Across the country, crowed homeless shelters and dilapidated neighborhoods are testimony to just how painful years of the foreclosure crisis has been for families. The foreclosure crisis has been as persistent as it has been terrible: At six years, the housing market has been in its longest slide since the Great Depression. However, in the past couple weeks housing experts have been reporting that the worst may be over. This cautiously optimistic talk of recovery is couched in phrases such as “prices are up,” or “sold for more than asking.”
Before we jump back into the feverish fray of home-buying (and mortgage-signing), it is important to think about what kind of “recovery” there has been so far, and what kind we really want. The foreclosure crisis – as terrible as it has been – has also been an opportunity to reject the practices that brought us to our knees in 2008, and to restart the housing market in a more sustainable, more responsible and more socially just way. Here’s what we’re warning against:
Multifamily Rent-Regulated Housing
Raising rents in the multifamily housing market have led some to believe that the rental market is booming. Demand for housing is high, and in New York City, the apartment vacancy level is very low. At the same time, buildings languish in foreclosure across the Bronx and Brooklyn, leading to condition deterioration and impact tenants’ quality of life. As banks seek to resolve these foreclosures, it is essential that they sell this housing stock at reduced prices that reflect actual conditions in the building. The renewed interest in multifamily housing investment could lead to a second round of Predatory Equity, which would be detrimental for tenants in rent-regulated buildings. In order to have the housing recovery that New York City tenants desperately need, this speculative cycle must be broken! This means that banks must take real rents and housing conditions into account when selling and making new loans.
The past few years have seen an increase in our desire to live in high density neighborhoods, close to mass transit, and in neighborhoods with high walkability scores. This is a progressive step away from what Kaid Benfield of The Atlantic Cities calls the “Ponzi Scheme” of suburban sprawl. As the housing market recovers, there is increased growth on the edges of cities, so as the Wall Street Journal poignantly puts it: “What’s Next for Housing? More Sprawl.” While the housing market recovers, familiar patterns of suburban growth at the edges of cities will reemerge. This movement away from more sustainable living is bad news for housing activists and for environmentalists alike.
Of course, this isn’t the first time that the media has prematurely heralded in a housing market recovery, so it could be just hot air. If it is true it, however, it’s important to think about the lessons we’ve learned – or should have learned – from the last six years of crisis. Like the fact that rent regulated multifamily housing is not an “under-performing asset.” Apartment buildings have real values that can’t be inflated without deferring services or evicting tenants (i.e. predatory equity). Or the knowledge that irresponsible lending fuels a speculative housing market that can lead to crisis, and that the burden of that crisis falls primarily on low income individuals.
A building in foreclosure is in limbo, between crisis and opportunity. When we organize in these buildings, we tell tenants that it is the optimal time to form a tenants association and demand a say in the kind of housing that they want. That’s why we believe that there is possibility, right now, to reclaim all of this distressed housing – single family and multifamily alike – in a way that preserves affordability and stabilizes neighborhoods.
Many of the buildings that remain in foreclosure in New York City are small and far apart. This represents a massive management and preservation challenge. That’s why the solution is for multifamily and single family housing advocates to work together to development one facility that has the capacity to buy distressed notes in bulk, with the intention of preservation outcomes. This bulk note sale must be done, before private equity groups swoop in and do it first — turning the buildings back into “investments” that don’t have residents’ interest at heart.
What we need is an interim facility. We need to be able to scoop up the distressed, affordable housing stock, stabilize it, and allow tenants the time and space to make their own choices and have those choices be real options on the table. It’s their home; shouldn’t they be the ones making the decisions? To learn more about our vision of a NYC interim facility, click here.