The luxurification of SRO's and the mindless demographic they attract

NY Post


Across from Kimberly Chexnayder’s bed (which folds out from the wall) and above her flat-screen TV (which came with her small but sparkling new apartment), she’s posted a slightly faded Polaroid of her mother.
The picture was taken 30 years ago, during what her mom described as her NYC “wild days,” when she flitted between apartments, owned a record store and was friendly with Andy Warhol.
Chexnayder, a 23-year-old junior analyst for the NFL, always coveted even a small slice of her mother’s New York life. But her experience moving to the city has been far different — and easier: 

She pays $1,700 per month for her 152-square-foot room through co-living startup Ollie (a shortened version of the resort-reminiscent term “all-inclusive”) in Long Island City’s Alta building. The move makes her one of the hundreds of young New Yorkers, mostly in their 20s and 30s, who are turning to co-living as a solution to frustrating and expensive apartment searches.

Co-living companies aim to disrupt traditional apartment life — just as coworking spaces did for staid office life — by borrowing the concept of resource-sharing. Tenants trade personal space for a fully furnished bedroom, shared common areas and sometimes group social events, all under a prix-fixe cost structure.
 
Say goodbye to frantically searching Craigslist for roommates, arguing over the internet bill, running to the bodega because you ran out of toilet paper, taking trips to Ikea or playing bed-bug roulette with the couch you found on the street. Say hello to, well, life in an adult dorm. Residents still have to deal with security deposits and income requirements, but the whole experience is much less Wild West than a classic New York apartment hunt.

The trend — which some treat as a half-step between college housing and the dog-eat-dog rental market — is growing in popularity, with companies like Ollie, Common, Roomrs, WeWork’s WeLive and Dwell gobbling up square footage from East Harlem to Midwood. Advocates say co-living is the future of housing in an increasingly cramped city, allowing people to trade privacy for shared amenities, a no-chores lifestyle and fun (if chaperoned) group outings. Critics say it’s a sanitized approach to city living for the generation that trusts Silicon Valley companies to solve problems, akin to eschewing the subway to take Ubers everywhere.
 
Chexnayder and her mother are fans. “As much as [my mom] loves New York, I think there is still an inherent concern that raises in your mind when you think, ‘Your new college grad is just moving to the city and starting a new life,’ ” says Chexnayder. “She got really emotional when I [found Ollie]. It was just a huge sigh of relief: ‘Ugh, we found a place, we are safe.’ ”

 Alta is on the higher end of the spectrum: The slick 43-story development opened last year and feels more like a hotel than a starter home. For rents ranging from $1,300 to $2,300, residents get a “microsuite” with a bed that folds into the wall to reveal a couch and mini living area, plus a shared kitchen and bathroom. Ollie, which partnered with Simon Baron Development to add its co-living spaces during construction, kitted out the units with brand-new appliances, dishware, furniture and TVs; it refills soap dispensers, drops off paper towels and offers weekly housekeeping and linen services. The building itself — a mix of rooms operated by Ollie and 297 traditional apartments — offers a full gym, a lap pool, a golf simulator, a yoga studio; a common room offers a ping-pong table and stadium seating that is set up during “Game of Thrones” and other screenings. Ollie’s studios in the building average 516 square feet.
 
For comparison, Chexnayder’s $1,700 room in a two-bedroom apartment on the open market might cost about $2,031, without utilities and furniture, according to data from brokerage MNS, since the average price of a two-bedroom as of March 2019 was $4,063.


The co-living idea has received its share of mockery — after all, the name sounds like a spiffy rebrand for the generic concept of “roommates.” But Ollie CEO Christopher Bledsoe says real estate developers need to break the mold to address the affordable housing crisis.


“There’s a large subset of the population that has either been priced out, or is feeling the pangs of loneliness, or is just looking or a more all-inclusive experience,” he says. Co-living companies can use economies of scale to save renters (or “members,” as some companies call them) money, since they are furnishing hundreds of rooms at a time.

Adds Bledsoe, “It’s counterintuitive, but we’re adding costs to improve affordability."

And this is why the subways are packed, the streets are congested with Ubers and Lyfts, landlords are weaponizing renovations in buildings with rent-stabilization, the rents are obscenely high and why the homeless population is going up. 

"Feeling the pangs of loneliness"???

"Improve affordability"???

 The marketing diarrhea that guy is spewing from his faceanus can't be any more tone-deaf.

