Long-Term Affordable Housing Strategies in Hot Housing Markets
2 May 2008
supply of expiring federally- and locally-financed affordable housing with new mechanisms
capable of stretching the tenure of new affordable housing and sustaining mixed-income
communities. Two policy vehicles for long-term local affordability of particular growing
interest today are inclusionary zoning ordinances and community land trusts, both of which
more communities are using to regulate affordability toward perpetuity.
Declining Supplies of Affordable Housing in Hot Markets
Despite the efforts of many cities, affordable units are being lost at a rate far faster than they
can be created. New York City provides a good example when discussing affordability, given
its broad array of expiring affordable programs and lack of affordability at nearly every
income stratum. Many affordable housing buildings were erected since the 1960s, and most
buildings built before 1974 are likely to contain rent-regulated units. For the first time in
decades, since 2000 New York City has many record years of new residential construction.
Despite this growth in the overall stock, increases in the luxury housing supply has led to a
decrease in the affordable housing supply, defined as units affordable to households spending
30 percent or less of their income on housing. New York City lost over 32,340 units of
privately owned rental-subsidized housing between 1990 and 2005,
1
at a rate of 2,000 to
6,000 units nearly every year since 1997.
2
The loss includes the sale of Manhattan’s biggest
affordable developments in 2006, Stuyvesant Town and Peter Cooper Village, together
making up 11,232 units. MetLife, which built and sold these complexes to Tishman Speyer
for $5.4 billion, estimated that by 2018, 70 percent of its units would be deregulated from
rent stabilization, compared with 30 percent in 2006.
3
Rent stabilization, New York state’s
successor to New York City’s nearly defunct rent control policies, governs rent increases
until individual units crest at a $2,000 per month ceiling or a household’s income exceeds
$175,000. In 2006 Starrett City Associates also tried to sell Starrett City, a 5,881-unit
development in Brooklyn, the largest Mitchell-Lama project. The New York City and state
affordable-housing programs lost 24,000 units before 2004, and 26,000 more since as
buildings leave the program.
4
Real estate values escalating faster than incomes rendered an
additional 205,000 units unaffordable to households making 80 percent of AMI ($50,000 for
a family of four) between 2002 and 2005.
5
New York’s statistics are representative of the
national scene, where 1.2 million rental units with monthly rents below $400 were lost
between 1993 and 2003.
6
New York City can provide lessons for all hot markets. It has far more robust subsidized
affordable-housing development programs than any other American city, and precedent-
setting experience tracking expiring units and monitoring displacement problems. Today the
1
Community Service Society of New York, May 22, 2007; www.cssny.org/news/releases/2007_0522.html.
2
Community Service Society of New York, “Policy Brief: Closing the Door,” Figure 1, May 2006.
3
New York Times, “Complexes’ Seller Pushes Profits, as Critics Fear High Rents,” Sept. 23, 2006.
4
New York City Comptroller, “Affordable No More: An Update,” May 26, 2006.
5
Association for Neighborhood and Housing Development, “Housing Preservation as Important as New
Construction,” in Public Advocate for the City of New York, Twelve for 2030: Responses to PlaNYC, April
2007; www.pubadvocate.nyc.gov/policy/documents/Gotbaum_2030_response.pdf.
6
Harvard Joint Center for Housing Studies, State of the Nation’s Housing 2005, “Measuring the Nation’s
Rental Housing Affordability Problems,” June 2005, p. 41.