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East New York Real Estate Prices Tripled Overnight

Row houses in East New York
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Row houses in East New York Sustainable Communities: East New York

The neighborhood that's supposed to be the model for new affordable housing developments is rapidly becoming unaffordable. East New York is the first of 15 sites to be developed under Mayor de Blasio's $41 billion housing plan that promises to build or maintain 200,000 units of cheap housing, but according to the Wall Street Journal, land prices there have almost tripled, from $32/square foot to $93.

Apartments in East New York now sell for $155/square foot, up from $143 last year.

In the first half of 2013, there were $2.7 million in real estate transactions conducted in the neighborhood. In the first sixth months of 2014, that number rose to $42 million.

In 2010, a housing complex with 43 affordable units received 15,000 applications.

How is the city's strategy of coaxing private developers to build affordable units supposed to work if getting a return on their investment is made exponentially more difficult?

If affordable rents in a neighborhood where the area median income hovers around $32,000/year (the city's median is $52,000) range from $375 to $625/month, but 80% of the development's housing will be built for those paying considerably more than $630, who is actually benefiting from this "affordable" housing?

In July, the executive director for the Department of City Planning, Purnima Kapur, told us that the city had commissioned a study to examine "what it is that market can support in terms of how much affordability we can ask from a private developer."

Now they might need a new study.

[UPDATE] Wiley Norvell, a spokesman from the Mayor's Office, emailed us this statement regarding the East New York study:

The sample size used in our study area of East New York is only five sales. This is hardly a scientific or exhaustive sample on which to draw conclusions. Moreover, there is a significant difference between land prices and rents that impact a tenant or small business. Someone may in fact purchase a building hoping or expecting that the City will allow for greater height or density. Their decision to pay more for the real estate is a reflection that a three story building could one day be a six story building, making the parcel more valuable. But that does not mean that the price per square foot that a tenant would pay for a one bedroom apartment or a storefront is increasing. Most importantly of all, no one will be able to build in the new zoning envelope without a significant provision of affordable housing. The result of the rezoning will be more affordable housing, not less.

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