Tons of New Apartments Are Being Built That Almost No One Can Afford
There’s a rampant homelessness crisis in large cities across the country, stoked by a lack of affordable housing units. But fear not — developers are constructing new apartments at a rapid clip this year.
The catch: Up to 80% of those rental units to be completed this year will be in luxury buildings the average person likely can’t afford, according to data obtained by the Wall Street Journal from the real estate analytics firm RealPage.
“A lot of these properties are competing for a small group of renters,” RealPage chief economist Greg Willett told the Wall Street Journal. “A typical renter can’t afford this brand-new product.”
A sizable portion of this year’s expected 371,000 new rental units will also come online in cities with deep poverty and inequality crises, like Los Angeles, Dallas, and Washington, D.C., according to the data released Wednesday. In Dallas, nearly 21% of the city’s population lives below the poverty line, compared to a national average near 12%. In Los Angeles, where the homelessness population has swelled to 36,300 people, the poverty rate is 19%. In D.C., nearly 17% of the population is impoverished. Collectively, those cities will get nearly 60,000 new units.
It wasn’t immediately clear what percentage of those units would be reserved for low-income renters, if any. But the new units will represent a 50% increase from the number of units completed last year nationwide — and more new units will be built in 2020 than in any year since the ‘80s, according to the Journal.
Developers often argue that building a new apartment is prohibitively expensive, making luxury units the only real profitable option for them, according to the Journal. And ideally, developers say, building more units for wealthy tenants means they’ll move out of their smaller apartments, leaving them available to lower-income renters. An analysis out of the Joint Center For Housing Studies of Harvard University found this isn’t happening.
“This process has not produced an adequate supply of rentals at the low end,” the researchers wrote.
These units can also be challenging to fill, although apartment occupancy overall is very high. For example, in Manhattan — where the skyline is filed with glossy luxury towers — one in four new luxury units built after 2013 remain unsold, according to the New York Times. Similarly, luxury units remain vacant in Seattle, Los Angeles, and Denver.
In some instances, cities try to quell the outrage over the rise in luxury units by reaching deals with developers to ensure a percentage of their units rent to people paying below-market rates. Detroit, for instance, recently ensured 20 percent of a luxury apartment building would be set aside for “affordable luxury” renters. The city then gave the property owner a 12-year, $1.46 million tax abatement, according to Model D Media. Similarly, New York City has set aside some luxury units for “affordable” housing. However, activists point out that the homes are really reserved for the upwardly mobile, or people making more than minimum wage. A Bklyner analysis found that only three out of 45 “affordable” housing units listed by the city were availed to those making Brooklyn’s median income of $52,782.
Cover: Construction was underway on Los Angeles projects Circa Luxury Condominiums and Park Hyatt Los Angeles at Oceanside Plaza in Los Angeles, California on September 11, 2017. (Photo By Raymond Boyd/Getty Images)
Source : Emma Ockerman Link