Study Links Troubled NYC Multifamily Housing and Risk of Deterioration of Nearby Buildings
A new study reveals that over-mortgaged and foreclosed multifamily buildings increase the risk of deterioration of nearby buildings and raise costs to New York City private owners.
By Keith Loria, Contributing Writer
New York—A new study conducted by the Citizens Housing & Planning Council (CHPC) reveals that over-mortgaged and foreclosed multifamily buildings increase the risk of deterioration of nearby buildings and raise costs to New York City private owners in the form of additional Emergency Repair Program expenditures.
“New York City has been experiencing a unique problem in the housing bubble compared to that of most other communities,” Harold Shultz, senior fellow at CHPC, tells MHN. “We wanted to look at multifamily buildings that were over-mortgaged or in foreclosure and understand the affect on surrounding multifamily buildings.”
By examining more than 1,100 multifamily buildings across Brooklyn, the Bronx, Manhattan and Queens, “The Impact of Multifamily Foreclosures and Over-Mortgaging in Neighborhoods in New York City” study suggests that these buildings increase the likelihood of code violations.
Local Initiatives Support Corporation and the Urban Homesteading Assistance Board provided the data for analysis. CHPC started with the list of buildings and drew circles around them and compared the buildings inside to those around the circle by taking snapshots of the years 2008 and 2010.
“In our initial pass, we found substantial differences in C violations, total violations and emergency repairs,” Shultz says. “However, we were concerned we might be comparing different parts of the city with racial, economic and ethnic differences, so we also did regression analysis to try to eliminate the affects of race, income, ethnicity and building size.”
The data showed that for buildings within a 500-foot radius of an over-mortgaged building, the average percentage increase in ERP liens per building was at 198 percent.
For those buildings outside of the 500-foot circle, the average percentage decrease in ERP charges was 39 percent.
It also revealed that buildings within a 500-foot radius had $1,892,142 more in ERP charges in 2010 than they would have had if they were not near an over-mortgaged or foreclosed property, and the average per building percentage increase in Class C housing code violations was 13.7 percent in buildings located within 250 feet of an over-mortgaged building. The average increase per buildings outside of a 250 feet radius was only 6.3 percent.
“The Impact of Multifamily Foreclosures and Over-Mortgaging in Neighborhoods in New York City” survey was commissioned and funded by Enterprise Community Partners.
“We were excited to work with CHPC on this study because we felt that we were fulfilling a gap of information and also could point policy makers and others to understand the impact of cuts to federal finding,” Shola Olatoye, deputy director and director of relationship management at Enterprise, says. “There are thousands of affordable homes for low-income New Yorkers in physical and financial distress, and the results reveal a clear correlation between these failures and the decline of surrounding neighborhood buildings.”
With approximately 1.1 million multifamily buildings throughout New York City, the area has a much higher density of multifamily buildings than most cities, with almost two thirds of all New York housing units being rented.
Enterprise is hoping the survey is the first step to fix the problem of overleveraged buildings to preserve the City’s affordable housing and to revitalize and stabilize New York City neighborhoods.
“From our perspective, one of the key pieces of work here is to work with the city of New York and HPD to identify the buildings and then work with the broader preservation affordable housing sector to reposition these properties when possible to provide necessary rehabilitation when possible,” Olatoye says. “There’s a whole effort to encourage affordable housing developers to acquire these and keep them as affordable housing.”