Plenty of new commercial buildings are still under construction and affordable housing (affordable refers to units that have been developed with some form of government subsidies and are intended for family groups with incomes below a certain level) is starting to become a reality for many people in the Bronx and around the city.
According to the May 2022 NYC Housing Tracker Report, District 17 of the South Bronx (median household income $31,615 with 36% of the population below the federal poverty level) ranks first in the period between January 2014 and December 2021 for new affordable units built (8,555). District 8 (Manhattan and Bronx) ranks third with 4,989 units and District 16 of the Bronx is ninth with 2,405 units. However, some stiff opposition among residents may halt this progress.
Before we dive into the real estate development landscape of the Bronx, it might be helpful to know the current state of housing in the city as a whole.
While New York City has made significant strides over the past 40 years in combating homelessness and the affordability crisis, both issues remain significant problems for many New Yorkers today. Real estate investors and politicians are continually doing everything they can to offer affordable housing to people in need, but the problem seems to continue.
The New Yorkers who can afford to house are often contributing over 30 percent of their wages to their housing payment–making them rent-burdened and having less money to spend on healthy foods, education, healthcare, and many other necessities.
First-time homebuyers and minority groups are seeing the effects of rising prices and runaway inflation first-hand. Most first-time homebuyers don’t have enough wealth to afford a home in New York City and become priced out of the market.
Additionally, minority groups are disproportionately issued fewer loans than white homebuyers. This is illustrated by the below graph showing that white homebuyers made up 44 percent of new purchase loans while Black and Hispanic home buyers only accounted for 11 percent of new loans in 2020.
Even further, Black and Hispanic borrowers often receive higher interest rates on purchase loans and don’t have the equity or reserves to refinance at a better rate.
The issues many New Yorkers face are due to the fact that the housing market hasn’t been able to keep up with the pace of job and population growth. Affordable housing is built slower than what’s needed to help solve the population and homelessness problem in the city.
Some efforts to encourage affordable housing projects in the Bronx experienced stiff opposition from community members. Earlier this year, Bronx residents opposed a 140-bed homeless shelter construction project in Morris Park that would have provided shelter for homeless men in the Bronx. The opposition to the affordable housing project cited concerns over the development company, and how they create homeless shelters and then sell maintenance services to the non-profits who operate the shelter.
However, there is still plenty of opportunity for real estate developers in the Bronx to start new development projects that center around offering affordable housing to those in need. Construction costs are starting to stabilize, but the housing shortage remains a real problem that drives up rent prices and makes buying or renting a home unaffordable for most low-income residents.
In its Housing Blueprint, a housing plan to solve housing affordability and homelessness, the City of NY said that the only way to solve the homelessness and affordability crisis is through changing the trajectory of housing growth throughout the city. With an all-time high of over 8.8 million residents, the city needs to increase efforts to create and maintain affordable housing for those in need. Their administration instituted a citywide effort that offers incentives for real estate investors to build affordable housing projects.
Additionally, the City of NY said they plan to pursue regulatory reform by funding research into construction technology for real estate developers. This will lower housing prices and accelerate housing development across the city, hoping to keep pace with the growing population. Another possibility for being able to build more affordable units is the rezoning of some areas (ie the Bruckner rezoning in the East Bronx district) and of course a 421A replacement program with new criteria.
While the housing and affordability crisis continues throughout New York City, there remains plenty of opportunity to build affordable housing as a real estate developer in 2023 and beyond, especially if there will be creativity and swiftness on the part of the City and the State of NY in creating the best conditions for a new urban development The South Bronx area is in need of housing developments to provide for the needs of their minorities and homeless population, and now couldn’t be a better time to capitalize on this opportunity for everyone.