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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Home away from home
 
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Yep. I'm not trying to say otherwise. The original point (long since lost ;) ) is that it's very difficult to provide affordable housing, as it's fighting market forces, and someone has to pay. Adding more units may not do the trick, and induced demand is one of the reasons why. So, I don't think adding a few thousand units to Journal Square will drive down housing costs in that neighborhood... especially as they are luxury units. It would also be very difficult to increase supply enough to make a serious dent in prices. Quote: Additionally, is Jersey City worse off today due to the new development than it was in the past? In my opinion, Jersey City is better than ever thanks to the new investments. Let's just say that... gentrification is a complicated issue.
Posted on: 2016/7/28 2:30
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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So in other words, without new construction, rents would be higher. Correct? I accept induced demand, but it's better than the alternative, which is to stifle new supply. Additionally, is Jersey City worse off today due to the new development than it was in the past? In my opinion, Jersey City is better than ever thanks to the new investments.
Posted on: 2016/7/27 22:54
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Home away from home
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Gentrification and low cost housing don't mix ... the goal of developers with planning approvals for city hall is to remove ALL low income dwellers and those of a socio-economic 'undesirable' group from a specific area. I doubt many if any, house / condo owners who has invested $500,000 plus, wants a low income housing estate or tenant has a neighbor.
Posted on: 2016/7/27 22:17
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My humor is for the silent blue collar majority - If my posts offend, slander or you deem inappropriate and seek deletion, contact the webmaster for jurisdiction.
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Yeah, too bad that's not what I'm suggesting at all. I did not say that SF prices will drop as people get priced out. What I'm saying is that when supply drops to near-zero levels, then people have no choice but to look elsewhere. If vacancy rates go up, then demand can increase, because living in that city now becomes an option. Induced demand. It's when an increase in supply causes an increase in demand. It's a thing. Look it up.
Posted on: 2016/7/27 22:09
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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It's not really about that, and the theory doesn't assume that more people are driving more miles. It's that when the capacity of the highway increases, then the highway becomes more enticing to people, and they are more likely to consider using that specific route. Similarly, as more units are built, the area can become more attractive, can support more businesses, residents can demand more amenities, and people can think "with all those new units, I bet I can find a place there." This is known as induced demand -- when an increase in supply produces an increase in consumption (demand) Quote: If JC didn't build lots of housing those buyers would buy up and bid-up the existing housing stock and spread farther into hitherto-ungentrified parts of the NY-metro area. So here's the thing. Some people 'round these parts think that with the massive number of units under construction, housing costs will bottom out. This is because they are assuming that an increase in supply must reduce prices. One problem with this theory is it assumes demand will be static, which probably won't be the case. In addition to JC's population increasing steadily, as noted it is entirely plausible that adding more units means more people don't have to look in Harrison and LIC and Newark. With higher vacancy rates, more people have the option to live in JC. So: If JC wasn't building, I do concur that prices will be higher. But even with the new construction, prices will likely continue to rise, as long as demand remains high.
Posted on: 2016/7/27 22:05
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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You have a basic misunderstanding of demand. People driven off by high prices do not reduce demand, they don't even get a chance to increase it. If you don't bid at a Picasso auction, you haven't increased the demand for Picasso's. Overflow does not reduce the amount a vessel holds, it's still full. SF prices do not go down because people are priced out, they'll go down when there's no longer people willing to pay that price.
Posted on: 2016/7/27 16:27
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Just can't stay away
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I see what you are saying, but I don't think the highway analogy applies to housing since highway-traffic generation is due to an increase in miles driven per person. With highways, you can theoretically generate more traffic by building more highways since once the highways exist, people can take longer excursions and thereby increase their miles driven or switch to driving to work instead of taking PT. But with housing, the amount of housing people use purely dependent on population. 99% of people can only afford one residence. If the highway analogy really applied to housing, then people would start buying extra apartments once more apartments are built, but that doesn't happen. Except for the top 0.1%, people are content with one urban residence at a time. (the closest equivalent to increasing miles-driven would be larger apartments, but I didn't think this was happening). If JC didn't build lots of housing those buyers would buy up and bid-up the existing housing stock and spread farther into hitherto-ungentrified parts of the NY-metro area.
