Impact Of Foreclosures On New York’s Housing

May 28th, 2008

The Furman Center at New York University collects large amounts of data from various sources to compile a report of State of New York City Housing and Neighborhoods. The report makes for fascinating reading of facts and figures.

In the most recent report for 2006 the center found that only a third of the residents of New York owned houses. This is in comparison to the statistics that two thirds of Americans were house owners. There has been an increase in housing activity but not enough.

The Furman Center did not fail to note the implications of the foreclosure crisis. Some parts of New York have been spared but there have been high concentrations in other pockets. Foreclosure Houses are emanating from a dramatic rise in sub-prime mortgages. These had been sanctioned to those with questionable credit history. These mortgages, because of their shady terms are ‘far more vulnerable to foreclosure’.

There was a lively question and answer session based on the Furman report in which it was said that there has been a decline in affordability of houses also because of foreclosures. Incomes have become stagnant while prices have increased making matters worse. Sub-prime rates have jumped from 6.5% in 2002 to 22.9% in 2005.

Another point to note is that there are huge disparities in house ownership rates based on ethnicity and race. The Latinos owned the least number of houses – only 16% as compared to 43.8% of non-Hispanic White residents of New York. The foreclosure crisis is also squeezing renters. In 2005 there had been a dramatic rise in building activity with permits having been granted to 31,599 units. It is four times greater than 1990. But even that has not been able to satisfy the demand because of the low level of construction during the 1990’s. Swelling population has also led to increase of demand.

The ambitious plan of Mayor Michael Bloomberg hopes to bridge the gap. The low-income group is being targeted but the criticism is that the middle-income group should not be neglected. The problems are, rising building costs, lack of vacant land and budget sanctions. The Mayor will literally have to create ‘buildable land’ by sheer innovative programmes and enforcing underused capacity. Pressure has to be put on government and other related agencies. This alone will offset the damages caused by foreclosures. Bronx neighbourhoods are one of the worst neglected pockets.