Update:

I got a name for this mindless demographic of millenial urban professionals:

Muppies

Another report on how unaffordable it is to buy a home in New York City

Patch

Many New Yorkers may dream of buying a home, whether it's a Brooklyn Heights brownstone or an almost suburban house in eastern Queens. But a new report suggests housing is unaffordable for the typical worker in all five boroughs.

In the report published Thursday, ATTOM Data Solutions crunched housing and wage numbers for 473 of the nation's more than 3,000 counties nationwide. It determined affordability by assuming a 28 percent maximum "front-end" debt-to-income ratio. That means a buyer purchasing an affordable home would not be spending more than 28 percent of their income on house payments including insurance, mortgage and property taxes.

Every New York City borough is considered unaffordable, meaning median home prices in the first quarter of this year were too expensive for average wage earners. That was the case in 71 percent of the counties that were analyzed.

 The city's highest shares of income needed to purchase a median home were seen in Brooklyn and Manhattan, where a buyer needs 115.9 and 115 percent of the average annual earnings, respectively, the report shows.

Things weren't as bad — though still pretty dismal — on Staten Island, where the costs of buying a home eats up 72.4 percent of the average annual wages of $51,337, according to the report.


ATTOM's affordability index took median home prices from public sales deed data. Average wage figures came from the U.S. Bureau of Labor Statistics. In all, 231 million people live in the counties analyzed by the company.

 Here's what the researchers found for each New York City borough.
Manhattan

• Affordability index (Under 100 is less affordable than historic average): 76
• Median sales price: $1,862,500
• Year over year annualized wage growth: 6.8 percent
• Year over year median home price growth: 33 percent

Brooklyn

• Affordability index (Under 100 is less affordable than historic average): 92
• Median sales price: $760,000
• Year over year annualized wage growth: 5.8 percent
• Year over year median home price growth: 0 percent

Queens

• Affordability index (Under 100 is less affordable than historic average): 91
• Median sales price: $630,000
• Year over year annualized wage growth: 6.9 percent
• Year over year median home price growth: 7.7 percent

The Bronx

• Affordability index (Under 100 is less affordable than historic average): 91
• Median sales price: $445,000
• Year over year annualized wage growth: 5.7 percent
• Year over year median home price growth: 11 percent

Staten Island

• Affordability index (Under 100 is less affordable than historic average): 101
• Median sales price: $490,000
• Year over year annualized wage growth: 7.3 percent
• Year over year median home price growth: 1 percent

de Blasio's zoning policies will exacerbate unaffordability and gentrification according to housing study

Crain's

A recent study on rezonings could prove problematic for the de Blasio administration the next time it tries to rewrite the rules for development to promote affordable housing.

The January report studied two citywide rezonings in Chicago and found that housing prices there increased shortly after the zoning changes went into effect, while permits for new construction didn't increase. That conclusion could bolster New Yorkers' fears that the city's policy of rezoning neighborhoods for greater density will simply raise housing prices and increase the risk of displacement without delivering enough market-rate and affordable units to ease pressure on the housing market.

The de Blasio administration countered that rezonings in New York typically have spurred serious amounts of construction. And because City Hall has instituted a policy requiring some of that production to be permanently affordable and has created protections for existing tenants, the city argues the 15 neighborhoods targeted by the mayor for greater density will ultimately be a net win for New Yorkers.

Both sides have a point.

"The funny thing about my study is that … everybody is convinced that it proves their side of the equation," said Yonah Freemark, an MIT doctoral student, who authored the report.

Although rezoning for greater density seems like a logical way to alleviate housing crises in big cities, the effects on the neighborhoods themselves are not well understood. Most studies tend to take very broad views of housing policy to draw conclusions, such as cities with stricter zoning tend to have higher land-use costs. Studying the effects on a neighborhood level, however, has been more difficult. In New York, for example, many neighborhoods are rezoned precisely because they are already growing, making it difficult to attribute changes to pre-existing market forces or to the rezoning itself.

In addition, existing homeowners might expect that new development will bring more amenities to the area and so they jacked up their prices in response. Yet the study found that new building permits never materially expanded in any meaningful way after five years.
"If the product of upzoning is no change in construction levels but increases in property transaction values, including for some existing housing units," Freemark wrote, "this policy may have some negative consequences in upzoned neighborhoods that rapidly become more expensive." In other words, a rise in housing costs without more supply could put existing residents at risk for displacement.

More affordable housing but less affordability

From Crains:

The city is building and preserving more affordable housing than ever, but federal programs remain the most effective tool for supporting the poorest households, according to a report released Thursday.