Posted on: 2016/7/27 15:57
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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I assure you, my understanding of causality is just fine. :D This isn't much different than what we see with highways. A highway is heavily used, and gets congested; we expand the capacity of the highway; the relief is temporary, as six months later the road is congested again. What happens is that as capacity increases, more people realize they can use that highway, so more people choose to take that highway. Similarly, extreme scarcity can suppress demand. San Francisco has allowed minimal building, and demand is increasing, and this drives up the equilibrium price point. At some point, though, there is no supply available at almost any price point; you can't outbid people if nothing is available. (Vacancy rates in SF are 0.3%; the lowest in the US is San Jose at 0.2%) If you can't find an apartment in San Francisco itself, you have no choice but to look elsewhere, such as Oakland. The scarcity is driving off potential residents, thus it reduces demand, without necessarily reducing prices. What would happen if we magically generated 150,000 housing units in SF? In theory, this might reduce prices, as supply is dropping. However, there will be thousands of people who were formerly unable to live in SF, who now think it may be possible -- including people from outside the Bay Area. In the same way as expanding the capacity makes more people choose that highway, the expansion of supply means more people can consider moving to SF. So yes, it is certainly plausible that increasing supply can generate demand.
Posted on: 2016/7/27 14:01
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Home away from home
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well said. clearly, there is more at work than supply and demand. the cost of housing has only risen with supply. and development has mostly has occurred (without non-profit involvement or heavy subsidies) at the top of the market.
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Posted on: 2016/7/27 12:29
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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You have a causality problem. Much of what you are pointing to is a construction boom IN RESPONSE to skyrocketing prices. Developers aren't fools, construction costs being equal they build where the return is greatest.
Posted on: 2016/7/27 3:27
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Actually, I'm saying that the dynamics of supply and demand are seldom that simplistic, especially in real estate. While SF has seen prices go through the roof as a result of (among other factors) a refusal to increase density, we also have numerous examples of areas that add housing units and experience price increases. Again, that happened in Williamsburg, Hoboken, DTJC, Seattle, LIC, Washington DC.... And no, this is not a violation of the laws of supply and demand. Nothing about those market mechanisms means that demand must stay the same, or that an increase in supply is incapable of generating an increase in demand. Quote: Hoboken is known to restrict residential development and not coincidentally rents are skyrocketing while Jersey City has seen much more modest rent increases. Whaa? Hoboken HAS added large numbers of residential units. The entire waterfront was once a junky parking lot, now there are several residential towers. The former warehouse on 15th by the water was converted years ago, as have other former industrial buildings. The old Maxwell factory is now large residential units. New construction is dotted around town, including on the north side near the Light Rail. There's a massive new project planned for the rail yards. I mean, really, what do you think is happening in DTJC? Thousands of residential units have been added, and thousands more are being built. Has this suppressed housing prices? Not at all. It's resulted in more high-profile shops and amenities like Whole Foods, high-end restaurants, a pedestrian plaza, renovations to local parks. Crime has fallen, more affluent people move into the neighborhood, and voila... Demand increases. Adding people to support those businesses and changes is a part of that cycle. This should not be news. It's routine for gentrification to also increase density, while prices continue to rise.
Posted on: 2016/7/27 2:26
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Which almost certainly was sold as condos rather than held as rentals like MDM would have preferred. Nice post. I knew it intuitively but didn't have the numbers. The other desinsity issue not mentioned yet is unit size. Requiring larger minimum sizes reduces the number of homes too. That 6 unit once on MDM's lot may have only been 500 sq ft per unit. So now there's 2 homes where there were 6. Anyone still wondering why there's not enough housing when JC once was home to 316,715 in 1930 when most of Downtown was still railyards?
