IS HUNTER’S POINT SOUTH MIDDLE-CLASS WARFARE?

 

Housing or luxury housing?

Housing or Luxury Housing?

The decision to set aside “affordable housing” in Hunters Point South is a misguided government attempt to alleviate a supposed problem.1  Instead it is nothing more than a reallocation from the slightly have-more’s to the slightly-have-less’s, and whenever you gaze upon the towers after they are completed, I hope that you come to visualize them as a monument to such.  In order to do so, one must first accept the assumption that the land in HPS is extremely valuable.  Here is the previous argument I have made for this.  Secondly, one must understand why I say this is a supposed problem, when in reality it is nothing more than an age old effect of capitalism and an individuals decision making.

A TALE OF TWO ORANGE COUNTIES

Orange County in New York State is roughly 65 miles from midtown Manhattan.2  According to wikipedia:

“Beginning in the 1970s, New York City police officers, firefighters and other workers moved to the area to purchase houses that were much less expensive than those nearer the city.”3

Orange County in California is renowned for its beaches(Newport, Huntington, etc.), but, also according to wikipedia:

“The completion of Interstate 5 in 1954 helped make Orange County a bedroom community for many who moved to Southern California to work in aerospace and manufacturing.”

Alas, 40 years later, things began to change.  People’s desire to live near the ocean and Los Angeles4 pushed out a lot of the manufacturing, and pushed up the prices of residential real estate, especially near the coast.  Thus, many people moved inland5, to a region interestingly coined The Inland Empire.  Also from wikipedia:

“The region now comprises numerous cities known as bedroom communities that are suburban cities to Los Angeles. Affordable home ownership is the primary motivation behind the growth in these Inland Empire cities as homes in the region are generally less expensive than comparable homes in Los Angeles and Orange counties.”

Basically, one gets more for one’s money the further one goes from center city.  This is true not only in NY & LA, but Philly, Chicago, DC, etc.  In fact, even if one were to look at Westchester County, an acre of land in Scarsdale, 19 miles from Grand Central, is roughly 50% more than an acre of land in Chappaqua6, which is 32.4 miles from Grand Central, yet an equally upscale neighborhood.  Thus, one Orange County people moved into because it had inexpensive real estate, and one Orange County people moved away from because real estate had become too expensive.

Am I telling you anything you didn’t know?  Time is money!  Well then why should anyone who makes $200, $300, or $500 thousand dollars a year now have a longer commute time than those who make less?

Now that I have you fired up, let me stick another needle in your eye: In addition to not being able to live in HPS and receive discounted housing if you make over, let’s say $150,000 a year, you actually will be paying more in monthly rent than you would have had they built solely market rate housing in HPS.  We have gone through the rationale in our previous not-so-groundbreaking economic piece Supply and Demand.  The basic rule of thumb is that more market rate supply requires lower monthly rents to fill them.  In the previous article, we estimated the rents would be 8% lower on average were HPS to be solely market rate.

About now, you might be saying “What’s the big fuss over a measly 8% rent increase and why is LICtalk griping about why Hunter’s Point South is wrong?”  Because affordable housing, or disqualification from, is not the only inequity incurred upon those in the economic strata starting just above the HPS threshold(~$150,000), and this is exactly the strata in which the majority of people in Long Island City occupy.  If you want to see a list of all the other nefarious economic burdens incurred by the upper middle class, I highly recommend you read this story in The Shadow Banker.  It outlines numerous situations where monies are taken from one slightly better off middle class group and given to those just below them, effectively flattening the middle class, and leaving the top and bottom untouched.

Finally, and while we are on the subject of the bottom rung, I find it hard to believe that FDR’s New Deal and Lyndon Johnson’s Great Society ever intended to provide luxury housing replete with amenities galore and spectacular views, all just one stop from Grand Central.  I’m not knocking either program, it is just that we seemed to have strayed far …very far, from the mandate to help the poor and provide decent shelter.  Keep that in mind too whenever you see the magnificent buildings of Hunters Point South.  Or the next time you receive a rent increase from your Center Boulevard landlord.

