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:
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 Condos – this 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 Triangle – 20 minutes from Grand Central on the 7-train, and NOT government …err you, subsidized.
Woodside, Queens Draws a New Crowd – sometimes 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.
- 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 [↩]
- from it’s geographical center [↩]
- 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 [↩]
- 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 [↩]
- in fact, many made a pretty profit in doing so by selling their homes at greatly increased prices due to their desirability [↩]
- 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 [↩]