Housing versus Homeowner

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Photo by Lou Cespedes

by Lou Cespedes – 

Recently, as I was walking back from petitioning, I approached a homeowner. I introduced myself and made my pitch. She looked at me and said, “Why should I help you? – What are you going to do about THAT?” – pointing to a new 6 story building right next to her house. Her house is a sprawling corner lot, with a handsome wood-frame home. She looked at me sternly as I tried to answer and asked, “How are you going to stop that?” I politely responded, “we cannot”. 

Obviously, she was not happy with my response. I don’t blame her to be honest. Nonetheless, it is the truth, as much as it pains me to say so. However, her concerns reveal a much deeper and bigger issue in our community about “housing”. What does that mean? The answer depends on who you ask. For some, housing means being able to afford rent for an apartment in a reasonably safe neighborhood. For others, housing means being able to hold on to the house you purchased. How does one reconcile the two? 

The term “affordable housing” is actually a misnomer, a proverbial urban myth.  It cost the same amount of money to build an “affordable apartment” versus a “market rate” apartment. The difference is how property tax is applied. Ironically, when we ask for “affordable housing” in our community, we are making homeownership less affordable. “Subsidized housing” is a better term because through the 421-A, a state property tax abatement, homeowners are offsetting property tax for developers. New apartment buildings in our community DO NOT PAY property tax. Instead, our appraised property value increases to make up for the “subsidy” used to help finance those new buildings. This is important for homeowners to know, as we explore why our community is changing so rapidly and becoming less affordable.

Homeowners with large wood frame houses are in danger. As property tax becomes higher, it is harder and harder to afford maintaining these large houses. You need to invest at least 5 to 8 thousand dollars per year to maintain your home. If you are not spending on maintenance, you are likely not keeping up the “value” of your home (which is different than the value of your land).

When your home falls into disrepair, over time, the land your house sits on becomes more valuable than the house itself. The reason is simple. If your home is in disrepair, it is less likely to be purchased by another family or “end-user” because the cost of buying and repairing the home in disrepair is usually beyond the means of first-time home buyers, and banks will not offer loans to purchase a home that “won’t appraise”. This simply means, a bank will not provide a borrower a loan to pay more than what a “house in disrepair” is worth. This makes it much more likely those houses will be purchased by DEVELOPERS!

Conversely, renters who are seeking more “affordable housing” options also find themselves with less affordable rents. For developers, its “win-win”. For homeowners it’s “lose-lose”. For renters, its “pay-pay”. Why you ask? The answer again is strikingly simple – the more they pay, the more “appraised value” is prescribed to THE LAND in your community – as the land becomes more valuable it, it becomes “less affordable” for renters and buyers seeking housing. This is the process by which GENTRIFICATION occurs, causing higher earners outside our community to flock here, because our neighborhood is cheaper than other areas where gentrification has already occurred, thus pushing out lower earning long term residents in our community.

What many people don’t know is that homeowners are the largest source of affordable housing in our community. As more new buildings are created, our financial footing in this community slips away. The way to change this is NOT by trying to “stop building” – that is not possible – but rather by ensuring that NO REZONING occurs in our community allowing for even larger buildings. Building slower and eliminating the 421-A subsidy is the right answer. More importantly, homeowners must be given tools to remain stakeholders and profit from the development of our community. This can be done, and we can change the reality. What we need is truth and sober recognition of the problem we are facing to find solutions that really work to the interests of our long-term residents. 

Although the homeowner I spoke to was not happy with my answer, she DID sign my petition. I believe it was because I told her the truth and I detailed the problem. Now I’ve also shared the truth with you. Consider it carefully.

Twitter: @louforflatbush         Jeremiah 9 v.12

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