The Perverse Effects of Rent Regulation“The problem, though, is that these programs actually make the city much less affordable for those unlucky enough not to live in a rent-regulated apartment, Mayer says. The absurdity of New York City’s housing market has become a standard part of many Econ 101 courses, because it is such a clear example of public policy that achieves the near opposite of its goals. There are, effectively, two rental markets in Manhattan. Roughly half the apartments are under rent regulation, public housing or some other government program. That leaves everyone else to compete for the half with rents determined by the market.”

The Truly Affordable New York Apartment“In 1994, when Ms. Paparo was 23, her name came up. For less than $2,000, she bought an 800-square-foot one-bedroom apartment in the complex that had been her lifelong home, and where her mother still lived.  A few years later, the complex ended the restrictions. Apartments now sell for market rate — a one-bedroom sold in December for $449,000. “It didn’t even occur to me how lucky I was,” Ms. Paparo said. “It’s only looking back that I realized I had this sweet deal.”

Zeckendorf’s Embrace Global Buyers With UN Condosthis development is directly across the East River from HPS.  What’s the difference?  1) apartments start at $2.8 million and go up to $55 million 2) the Zeckendorf apartments have views of Queens and let out onto no-man’s land in the East 40′s, while the HPS apartments have unobstructed views of Manhattan and let out onto a park (kinda like CPW and 5th Ave, dontcha think?)

Woodside, Queens: An Affordable Convenient Triangle20 minutes from Grand Central on the 7-train, and NOT government …err you, subsidized.

Woodside, Queens Draws a New Crowdsometimes capitalism works correctly, even in real estate: “Younger folks are being priced out of more popular neighborhoods and are following the subway lines [deeper into the boroughs] to find affordable housing with an easy commute to the city.  Price hikes in newly trendy Queens neighborhoods like Long Island City and Astoria are sending young professionals streaming eastward into Woodside’s tree-lined streets. There, apartment rents are nearly 25% below those in Long Island City, which until recently was billed primarily as a cheap, convenient alternative to Manhattan.  That influx of new residents, in turn, is drawing the attention of developers. With demand for apartments rising and people with more money to spend moving in, landowners are rising to the bait and are putting up condo and apartment buildings.

  1. Though it could just as easily be considered either a) an attempt to increase votes for politicians who support it(I mean, what politician wouldn’t support this seemingly benign project?) b) an attempt to create a legacy: largest affordable housing project in more than three decades, in grand view of everyone on the Circle Line, FDR Drive, midtown office towers.  Might be as visible as Rock Center, and best of all, didn’t cost Mayor , err some politician, a dime []
  2. from it’s geographical center []
  3. this is in regards to Middletown, NY specifically, but holds true for the rest of the county as well, especially those towns near the major highways []
  4. ergo, oceanfront property is the most expensive, followed by that which is two blocks away, followed by that which is 2,10,50 miles from the ocean.  It’s a pretty linear equation, with many exceptions []
  5. in fact, many made a pretty profit in doing so by selling their homes at greatly increased prices due to their desirability []
  6. Wow, this is pretty linear too.  Google “an acre of land in Scarsdale, an acre…Chappaqua, you’ll get a pretty rough idea of what’s available at what price []

24 thoughts on “IS HUNTER’S POINT SOUTH MIDDLE-CLASS WARFARE?

  1. Anonymous says:

    If 100% of the apartments are set aside for affordable housing, it’s counter-intuitive to the idea behind 80/20 that these residents should be mainstreamed into the general population. Isn’t it?

  2. Anonymous says:

    Amazing, the only way to get a 3 bedroom apartment in this town is by making less money!

  3. Bizness As Usual says:

    Excellent editorial – while most residents worry about bringing the ghetto to HPS, it’s really just the politicians rearranging the deck chairs to help their cronies.

