A missing housing foundation
New York City must be a place where homeownership is an affordable choice for working-class and middle-class families. Long the instrument of Americans’ ability to accumulate financial equity and establish a secure foundation for their families, homeownership continues to prove immensely effective at economically empowering individuals and communities.
Yet New York City’s homeownership rate is less than half of the national level of 63.9%, itself the lowest in decades. Worse, more than half of city residents can no longer afford their housing costs, and unlike a solid, fixed-rate mortgage, rent increases have no end in sight.
Since the housing crash in 2008, public investment in affordable homeownership opportunities has largely dried up. The NYC Housing Development Corp.’s cooperative development program shuttered in 2010. Today, under Mayor de Blasio’s programs to build or preserve 200,000 affordable apartments, city housing programs favor rentals as the sole solution to the city’s housing crisis.
Just 227 out of the 6,844 planned units of affordable housing granted city aid last year are being built for purchase, under programs such as the Nehemiah Homes. All the rest are rentals.
The result of this disinvestment, combined with the ongoing foreclosure crisis, has been a slow but steady decline in the city’s homeownership rate from its peak of 34.4% to its current 31%.
By focusing on rentals, the city is missing a crucial opportunity. Habitat for Humanity New York City’s experience shows that when affordable homeownership is properly underwritten and backed by government financial support, the results are transformative. Reduced purchase prices and fixed-rate mortgages through the support of our public and private partners make our homes affordable to low-income families.
Despite the market crash and economic upheaval of the last decade, nearly every Habitat NYC homeowner has avoided severe default or foreclosure.
Property ownership has broad power to help low- and middle-income New Yorkers achieve long-term economic stability. Homeowners accumulate more wealth over the long term than renters, their children perform better in schools and are more likely to succeed as adults, and neighborhoods with high ownership rates are likely to see more business activity and civic participation.
Nationwide, renters have dramatically lower financial assets than homeowners — by more than a 36-to-1 margin.
With these facts in mind, it is critical that affordable homeownership be included as a key strategy in the city’s neighborhood development plans.
Gentrification’s ripplelike displacement continues to drive housing prices higher while simultaneously pushing low-income New Yorkers further toward the outer boundaries of the five boroughs. Property values in Brooklyn’s Bushwick and Bedford-Stuyvesant neighborhoods have already doubled in recent years, and housing speculation now roils East New York.
This trend, while benefiting some current homeowners, will create economic barriers to future working-class and low-income families from ever gaining access to the home-buying market, handcuffing future generations from ever owning a piece of the communities they grew up in. Researchers at NYU’s Furman Center recently found that only 3% of purchase prices in 2014 were affordable to low-income families.
The tiny scale of affordable homeownership construction in the mayor’s housing programs will have long-term economic consequences for individuals and the city as a whole.
The billions of dollars in subsidies that make possible rental solutions to the city’s housing needs also perversely ensure that vast numbers of New Yorkers will continue to be barred from the opportunity to build assets that homeownership encourages.
All that public housing investment will still leave the city decades hence grappling with an aging population at needlessly high risk of economic dependence.
Affordable homeownership is essential to the future of New York City and must be created on a larger scale, to prevent displacement, invest in stable communities and help ensure the public’s investment in housing helps build assets for families and neighborhoods.
The investments and strategies we make as a city today will shape the neighborhoods our children will inherit tomorrow. Creative solutions, like creating community land trusts, expanding down payment assistance and encouraging permanently affordable homeownership on a large scale could build community assets that will last for generations to come — and make homeownership available to all hardworking families.