Matrix Blog

It’s that time of year again – The Furman Center For Real Estate and Urban Policy just released their seminal annual report. It’s chock full of an amazing level of analysis on all 5 boroughs and an essential download.

Here’s the executive summary and the full report.

Regarding property appreciation over four decades:

• Between 1974 and 1980, prices declined by 12.4% citywide.
• Between 1980 and 1989, prices increased by 152%.
• From 1989 to 1996, prices dropped by 29.3%.
• From 1996 to 2006, the City’s latest boom, housing prices increased by 124%.

A couple of interesting points made:

• On average, despite very high price levels, hous- ing prices in the City have not risen as much over the past two decades as they have around the country: in the most recent upturn, New York’s impressive growth of 124% was dwarfed by growth of 189% nationwide.
• Eight of the ten neighborhoods with the largest increases in the 1980s boom were also among the neighbor- hoods with the largest price increases in the most recent boom.
• Contrary to what one might expect, higher-income neighborhoods are not insulated from downturns, and investing in such a neighborhood does not necessarily guarantee strong future gains. Rather, prices in higher-income neighborhoods tended to grow less than the City average in the 1980s upturn and fall further in the 1990s downturn. In the most recent upturn (1996–2006), there was virtually no correlation between neighborhood income and sales price performance.
  

In Memoriam: New York just lost an essential New York media icon with the passing of Braden Keil of the New York Post to cancer. Combining celebrity and real estate, he always seemed to get the scoop. After starting off a bit shaky, I grew to appreciate my interaction with Braden and will miss him – he characterized his situation to me in early January: Life is indeed serving me up a lot of lemons.

I speak now from an especially close perspective to cancer but with a better outcome:
Cancer – for lack of a better word – sucks.

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Here’s the remainder of the Q&A column I was invited by the New York Times to participate in, along with Vicki Been of the NYU/Furman Center.

I enjoyed the process and was asked to do more in the future.

Expert Q&A: A Downturn for New York Real Estate?

This is the second session. There were originally supposed to be three, but they asked more questions in each of the two so I suppose they felt they had enough.

And who needs reality television when you’ve got Karl Rove speaking at the Mortgage Bankers Association’s annual convention.

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Been crunchin’ two new market reports 24/7 (one is a re-design) to be released very soon so my posts have been few and far between. In the meantime, here’s a Q&A column I was invited by the New York Times to participate in, along with Vicki Been of the NYU/Furman Center.

It works like this: NYT announces the Q&A session and then picks out questions they want the experts to answer. It’s really a format I enjoy.

Expert Q&A: A Downturn for New York Real Estate?

This is the first session. There will be two more over the next several days.

Of course, Gossip Girl was also on many people’s minds.

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I recently got a copy of The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco, Washington DC and Suburban Boston Areas researched by Jenny Schuetz, Rachel Meltzer, and Vicki Been of the Furman Center for Real Estate and Urban Policy at New York University. I have had the pleasure of knowing Vicki Been and the good work of the Furman Center. Last summer I had honor of having a paper I co-authored with the Furman Center back in 2003 published in the Journal of Legal Studies.

I’ve always been intrigued by the influence of zoning on housing: why a town or neighborhood has a consistent housing stock, higher end type of property, limited multi-unit dwellings, limited of commercial space, (let alone the lack of chain-link fences, a key source of suburban blight).

Zoning tends to be exclusion based to keep affordable housing out of specific areas and has a lot to due with whether a housing market is higher priced in certain markets and not in others.

Inclusionary zoning, also known as inclusionary housing, refers to municipal and county planning ordinances that require that a given share of new construction be affordable to people with low to moderate incomes.

the average annual number of single-family permits issued during the 1980s, 1990s and since 2000. As shown in the first two groups, the changes in annual permits since 1980 are quite similar when comparing all jurisdictions that had not adopted IZ by 2006 and all those that had adopted IZ at some point. However, this comparison obscures considerable variation among jurisdictions with IZ, as shown in the last four groups of columns. In particular, those jurisdictions that adopted IZ prior to 1980 or after 2000 issued substantially more permits, both before and after adoption, than jurisdictions that adopted IZ in the 1980s and 1990s. The most recent adopters seem to have been developing much more rapidly in the early decades and saw dramatic drops in the number of permits, even before adopting IZ.

Although less pronounced, there is also considerable variation in changes in housing prices among jurisdictions with IZ (Figure 7.2). Jurisdictions that adopted IZ prior to 1980 had higher than average housing prices as early as 1980 and have seen some of the sharpest increases in prices between 1980 and 2000. This would be consistent with either the explanation that IZ resulted in higher prices in those locations, or that jurisdictions with strong location-specific demand were some of the first to adopt IZ. As of 1980, jurisdictions that adopted IZ in the 1980s and 1990s more closely resembled those that have never adopted IZ, and have seen price increases roughly comparable to the non-IZ group since then. The most recent adopters, which had some of the lowest housing prices at the beginning of our study period, have seen relatively modest price increases, and in 2000 were still relatively affordable.

Such zoning can be controversial. It is often done without public funds and can promote economic and racial integration, but can restrict development of open market properties, creating higher priced housing, reducing affordability.

The report draft is a good read.

While you’re at it, take a look at The Effect of Community Gardens on Neighboring Property by Vicki, and my co-author Ioan Voicu. Interesting stuff.

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Source: ArtNet.com

I was attending a panel discussion last week called VU 2006 hosted by New York University’s Furman Center and the New York Times. One of the phrases that came up repeatedly was affordable housing and the question was asked: “How do you define affordable housing?”

According to [The City of San Diego](http://www.sandiego.gov/housing/whatis.shtml):

The U.S. Department of Housing and Urban Development (HUD) defines “affordable” as housing that costs no more than 30 percent of a household’s monthly income. That means rent and utilities in an apartment or the monthly mortgage payment and housing expenses for a homeowner should be less than 30 percent of a household’s monthly income to be considered affordable.

The median family income of the specific market is used to calculate the affordability.

I think there is the tendency to associate affordable housing with housing for the poor. However, its use today is primarily in reference to the middle class. [Worker housing is affordable housing [AHI]](http://www.affordablehousinginstitute.org/blogs/us/2006/04/workforce_housi_1.html)

Cities and towns across the US are losing workers who have become [priced out their markets [NYT]](http://select.nytimes.com/search/restricted/article?res=F20D10FF35540C7A8CDDAD0894DE404482). Its a real problem and a hidden future cost of municipalities as they try to replace these workers.

For example, New York City [will offer housing subsidies [NYT]](http://www.nytimes.com/2006/04/19/nyregion/19teach.html?ei=5090&en=da99716f27a367ef&ex=1303099200&adxnnl=1&partner=rssuserland&emc=rss&adxnnlx=1145829473-3MbIcJ0PT3RmB71FjzH6Yg) of up to $14,600 to entice new math, science and special education teachers to work in the city’s most challenging schools.

The housing boom has priced out many in the middle class who have been forced to seek [other areas for affordable housing [ContraCostaTimes.com]](http://www.contracostatimes.com/mld/cctimes/news/transportation/14385404.htm).

This type of gentrification has long-term implications for the haves and the have-nots. Local retail stores, forced to leave because of rising retail rents, are replaced by chain stores reducing the appeal to the area by the buyers who were attracted to the housing in that location in the first place.

I can’t seem to get past the irony here. The very residents that created a community that attracts more residents and development are the ones being displaced.

Thats something the new residents simply cannot afford.

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