The Citizens Budget Commission analyzed a recent housing survey and found that around 44% of households pay more than 30% of their income in rent—after accounting for government subsidies such as the Supplemental Nutrition Assistance Program and Section 8 housing vouchers.

The 30% rule, the federal standard for being rent-burdened, is an imperfect measurement. High earners could spend a third of their income on rent and still have money left over for luxuries; but some low-income residents, who make up the lion's share of the rent-burdened, can be hard-pressed to pay for necessities if 30% of their earnings go toward rent.

As the report notes, many of the poorest residents spend an even higher percentage of income on housing. About 22% of city households, predominantly made up of low-income senior citizens and single parents, were found to be severely rent-burdened, meaning they devote more than half of every paycheck to rent.

Who is lying when it comes to supply & demand?

From Crains:

New York City and the surrounding area, including northern New Jersey, the Hudson Valley and southwest Connecticut, is home to 22.8 million people working at 10.4 million jobs, the Metro Economic Snapshot released Tuesday by the Department of City Planning found. Since the last recession, the region has added around 708,000 new jobs—much more than anywhere else in the country in terms of raw numbers—but at a growth rate of just .9%, which is about half that of other metros and roughly on par with the country as a whole.

Over the same time period, the New York area added just 378,000 new housing units, far fewer than the number of jobs created and not nearly enough to meet demand. The mismatch was centered in the five boroughs and helped drive around 100,000 people to the suburbs each year between 2012 and 2016.

The metro area also lost a significant number of recent college graduates to lower-cost cities elsewhere in the country—something Glen has experienced personally.

"I just moved my daughter to Minneapolis," she said. "It was great, but it was also really sad."

From Forbes:

Researchers at the Fed found there were no "direct estimates of the rent elasticity with respect to new housing supply in the literature." No one knows how much housing you'd have to add to have any significant impact on costs. So, the researchers built a simulation to estimate, directly from data, the elasticity of rent with respect to housing supply.

They wanted to know how much rents might change if there was an influx of new housing. Given metropolitan housing crises and a lack of other data, it was an important study.

However, elasticity isn't a simple phenomenon. There are products where changing the price doesn't necessarily result in big shifts of demand. Look at the Apple iPhone X: $1,000 for the device and tens of millions purchased it.

The Fed report suggests that housing will be much the same:

The implication of this finding is that even if a city were able to ease some supply constraints to achieve a marginal increase in its housing stock, the city will not experience a meaningful reduction in rental burdens.

Add 5% more housing to the most expensive neighborhoods and the rents would drop only by 0.5%.

The reason is that people like the amenities in given neighborhoods and want to live there, so will continue to pay higher prices. Amenities can include shopping, schools, and ease of access to public transportation.

De Blasio jobs prediction is full of crap

From the Observer:

Nearly everyone noticed the lack of detail in Mayor Bill de Blasio’s State of the City proposal to create 100,000 “good-paying jobs”—and it appears that’s because it’s simply an extension of what the city’s mayoral-controlled Economic Development Corporation has done for the past 15 years.

The jobs proposal was the centerpiece of the State of the City address de Blasio delivered at the Apollo Theater in Harlem last Monday night. De Blasio vowed his policies would produce 100,000 positions over 10 years in a variety of sectors throughout the city, with salaries ranging anywhere from $50,000 to $75,000 a year or more.

The mayor promised work in film and TV, technology, life sciences and “advanced manufacturing,” though declined to offer much in the way of an explanation of how the city would generate these jobs.

“This new addition, this new focus on creating more and more good-paying jobs, this will be the new frontline in keeping New York City affordable,” he said.

For the mayor’s emphasis on what a “new” and ambitious undertaking this is, a 2016 report from the New York City Industrial Development Agency, a public benefit corporation that the EDC runs, credited its combination of tax incentives and bond financing with the creation and preservation of approximately 146,000 jobs since 2002. That would average roughly 10,428 jobs a year.

This would suggest that the mayor’s plan for 100,000 jobs between Fiscal Year 2018 and Fiscal Year 2028 is merely a projection of a pattern of growth the IDA and EDC established over the past decade and a half.

Can people with modest incomes afford NYC anymore?

From NBC:

The city comptroller's office says median rents across New York City rose 75 percent over a period of 12 years, while New Yorkers' medial real income declined by nearly 5 percent. Rob Schmitt reports from Williamsburg.

Building boom 2013

From the Daily News:

Construction this year in New York City is expected to hit pre-bust levels, according to the New York Building Congress, which represents top contractors and construction firms.

