New York City, a city I praise often, seems to defy the odds, these days. (When I talk of NYC, I’m mostly talking about Manhattan, not all five boroughs.)
It’s never been more popular – the city’s population increased by 200,000 people between 2000 and 2005 (and Manhattan by 60,000 residents), its commercial vacancy rate is at something like 5%, its rental vacancy rate is at something like 1%, it has the lowest crime rate ever recorded, etc.
I think it’s worth comparing our two cities, or, worth taking a look at what goes on in New York, to see if we should consider doing the same sorts of things, here.
Here’s the funny thing. More and more people want to move to New York City, even as it gets more and more expensive to live there. Why is it more expensive? Because of supply and demand, right?
So, you wouldn’t think of restricting supply now, would you?
But, of course, that’s what New York (and other major US cities) end up doing. Once a neighborhood gets all popular and everything, suddenly everyone who lives there is like, “We don’t want any more residential buildings constructed,” right?
Which, of course, starts limiting what you can build, and where.
Then, you have the city’s government getting involved (again, in NYC and in other cities) saying, “Housing is too expensive, we need to build affordable housing.” Which, of course, does nothing to satisfy the needs and wants of the upper-income people who want to move into the city and are willing to pay top dollar for the opportunity (unlike those lower on the income scale who are more restricted in what they can buy).
New York City had a great program called 421-a tax abatements. Basically (as I understand it), new homeowners wouldn’t have to pay any property taxes on their condos, above what the property was taxed at, before their buildings were constructed (meaning, the empty lot that used to be in the space taxed at $100,000 for the whole thing, would now be taxed at $100,000, even though $100 million worth of condos were in the same place).
The city got a lot of flack for this, mostly because the abatements were granted to developers building in the middle of Manhattan, certainly not a place that needed any incentives to encourage buyers.
” … the Bloomberg administration â€” while encouraging development through rezoning and subsidies tied to affordable housing â€” has put curbs on two of the most popular development incentives in modern New York history: the 421-a and the 421-b tax abatements. The city now ties the 421-a, which gives developers tax breaks that often translate into savings for apartment buyers, more to affordable housing. The 421-b, eliminated last summer, gave similar breaks for single-family homes, mostly in Staten Island.”
Because of the cost of construction and the cost of land, developers will be less eager to build in New York City (so they say), because their profits will be less than desirable.
So what am I saying? I guess this:
1) You can’t always prove the point that high housing prices drive homeowners away. Maybe New York City is the exception proving the rule, but maybe, instead, there’s something there that we can replicate, in Boston.
2) Putting restrictions on the natural growth of a city, through taxes or regulation, does nothing to alleviate the housing shortage; in fact, it does the opposite, by limiting supply, which ends up increasing prices, etc., etc., etc. (Ironically, the cities deal with these higher prices by adopting affordable housing programs, which increase the cost of building, which increase the prices of condos for sale!)
3) Nothing lasts forever. Cities need to plan better; New York has a plan for what the city will and/or should look like in 2030 (it’s not been publicly released, yet) (they are projecting an additional 1 million people by then!). Boston probably has a couple plans sitting around collecting dust (I’m sure the BRA would be glad to show you some of them … wait, where they hell IS the BRA’s office???). NYC’s plans include more housing for everyone, increased infrastructure expenditures, etc. What do we got?
More: Mayor Trumpets Building Boom, But Weâ€™re Still Bursting at the Seams – By Tom Acitelli, The New York Observer