A permanent housing crisis begs for permanently affordable homeownership

There is more at stake in New York City’s housing crisis than meets the eye. On the surface, we know that since 2002 more than 330,000 affordable rental units have been lost to the open market. With skyrocketing housing prices, more families struggle to make ends meet and are increasingly forced to move away from the city’s center, chasing a seemingly endless promise of affordability further and further along the MTA lines.

The problem with the conversation about New York’s rental housing crisis is that it often skirts a deeply important issue – that most New Yorkers cannot afford homeownership within the five boroughs.

While the issue of affordable housing impacts a large portion of New York renters, affordable home ownership is a critical tool for ensuring the long-term stability of the city’s housing plan. Owning a home brings with it a multitude of benefits for a family and the neighborhood, including higher educational outcomes, more stable employment and greater financial stability. Homeownership is also the time-tested model for hardworking, low-income New Yorkers to break through to the middle class.

Yet, according to a recent report from NYU’s Furman Center, the majority of sales in New York City are too expensive for the vast majority of households, and the city-wide homeownership rate of 31 percent is less than half the rate in the rest of the country. While the homeownership rate varies by borough and is as high as 68 percent in Staten Island, in the Bronx the rate is only 18 percent – the second lowest of any county in the United States. Some of the suburbs surrounding New York City are also becoming unaffordable: In Westchester, only 18 percent of home sales were affordable to households earning up to $114,000.

With few opportunities for first-time homeowners to purchase a starter home in the five boroughs, families that would have left the rental market remain in units that may otherwise have gone to a lower-income family. This stagnation of the housing continuum may very well be contributing to the strain on our rental markets and increasing family homelessness.

But these facts don’t help us understand how we found ourselves here in the first place, and why permanent affordability mechanisms would ensure that future generations are secure from a similar housing crisis.

Unfortunately, the programs and investments in affordable homeownership from past decades were not set up to last. Anti-flip restrictions and 20-year tax abatements, while ensuring the home is affordable for the first purchaser, fail to ensure that a unit built in communities like Harlem or Bedford-Stuyvesant would remain affordable once the first homeowner sells on the open market. Mitchell-Lama developments built to provide workforce homeownership opportunities throughout the city have thrived, but are now opting out of affordability restrictions. In addition, down-payment assistance programs once used to provide a step up the ladder for low-income families are no longer adequate in today’s high-cost market, and also did not include long-term requirements to preserve the opportunity afforded to initial participants in those programs.

The failure to anticipate long-term cost increases in the past has put our city’s present and future at risk. We now find ourselves searching for ways to claw back precious housing stock against the overwhelming tide that is the New York City real estate market.

Faced with this reality, we should alter our course and lay the foundation for an alternative, affordable homeownership market that will be accessible to our children’s children.

To address this problem, the city must consider permanent solutions to what appears to be a permanent crisis. The community land trust (CLT) model is an important tool missing from the city’s toolbox.

As community-focused nonprofit organizations, CLTs own the land and lease it back to the homeowners for periods up to 99 years. This ground lease relationship is a means of ensuring the permanent affordability of housing while enabling homeowners to reap all the other benefits of homeownership. Homeowners on CLT land are legally required to sell their home to another income-qualified family, thereby preserving the home’s affordability in perpetuity. It is an arrangement that both satisfies the community’s need for permanent, long-term affordability and the individual’s dream to own a stake in their neighborhood.

Had the CLT model been used 40 years ago, there would be a community-based, mission-driven entity overseeing the thousands of homeownership units constructed in the last half century. This stewardship would have been the failsafe to ensure that the private profit motive of New York City’s real estate market wouldn’t supersede the public benefit the community should retain from extensive public investment.

The Coalition for Affordable Homes and the New York City Community Land Initiative (NYCCLI) – alliances of nonprofit service providers, academics, affordable housing developers and community activists – have led the charge to educate the public about community land trusts. While the city has been slow to adopt the CLT model, earlier this fall, City Councilman Donovan Richards took the first step in building support for the model by introducing Intro. 1269, which would enter the phrase “community land trust” into the city’s administrative code and allow the city to establish regulatory agreements directly with CLTs.

This is a great first step, but further action is needed by the state to provide long-term tax relief for the land held in trust for the purposes of permanently affordable housing. Furthermore, existing subsidy programs providing capital resources and down-payment assistance for low- and moderate-income homeowners should be expanded and tied to permanent resale restrictions. All of these steps would go a long way to incentivize the creation and preservation of affordable homeownership opportunities that will last.

The de Blasio administration has been aggressive in its campaign to combat the city’s housing crisis, pursuing the preservation and construction of 200,000 affordable housing units. However, the vast majority of these units are rental housing, while affordable homeownership remains an exceedingly small piece of the city’s housing strategy. While we laud the scope and ambition of the mayor’s efforts, if we are going to be serious about the long-term success of New York City neighborhoods, we must mitigate the impact of gentrification and prevent the displacement of low-income families resulting from the tide of more affluent newcomers.

By now we know that there isn’t a neighborhood that isn’t threatened by the city’s growing housing crisis. Neighborhoods all across the city continue to transform as a result of higher housing costs and loss of displaced families. Investing in and sustaining affordable homeownership opportunities for New York’s low- and moderate-income families is essential in the effort to combat displacement and will preserve much needed affordable housing stock that would otherwise be lost to the open market. Community land trusts are an important solution we need to the city’s permanent affordability problem.

Karen Haycox is the CEO of Habitat for Humanity of New York City.