With the new year now here, we consider 2024 and the real estate trends that may impact cooperative and condominium buildings. There are three trends of interest for the upcoming year: the migrant crisis and the City’s (in)ability to address issues posed by the migrants; the profound housing shortage for moderate-income city residents and, lastly, the downward price pressure on cooperative and condominium units.
Migrant Crisis
More than 100,000 undocumented migrants have entered New York City’s welfare system seeking temporary housing. The city has been struggling to house them and in response is waiving zoning laws in order to ease repurposing commercial buildings into temporary housing in many neighborhoods. However, since the Fire and Sanitary Code requirements are not waivable; the City must comply with them.
The primary issue for cooperative and condominium properties from these facilities is sanitation: the city is not providing sufficient trash pickups, among other services. Also, the migrants are not eligible for health care except in extreme emergencies, but are bringing a host of communicable illnesses, including gastrointestinal and respiratory viruses as well as antibiotic-resistant tuberculosis. Any public health issue should be reported to the city and state health departments. If necessary, building management may consult a certified industrial hygienist for additional information and support.
Housing Shortage
Moderate-income housing has been in short supply in New York City for many years. As job growth has increased in the city, the need for additional housing has also grown. Various mayoral administrations have tried to address this issue, generally with no success.
The present administration is looking at what it calls the “City of Yes” proposal, which seeks to create 100,000 new homes over 15 years by, among other things, lifting zoning restrictions on the conversion of commercial buildings to residential.
Regular readers of this column know that zoning is only a small part of the conversion problem. The real issues relate to the requirements under the Multiple Dwelling Law that mandates operable windows in bedrooms, adequate numbers of bathrooms and other health and safety requirements. Because the city can’t waive health and safety requirements, these constraints continue to preclude these conversions.
The “Yes” proposal includes types of housing that have not been considered desirable, such as dormitory-type housing and basement apartments. The former is less desirable than single-room occupancy (SROs), but may be useful as temporary housing for single homeless people, while the latter is prone to flooding, which may mean that they are dangerous in a storm. In addition, accessory housing (in addition to legalizing basement apartments) connected to existing one- and two-family homes may be considered.
Another element of the “Yes” proposal allows modest additional developments at transit sites in the outer boroughs. The idea is to allow modestly larger, three- to five-story multiple dwelling units at bus and subway transit stops in the outer boroughs. Purportedly, this will increase ridership (at a time when it has fallen due to the long-term impacts of remote work following the pandemic) and provide additional housing.
Some outer borough residents fear that the new housing located at transit stops will lead to gentrification, which will drive existing residents out of their homes and neighborhoods. Missing in all of this is a discussion of infrastructure, including water and sewer lines, schools and other essential elements required in neighborhoods. All of that aside, the quantity of additional housing from this proposal is modest.
Pricing Issues
For owners of cooperative and condominium units, 2024 may be rocky. Local Law 97 fines will be coming online, so property taxes may be increasing. The flight of high-income residents from the city is reducing the income tax base at a time when the mayoral administration is looking for more revenue, not planning for less.
The interest rate environment will make refinancing mortgages more expensive. Higher interest rates will also lower prices and reduce the number of buyers for certain units. High-end luxury apartments will remain popular, but possibly without income tax payments from high earners as they transfer their “official” residences to lower-cost states.
This column presents a general discussion. This column does not provide legal advice. Please consult your attorney for specific legal advice.
Carol A. Sigmond
Partner
Greenspoon Marder LLP
590 Madison Avenue, Suite 1800
New York, NY 10022
carol.sigmond@gmlaw.com
(212)-524-5074