  4. LIC rent-payer says:

    Sounds like Rockrose, TF and all the big landlords in LIC are big beneficiaries of Hunters Point South not being market rate.

  5. Ben Dover says:

    Cops, firemen, teachers get huge benefits and retire in their 40′s and 50′s. Kind of makes me think ‘why bother having my wife work’? Even better, maybe I retire now and have her keep working and move to HPS.

  6. Anonymous says:

    Not only should market rate payers be angry. It’s kind of an insult to those who don’t win the HPS lottery because they get nothing. Is this what it’s come to, only the best will do. A very egotistical project that I am sure the pols will trot out whenevr they want to alk about what they’ve accomplished.

  7. lo-riser says:

    What about those of us paying market rates but not living in a luxury hi-rise. We don’t even get the “amenities” that those in Hunters Point South will get.

  8. Amadeo Plaza says:

    Am I seriously the only person who is paying market rates, and is comfortable with the idea of people who may not make as much money as I do, to be afforded the opportunity to live in the area. I’ve always wanted to live in LIC, and am fortunate enough to have finally made it. There are are plenty of people who share that dream, but simply go into professions in which they just can’t afford to live there. This city is quickly turning into one of the haves and have-nots. I don’t think there’s anything wrong with the blending of these folks, instead of allowing it to turn into one homogenous group of working professionals. I’ll always choose socioeconomic diversity over people who are just like me.

    • Brian Howald says:

      No, I agree with you, but unfortunately many people who move to New York City are wary of the diversity that is one of the city’s greatest strengths.

      There are certainly valid points raised by the article that affordable housing policies are counterintuitive and often harm those who are poor and are not lucky enough to win the lotteries, but the answer is that we need affordable housing in some form. Maybe requiring landlords to pay into a fund that subsidizes the rent of those who are less well off is a start, but scrapping affordable housing on the grounds that it has distortionary effects on the housing market is just reasonable cover for an unreasonable outcome.

      I’d like to think that I’ve worked hard in life, but I and many other people who look like me and who make what I make have been wise in our choice of parents. Plenty of people who have worked harder than me have more than I do, and many have less. To look at a single, minor facet of life – who has a better view and what does s/he pay for it – strikes me as surprisingly disingenuous and petty in a country where the circumstances of your birth largely predetermine your life outcomes.

      As someone who grew up in Los Angeles and New York City (whose family has lived in New York for a century), went to public school, and now lives in market-rate housing in Hunter’s Point, this just strikes me as suburban-grown discomfort with those who are different that is unfortunately becoming more prevalent as longtime urban residents are displaced by former suburbanites. You can see it in the increasing homogeneity of many parts of the city, or in the behavior of Long Island City drivers who behave as though they are on a suburban street devoid of pedestrians, not a densely populated neighborhood in a transit-oriented city.

  9. Anonymous says:

    i think the issue that people have is that the people who get the opportunity to live in these buildings will have probably the best building/views in the area for half the cost.
    A person one block in from the river will be paying $2,500+ to rent a place at the powerhouse yet the new development will be significantly cheaper, and yet, have the best ammernities.
    Living in LIC is one thing….living in the best area of LIC and still paying the lowest rates is what gets people questioning. We all work hard for our money. We all are happy that we saved up money and were able to move into the area….sometimes it seems like the less you make the better it is.

    • Amadeo Plaza says:

      I mean I understand both sides of the argument. But if you compare the full inventory of the waterfront versus the inventory from the completed HPS project that’s allocated for affordable housing (the exact percentage escapes me right now), and it’s not even comparable. There will still be a vast amount more of market-rate apartments on the waterfront. The argument that a lot of people are making is that there shouldn’t be any affordable housing whatsoever on the waterfront, and I’m not really in support of that. It’s not a takeover. It’s sharing the spoils as a community.

      *waits to be called a socialist* Haha.

      • JP says:

        Amadeo – the question then becomes 1) Does building luxury housing help the most amount of people with their lives 2) Who pays for their receiving of luxury housing 3) To what EXTENT should we be helping others?

