Posted by Leonard Steinberg on May 5th, 2014

Mayor De Blasio today revealed his bold affordable housing plan for New York, aiming to build at least 200,000 units over the next 10 years as opposed to the Bloomberg administration that built about 165,000 units in its 12 years. The plan calls for almost $42 billion in State, Federal and private funding for affordable housing over the next 10 years. The plan would force developers to include affordable units in their buildings, but also encourage larger buildings and less government red tape to speed up the building process.

Did you know that only 38% of New York City renters live in market rate apartments (as of 2011)?  despite the widespread impression that stabilized apartments are meant to provide affordable housing (and they certainly keep housing prices stable for hundreds of thousands of people), many of those fortunate enough to land one in recent years have been relatively well off. The median income of all renters of stabilized apartments in the Manhattan core — defined as below 96th Street — is $57,780: the median income of those moving in in recent years is closer to the average Manhattan income of about $100,000. The income cap to qualify for a rent stabilized apartment is 200K/yr (income,not accumulated assets; you can have a huge stock portfolio and a vacation home and still show an income of under 200K a year). Is this FAIR?

What does “affordable housing” really mean? Does it mean that if you have sound financials, earn less than 200K/yr in income and are very lucky, you might be able to get one of these new “affordable” units. And if you are not lucky you get to pay a highly distorted, much higher market price for your unit? Mayor De Blasio needs to address this sticky subject in his plan. He should also add time limits on affordable housing so that people are incentivized to improve their incomes, and that those who were not lucky enough to score one of the affordable units get their chance too.

If each of the 200,000 families gets its share of the $41 billion targeted for this housing over the next 10 years, they will each get $20,000 a year. Surely a housing voucher of that size would help most families get affordable housing without any further government help? New York City currently has over 3 million housing units: surely all of these do not belong to the wealthy as everyone seems to consistently imply? Rent regulation, while benefiting a few lucky people who win a lottery of sorts for regulated units, reduces the supply, and hence increases the prices of the remaining rental housing stock for everyone else……the only kind of housing the vast majority of people actually looking for new apartments are able to find. The result is higher rents for the vast majority of renters. This simple economics seems to be conveniently ignored for political gain.

One nagging issue remains:  if this city only focuses on building high end luxury housing and affordable housing, what about those in the middle? Surely this will cause even greater class warfare and perpetuate inequality?