How I Learned to Stop Worrying and Love the Luxury Condo

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By Stephen Smith

With nine subway lines, downtown Brooklyn, New York, has more rapid transit than Chicago. You wouldn't know that looking at its parking requirements for new development: four spots for every 10 units in buildings of any significant size.

Transit activists and urbanists were originally hopeful that the city would eliminate the minimum requirements entirely for highly mass-transit-accessible neighborhoods such as Harlem, Williamsburg and downtown Brooklyn. The proposed reform, however, turned out to be a tepid disappointment: Parking minimums in downtown Brooklyn -- and only downtown Brooklyn -- would be lowered from four to two spaces for every 10 units. Only affordable-housing developers would be allowed to build completely transit-oriented buildings, relieved of the tens of thousands of dollars it costs to build each parking space.

Activists and developers have reason to feel let down. Amanda Burden is celebrated as a progressive and headstrong chief city planner, but her department's reforms are weak compared with those of cities as car-dependent as Sacramento, California, or Buffalo, New York, which have eliminated or are trying to eliminate off-street parking requirements entirely in at least small sections of their downtown cores.

But for Letitia James, a city council member from the Working Families Party whose district includes part of downtown Brooklyn, even these meager reforms are too much.

She objected in particular to existing buildings being allowed to take advantage of the new requirements and eliminate or redevelop some of their existing parking. "They would turn it into luxury housing," she told the New York Times, saying that would not address the need for affordable housing in Brooklyn.

By dismissing new luxury construction as irrelevant to affordable housing, James shows a misunderstanding of how housing markets interact and how the effects of new luxury construction (or the lack thereof) ripple throughout nearby neighborhoods. The would-be tenants of shiny new towers in downtown Brooklyn aren't going to disappear from the borough if we don't allow new luxury units to go up. They're just going to move farther into James's district.

Downtown Brooklyn has already undergone tremendous demographic change, but Crown Heights and Bedford-Stuyvesant, also within Brooklyn's 35th Council District, are still on the frontier of change. If downtown Brooklyn does not make room for more newcomers, it will simply price working-class residents out of less trendy, historically black neighborhoods like these. When a housing market is functioning properly, new luxury construction can not only prevent this type of gentrification but also reverse it entirely, creating new affordable housing units.

Housing economists call it "filtering." Housing filtering is the gradual decline of home values as structures age -- and with home values, prices and rents -- and the new opportunities for low-cost housing that this affords. In other words, with time, all housing eventually becomes affordable. Designs go out of style, appliances age and new technologies such as central air conditioning are not installed. Middle-class, single-family homes on the Lower East Side were carved up into tenement apartments during the late 1800s, and grand apartments across the city were divided into more reasonable one- and two- bedroom units during the Great Depression.

This concept might seem totally alien to New Yorkers today, though, who are accustomed to multimillion-dollar renovated brownstones and elite prewar co-ops. Because New York has allowed so little new construction after the passage of its anti-urban 1961 zoning code, most of its housing stock is very old, and so the opposite of filtering is occurring: gentrification. Rather than poor people moving into rich people's old houses and apartments, as had been the pattern for most of civilized history, gentrification is when the wealthy take the homes of the poor.

Sure, wealthy people would prefer to live in state-of-the-art buildings, with central air conditioning and large windows. And in places that make room for growth, such as Chicago or most middle-American suburbs, they do, because new development is allowed and new construction is affordable.

But New York has not allowed supply to keep up with demand, and so the wealthy settle for old buildings, and the poor and middle classes are condemned to long commutes and displacement from their old neighborhoods.

The irony of James's position on growth in downtown Brooklyn is that it's her core constituency, longtime black renters in Crown Heights and Bed-Stuy, who are bearing the brunt of this housing mismatch.

James and others worried about the growing housing affordability crisis in the wealthiest U.S. cities should keep in mind that the newcomers are rich enough to buy their way in, whether cities make room or not. The only question is, are they going to buy new homes, or are they going to take yours?

(Stephen Smith, a writer based in Brooklyn, New York who covers land use and transportation, is a contributor to the Ticker. Follow him on Twitter.)

Read more breaking commentary from Bloomberg View at the Ticker.

-0- Dec/04/2012 22:17 GMT