        Should we give them free parking and a BMW too?

        So many questions raised by this development.

  10. socialist says:

    I don’t mind the idea of the government helping people get housing at affordable prices. But doing it this way, so that a very small group of people win the lottery and get basically set for life, seems like a bad way to do it.

  11. Joe Justice says:

    As a market rate paying tenant above the qualifying level for Hunters Pt South but far, far from wealthy, this project really bothers me. Basically I get no view, but someone making 40 grand less than me does, and pays a lot less for their apartment to boot.

    • Helen says:

      Joe Justice, I know you wrote this a while ago but I sort of feel the same. My family and make either too much or too little. To be middle class in NYC blows!

  12. Anonymous says:

    I’m frustrated with the fact that the market rate apartment I bought is negatively impacted by this project. Basically the two new buildings have blocked all views of those condos directly behind it. It’s one thing if these were market rate apartments blocking the views. You would expect that even though the views are blocked it would increase the value of the surrounding area. However, these are public housing units which get the choice location and bring no additional value to the area. In fact, I am worried that the values will fall. I’ve yet to see a public housing development that is actually good for surrounding area. It will eventually turn into a project.

    I recognize the need for affordable housing but does it have to be on the most expensive real estate Queens and at the expense of market rate buyers? There are many open spaces off the waterfront that could have been used for this project leaving the waterfront to market rate development.

    • Amadeo Plaza says:

      I can understand your concern, but I feel like you’re under the impression they’re building project housing…

      A PERCENTAGE of the units will be set aside for MIDDLE-INCOME housing. Sure, you’ll have a few that are lower income. But they’re not building Section 8 houses. The more the neighborhood gets developed, the more valuable your property will become. At the end of the day, they’re not giant project towers. They’re luxury towers with a few of the units being carved out for middle-income earners.

      I feel like people are grossly warping what this is…

  13. Anonymous says:

    @Amadeo – I hope you are correct. Phase 1 was originally presented to the community as 75/25. It is currently 100% affordable, changed after the community bought into the idea. Moving forward, with the new admin I would not be surprised if phase 2 and 3 went 100% affordable and even to low income..

  14. T says:

    Thank you, Amadeo, for being a voice of reason here. Coming from a middle-class family in NJ, I recognize the advantages that I’ve been afforded and also feel quite privileged to be able to pay the market rate to live in a luxury high rise. I spent a number of years working for a non-profit, living well below the “threshold” and am fortunate to now be in a position that I hadn’t previously anticipated/dreamed of.

    Would I like to pay less rent? Sure. Would I prefer that my view not be obscured by a new development? Absolutely… and also, I could do without the construction noises at the crack of dawn. But really, truly, in the grand scheme of things, does this make a difference? No… this isn’t socialism, this isn’t a slippery slope (BMW won’t be subsidizing its luxury cars anytime soon), and maybe, just maybe, it could be a good thing to have a sprinkle of diversity down here in HPS. The “fine, live in LIC, but not in the ‘nice’ part” argument is tricky and you know what, we’re pretty darn lucky to be here. Why not open the gated community a bit?

    While we’re at it, outlining how tough life is here, I have a couple of grievances to air: I had to wait too long at the coffee shop by the water this morning. 2 minutes for an iced coffee is ridiculous. And I had to let a 7 train pass on Friday morning because the first one was too full. It was at *least* 30 seconds before a second one came. What is happening to this neighborhood?!

  15. Anonymous says:

    Here is the bottom line: difference in earning power between 2 income groups (slightly above average & slightly below) is not huge. Why should the slightly below group get such a huge opportunity in housing? Just because they earn a few grand less?? Well, other group pays more in taxes.

  16. […] Economically, these buyers are very much like those applying for the moderate income slots.  They may or may not be slightly wealthier, but no one is in the 10/20/50 Manhattan group, or even close by my reckoning.  In a previous post, I even brought up the topic of whether the HPS lottery is akin to middle-class warfare? […]

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