The group projects $31.5 billion in construction spending this year, a 14% rise from last year.

It’s the first time the industry has spent more than $30 billion since the crash and the most spending since 2006.

From Crain's:

What could better? A lot actually.

When the numbers are adjusted for inflation, the 2013 total will remain 15% below the 2007 peak in terms of work delivered.

The residential surge is even more problematic because it is based in large part on the construction of those spectacularly tall, thin and expensive apartment towers for the billionaires Mayor Michael Bloomberg loves so much. Just this week, Extell Development and Vornado settled a long-running dispute so they could each build one of those apartments buildings on 57th Street. Extell boss Gary Barnett, sounding like hizzoner, extolled the plan to The New York Times, saying, "This clears the way for the development of two great buildings that will enhance the skyline and contribute greatly to the economy of New York City."

However, the Building Congress report notes that last year New York City produced only 11,000 new housing units from $5.3 billion in residential construction because of the shift in the market to the Extell- and Vornado-type projects. In 2008, the city gained 33,000 units from almost the same amount of money, $5.8 billion.

From the Daily News:

Queens — once known for its Archie Bunker rowhouses and its strong ethnic enclaves — is the next New Thing for developers, a new survey revealed.

When asked where residential growth will be strongest outside Manhattan, roughly 30% of top developers surveyed said Queens. Another 20% specified Long Island City.

The company that conducted the survey wasn’t surprised.

“There is a demand for Queens,” said Martin Brady, a vice president at The Marketing Directors. “The land is cheaper and more available.”

Queens is already popular with urbanites priced out of Manhattan and uber-trendy Brooklyn — and now developers searching for large parcels of available land on the cheap are taking note.

The borough’s close proximity to midtown Manhattan, which can be about a 10 minute train ride in some places, is also a big selling point.

“I call Queens the new Brooklyn,” said real estate appraiser Jonathan Miller. “What you’re seeing is this never-ending search for greater affordability.”

Miller believes northwest Queens, a.k.a. the neighborhoods closest to Manhattan, will benefit the most from the boom.

He envisions more upscale — but not luxury — rental buildings going up in Astoria, Sunnyside, Woodside and Jackson Heights.

We're too poor to buy new cars

From Crains:

Median-income families in the New York area cannot afford new cars at their average purchase price nationally, according to a study by Interest.com. Those families are in good company, though, since the same is true in all but one of the country's largest metropolitan areas.

Interest.com calculated what households in the country's 25 largest metropolitan areas could afford to spend on cars. They factored in median income, sales tax and insurance costs, creating an affordability index for car purchases. The New York metropolitan area ranked at No. 10 on that list, right behind San Diego and ahead of Philadelphia.

The study found that the affordable purchase price for a New York City household's new car is $21,464, or a maximum monthly payment of $431.

What the study mainly illustrates is that people spend too much money on their cars, said Mike Sante, Interest.com's managing editor. In New York, car costs are driven up by higher-than-average sales taxes and insurance costs.

"It just makes buying a car that much more expensive," Mr. Sante said.

Higher incomes offset this a bit, but New Yorkers also have to pay more for housing. There is much more flexibility in choosing a car, Mr. Sante said, so people in expensive housing markets like New York have even more to gain by making a smart car decision.

"The thing for New Yorkers that is so critical is that you have to pay a lot for housing," Mr. Sante said. "This is your second biggest expense and you really need to keep it under control."

Word of the year

From the NY Post:

Beyond suggesting that a secretive force of “elites” is responsible for making life here too damn expensive, the pols are promising additional subsidies for more people. From housing to child care to transit, they’re saying that, as mayor, they would make life cheaper for nearly everybody else by taking more money from a few wealthy taxpayers.

In their dreams. If higher taxes and more subsides were the key to affordability, the problem would have been solved long ago.

City tax revenues have nearly doubled, from over $21 billion a year to more than $42 billion, since Bloomberg took office. How much more in taxes and spending do the candidates think it will take to keep their promises of “affordability?” And who is going to pay those taxes?

Trust me — they don’t have a clue, because they’re on a false goose chase. More subsidies for some will chase others out of New York and lead to more poverty for many who stay.

Here’s an offer to the candidates: A Truth in Promises award goes to the first one who plants a money tree and vows to use its fruit to make Gotham more affordable. If the tree fails to bloom with $100 bills by September, the winner agrees to go to Plan B — cutting government spending to a level that New Yorkers can afford.

Do we have a deal?