Posted on: 2016/7/26 21:45
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Not the case at all... Back in 2002 I picked up an empty corner lot at the city tax auction. The lot used to have a 6 family which burned to the ground. The bank that owned the mortgage declined to foreclose. I worked up a set of preliminary plans with my architect for a 2, 3, and 4 family property. Those designs were then forwarded to a manufacturer of steel framed buildings for price quotes. The steel building method was pretty cool. After the foundation was in place, the building would arrive in 2 tractor trailers and the frame, roof, and exterior sheeting would be installed. Other contractors would then install the siding and finish the interiors. The framing crew would show up on a Monday and be finishing up on a Friday (weather permitting). The max height for them was 4 stories. Beyond 4 stories required additional framing and foundation work. Beyond 4 you would have been better off going like 6 or 8 stories with a different building method. Cost of foundation for a 2 vs. 4 family: pretty much the same Cost of framing (material & labor) 2 vs. 4 family: More, but the cost per unit added dropped dramatically. There was a fixed cost to get the trucks and people there if it was 2 or 4 units. So the more units you added, the total cost per unit went down. Cost of roof: Same, so per unit cost went down by 50% Cost of siding: Putting up the masonry facade was definitely cheaper on a per unit basis when going up in units. Cost of utility service (excluding govt. fees): It isn't that much more expensive to go from a 200 AMP to a 400 AMP service, so cost per unit goes down Interior finishing costs: Some savings on a per unit basis as you can get a better price on the volume of material. Nothing on the labor. So a slight reduction in costs. Govt. Fees: Permits are based on the total cost of the project, so the permit fees actually got cheaper on a per unit basis going to a 4 family. What was really expensive was the fee from PVSC to hook up the sewer. But this was done (back then at least) on a per bedroom basis. So the PVSC permit costs were pretty much a wash. After talking to planning, zoning, and the neighbors I settled on a 3 family as it had the best chance to get a variance (4 unit would have worked out better financially though.. even with the extra floor). A 2 family would not have provided a justifiable cash flow. With the signs of a property crash coming, I sold the property instead and paid down debt. One of those ass-ugly 2 family homes got built instead.
Posted on: 2016/7/26 19:46
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Just can't stay away
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I'm not a fan of Steve Fulop, but I think housing policy is an area where he is ok. Think of all the city establishments in the US who are anti-development and fight off most attempts to increase housing supply and alleviate pressure on renters. Steve Fulop and Jersey City are very open to new development. If you compare JC to NYC's outer boroughs and downstate New York, JC (and NJ in general) builds more units per capita in most years. ( NJ never gets any credit for anything, but in housing policy we're a lot better than NYC/NYS. https://newyorkyimby.com/2014/10/north ... heres-how-they-do-it.html ) Anyway, JC might try to force developers to build more affordable units, but it would make market-rate units more expensive and/or require bigger tax subsidies, or even reduce the total number of units that get built. Those are pretty big tradeoffs if you ask me.
Posted on: 2016/7/26 19:44
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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You state that creating more units often leads to increases in housing costs. The truth is just the opposite. San Francisco is notorious for restricting the supply of new housing and they have the highest rents of all! Closer to home, Hoboken is known to restrict residential development and not coincidentally rents are skyrocketing while Jersey City has seen much more modest rent increases. To suggest otherwise would be to argue against the Laws of Supply and Demand.
Posted on: 2016/7/26 18:37
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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How? With new units, you aren't going to save on design or construction costs. It'll take longer to build, especially given the permit process (gaah). It'll be more expensive, meaning you are taking out a larger loan and thus more risk. With existing units, it's not like the ongoing costs scale all that well. Maybe once you're at the Dixon / Lefrak level it doesn't cost much to add a few units, but if you own 2-10 buildings? Not really seeing it. Plus, on a broader scale, increasing density and the number of available units does not necessarily reduce rental or purchase prices. Even when units are added, demand is outstripping supply; in fact, creating more units often increases demand in gentrifying neighborhoods. E.g. there's a lot more housing in Williamsburg and DTJC now than there was 20 years ago, yet housing costs in those areas are very high, and still climbing. Quote: There is a lot of demand for affordable apartments (i.e. 2 bedrooms under $1,200 a month). I'm sure. But there isn't as much demand for apartments that aren't close to a PATH train and a supermarket, and aren't spruced up yet. Even given the higher costs, I have serious doubts that the profit margins are better on a 20-unit building in Greenpoint than in DTJC. I'd need to see some real math on that. Unless we're talking about the slumlord route....
Posted on: 2016/7/26 18:25
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Allow a density bonus if 20 percent of the units in a new building are affordable. The amount of the density bonus is directly proportionate to how seriously the city wants to tackle the affordable housing issue.
A couple of the redevelopment plans already do this - so it's just a matter of expanding what's already existing. The main roadblock would be the selfish neighborhood associations, those concerns about parking and xenophobes.
Posted on: 2016/7/26 18:23
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Developers, taxpayers, the state. Just one of the many reasons why setting up affordable housing is a tough sell.
Posted on: 2016/7/26 18:10
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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If the zoning was changed, you would get affordable apartments built without subsidies and with only a short term abatement of 5 years. BTW: I have a total of 12 units. Total number of kids in the JC school system: 0 Once my tenants kids get old enough they either move or send the kids to a non-public school. I am curious as to the other landlords here as to the total number of kids (themselves or tenants) are actually in the school system.
