In the latest push to provide housing to New Yorkers who have long been shut out of the housing market, New York State is going on a massive buying spree.
Effective today, those fortunate enough to own New York real estate can sell their lots, buildings, or apartments at market rate to the Social Housing Development Authority—the state entity that formed after more than a decade of intense political battle. The Authority’s recent successful bond sale—the bonds are guaranteed by the state—has raised more than 10 billion. And this is essentially a pilot project for what is slated to be a transformative housing landscape in the nation’s largest city.
But why, you ask, would owners want to sell?
Doesn’t every New Yorker know that owning a little piece of the apple—and holding onto it, and reaping the cashflow rewards or persistently high rents while the asset itself appreciates, is the key to building generational wealth? Until now, it’s been a win-win for the property-owning class.
"I'll probably have to sell about half my buildings just to stay afloat," he says. "And that's simply un-American." When asked what he would do with the tens of millions of profits those sales would bring in, Mr. Flip routed the call to his personal AI assistant.
But that has changed.
“Owners are encouraged to sell,” explains the authority’s commissioner, Samuel Stein, “by the gradual strengthening of rent regulations, which recently hit a peak in the Protect New Yorkers (universal stabilization) Act. That makes landlording a whole lot less of a sweet deal than it used to be, and owners who found themselves investing and renting out space simply because it was easy money but never set out to be landlords are now waking up to the fact that the gravy train is over. The constitution protects their property rights, so we can’t just take it, but we’re offering them a fair price to get out of landlording. We think many will cash out.”
"These mini-Maos won't stop until they take everything from you. First, it's your building. Later, they'll take your kids. Your toothbrush."
“These mini-Maos won’t stop until they take everything from you,” says Brandon Flip, a landlord who owns more than twenty luxury rental buildings spanning The Bronx to Crown Heights, Brooklyn. “First, it’s your building. Later, they’ll take your kids. Your toothbrush.” Flip has seen his rentrolls decrease substantially in the past years as rent caps have been enacted. “I’ll probably have to sell about half my buildings just to stay afloat,” he says. “And that’s simply un-American.” When asked what he would do with the tens of millions of profits those sales would bring in, Mr. Flip routed the call to his personal AI assistant.
The authority plans to obtain a massive mixed housing portfolio in the next few months and spend the first stage, spanning 2-3 years, on bringing the housing stock up to code and retrofitting buildings to serve families, twenty-somethings, communal living, and elderly living, using the Stages of Life building model. Many clusters of new units will also feature supportive resources such as therapy circles, healthy city kitchens, and medical clinics to serve formerly homeless and substance addicted New Yorkers as they settle into their new homes in the coming years.
But design isn’t the only thing that will be innovative as a result of this buying spree.
"The residents buy the building, while the city owns the land underneath it. In this system, New Yorkers won't make a killing by selling their apartments, but they can get back what they put in."
“Much of the housing will be land trusts,” says Stein. “The residents buy the building, while the city owns the land underneath it. It’s governed in a slightly more complex-than-usual form of coop: homeowners share power with the city. In this system, New Yorkers won’t make a killing by selling their apartments, but they can get back what they put in. Meanwhile, the city benefits from investment, and perhaps most important of all, tenants will have a sense of ownership. That means the buildings will be maintained with dignity, and people will be leading happier lives within them.”