Block. For a household of three in the New York area (which the federal government delineates as the five boroughs of New York City, plus Westchester and Rockland counties), the Department of Housing an Urban Development (HUD) defines “low income” as less than $75,150 per year. “These sales declined by 66.7 percent from 2012 through 2016,” Ms. Block notes. She adds that, “the jump in home prices in Lower Manhattan makes it very unusual for somebody making less than $70,000 per year to purchase here.” This statistic puts Lower Manhattan in the top ten for all communities in the City when ranked by decline in the number of purchases by low-income buyers.
A third benchmark that the ANHD report notes is local “income stratification.” This measure relies on the “Gini coefficient,” a gauge of statistical dispersion intended to represent the wealth distribution among a given population. The most commonly used measurement of financial inequality, the Gini coefficient ranges between zero (which would represent absolute parity) and one (which would denote maximal inequality). Lower Manhattan’s rank is 0.54, which places it among the top 20 of most unequal communities in New York City.
“That figure is driven by the contrast between legacy residents and people who have moved in more recently,” Ms. Block notes. “People who have lived in Lower Manhattan for many years are more likely to have rent-regulated apartments, while people coming here for the first time are usually moving into very expensive homes.”
“Those longer-term residents are also more likely to be elderly or disabled,” adds Barika Williams, ANDH’s deputy director, “which also means that have a greater probability of living at or near the poverty line. Income stratification is one of the harder things to see in Lower Manhattan, where wealth is so conspicuous. But just because you are looking at a place with a high median income doesn’t mean there aren’t people in poverty living there.”
On a related note, the ANHD report indicates that Lower Manhattan is among the most affluent areas of New York City. Downtown is tied with Greenwich Village and Soho for the highest area median income (AMI) relative to the surrounding metropolitan area. For a household of three, HUD calculates the AMI in New York as a whole to be $93,900, but the ANHD report says that both Lower Manhattan and Greenwich Village/Soho have local AMIs of 165 percent of that figure, or $154,935.
Elsewhere in the report, ANHD finds that 30.1 percent of Lower Manhattan residents contend with “rent burden,” which is defined as the cohort of tenants who spend more than one-third of their gross monthly income on rent. (This metric declined from 37.8 percent in the 2017 report.) Although apartment rents are climbing ever higher in Lower Manhattan, this statistic appears to hinge on the unusually high local household income combined with a large number of dwellings owned by their occupants. (Condominium apartments are excluded from rent surveys.) It may also be worth noting that the “rent burden” is traditionally much higher in economically distressed neighborhoods, where rents tend to be significantly lower, but household incomes are even more depressed.
The relatively small percentage of local residents who struggle with rent may also reflect the 7,360 rent-stabilized apartments that the ANHD report inventoried in Lower Manhattan. Among affordable units, however, the analysis determined that 251 (which contain limits on rent increases because of subsidies from the federal Department of Housing and Urban Renewal) are at risk of becoming de-regulated over the next four years.
CB1 Land Use, Zoning and Economic Development chair Patrick Kennell: “As we welcome new neighbors to Lower Manhattan, we have to remain vigilant of the many effects new residential development has, including the strain it puts on affordability.”
Patrick M. Kennell, who chairs the Land Use, Zoning and Economic Development Committee of Community Board 1 (CB1), responded to the ANHD analysis by observing, “this report shows that, as we welcome new neighbors to Lower Manhattan, we have to remain vigilant of the many effects new residential development has, including the strain it puts on affordability. One of the many things that makes Lower Manhattan unique and better than anywhere else in New York City, in my view, is the sheer amount of new commercial and residential investment in the area in the last two decades.”
He added, “I’m not surprised that those investments are succeeding in many ways. But it’s the character and diversity of these neighborhoods that really makes people want to live here. We’ll lose that diversity and identity if we don’t constantly work to protect the current stock of affordable housing and make sure our seniors and other pioneers of residential Lower Manhattan aren’t priced out of their homes or out of their neighborhood altogether. It’s a balancing act, and having analysis and reports like ANHD’s should help our elected officials and other leaders keep an eye on that balance.”
CB1 Housing chair Tom Goodkind: “The struggle for renters of our local stabilized apartments is likely to get much worse with the new version of 421a, which no longer allows all tenants renting to be stabilized. We call upon our elected officials to bring better protection to all of us who wish to grow roots in our community.”
Tom Goodkind, who chairs CB1’s Housing Subcommittee, noted that, “home ownership is a great way for New Yorkers to invest in their communities, while building equity for themselves and their family. Yet, according to the Furman Center’s 2016 State of New York City Housing and Neighborhoods report, our City has a 31.6% ownership rate, compared with a 64.2% rate for the United States as a whole. The homeownership rate for Manhattan is even lower, at 23.5%.”
He continued, “outrageous increases in property tax are one reason. Owners should note that New York State has instituted a property tax cap of the lesser of 2% or the Consumer Price Index annually. But that cap does not apply to New York City. Also, the new 2018 $10,000 cap on how much local and state tax can be deducted from federal income taxes has greatly slowed apartment purchases and could place insurmountable strains on those who own.”
Mr. Goodkind added, “the struggle for renters of our local stabilized apartments is likely to get much worse with the new version of 421a,” which is a subsidy programs that offers building owners a reduction in taxes in exchange for affordability protections for tenants. “The new version no longer allows all tenants renting to be stabilized; it reverts to the $2,733.75 rent limit which would put most, or all, of Downtown out of stabilization. It also removes the 50% community preference from affordable housing, greatly limiting the opportunity for those who helped build our community to remain here when retiring.” He concluded, “We here downtown call upon our elected officials to bring better protection to all of us who wish to grow roots in our community.”