Posted on: 2016/7/26 18:01
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Affordable housing receive tax abatements, meaning little goes to County services -5% and nothing to the schools. As I mentioned earlier JC should not be compared to NYC which does affordable housing. Everyone in NYC pays an income tax and contributes to the sales tax. In theory if every abated property did not exists in JC, a number of schools would be closed, perhaps half. Both the county and school systems are going up 3% for 2016 and not one person living in affordable housing in JC will pay any of that increase. I received the tax breakdown from the city. The problem is not affordable housing, the problem is providing the serves for affordable housing. The real irony on affordable housing, it does not really service the local community. I remember in the 1970s and 1980s when Russians and Polish people were coming to JC due to overseas problems. They were place in affordable housing. I am sure the Syrian immigrants will be place in affordable housing too. Will the feds reimbursement JC? The answer is no.
Posted on: 2016/7/26 17:46
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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A 4 family building will pay more in property taxes than a 2 family. It will also pay more in water/sewer charges and other fees. It will also pay more in sales taxes on the utilities, which then go to the state (which covers the bulk of JC's school costs). The issue that Brewster was making (and has been made on other topic threads) is that you get an economy of scale the more units you put into a single building. There is a lot of demand for affordable apartments (i.e. 2 bedrooms under $1,200 a month). For a landlord, it isn't the total rent that matters so much, but the positive cash flow / return on investment you get. In areas outside of Newport and the Downtown, you can make a better profit margin with less expensive units than you could trying to rent a high end apartment that probably would remain vacant, unless you cut the rent or allow the apartment to be loaded up with multiple people. It is impossible to offer an affordable apartment when you can only build/rent a 2 family unless you bought it for dirt cheap (pre year 2000 outside of the downtown area).
Posted on: 2016/7/26 17:29
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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The problem with this article, who pays the services? You are bringing in children, that mean schools, more police and fire services. In order to do this others must pay the services. Do not compare JC to NYC which has an income and sales tax.
Posted on: 2016/7/26 12:54
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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You can increase affordable housing by increasing supply in NON-PREMIUM AREAS! Market rate in Greenville is way more affordable than Downtown where most new units are built. And how do tenants get pushed out of empty lots? Quote:
There's this kind of mixed density all over JC and it works perfectly fine. As for that location, a corner on a main 2 way N-S street is considered perfect for a neighborhood business like a restaurant or grocery. We're not talking about the middle of a residential street. I'd bet anything that whatever was there historically had commercial space.
Posted on: 2016/7/25 16:10
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Perfect solution. We've already earmarked the abatement money (that we don't yet collect), to fund education. Everyone wins, right?
Posted on: 2016/7/25 15:59
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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His entire article was focused on making an example of JC - when clearly it's a state-wide affordable housing crisis - that needs to be addressed at the state level. Perhaps we should get his professor to grade his proposal.
Posted on: 2016/7/25 15:01
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Hey Donal, maybe make tax exempt religious institutions (like St. Peter's) build affordable housing in lieu of being forced to pay real estate taxes?
Posted on: 2016/7/25 14:10
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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I guess you don't know that Mack-Cali got township approval for a hotel, apartment, and parking garage adjacent to the Mall at Short Hills that will have 200 rental units, with 15% affordable housing. And the developer will provide shuttle service to the train station. Plus, the town requires any similar project have affordable income housing.
Posted on: 2016/7/25 13:23
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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What's with the scare quotes around his job title? Where does he say that affordable housing is exclusively the responsibility of JC?
Posted on: 2016/7/25 13:22
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Yeah, not so much. The H1B program is at least 20 years old, and it's unlikely to change much any time soon. As of 2012, NYC had around 17,000 H1B visa holders, and almost 5000 of those were employed by the NYC Department of Education. I'm reasonably confident that H1B's do not have a big effect on housing costs in the NYC area.
Posted on: 2016/7/25 13:19
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Re: Better ways than abatements to address Jersey City's affordable housing crisis | Opinion
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Perhaps the "Associate Professor" would like to explain how many units he thinks JC should build, and why places like Millburn should be let off the hook?
http://www.njbiz.com/article/20150423 ... ng-need-at-200k-statewide
Posted on: 2016/7/25 13:06
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