In my December column, I discussed the national housing crisis — the country is short as many as 5 million “housing units” — and how it impacts the Highlands. Our local problems are not unusual, so we need an understanding of the big picture to make sense of what is happening in our neighborhoods.
One extremely tangible statistic: The National Low-Income Housing Coalition calculates that New York workers need to earn $37.72 per hour to afford a two-bedroom rental. That translates to $78,465 in annual income. And that is averaged across the state, so the numbers are even more steep in highly attractive locations such as Philipstown and Beacon. Most people can’t afford that.
Are there any answers to the affordable housing crisis? The pandemic has led many businesses to adopt hybrid work models, where “knowledge workers” spend all or part of their week out of the office. This transition — despite some company leaders demanding their employees return to a full-time in-the-office regime — has led to major turbulence in the commercial real estate market.
Before the pandemic, 95 percent of offices in large cities such as New York were occupied. That had fallen, by late 2022, to 47 percent.
While there is a great deal of speculation about how all this empty space might be used, the immediate impact is that office building projects are in a steep decline. However, nationally, the number of new residential units has grown from 368,000 in 2019 to nearly 500,000 units projected to be completed in 2023, according to one industry estimate. That is the largest jump since 1986.
Because the economics are good, real-estate firms that own smaller office buildings are converting them to residential, such as a 7-acre site in Tarrytown facing the Hudson that AmTrust is developing with dozens of apartments.
The Highlands does not have many office buildings that could be converted, but now that developers are pivoting to residential, other Hudson River cities and towns are likely to become more attractive. The demand for housing is high in part because so many people have moved out of urban centers since the start of the pandemic in early 2020.
Of course, developers want to build the most expensive housing they can, and as little affordable housing as they can get away with. But communities like Beacon and Cold Spring have a lot more leverage in those negotiations.
Local and state governments seem to have forgotten that they can create their own housing. Rather than depending on developers, municipalities can raise funds to develop public housing, and keep both the land and the revenue stream.
The U.S. has nearly 1 million units of federal public housing, but these have suffered from poor reputations because of federally imposed policies that limit such housing to only the very poor. We are seeing a resurgence in interest in mixed-income housing, which is being called “social housing” to avoid the stigma attached to the term “public housing.”
Rhode Island recently approved $10 million to pilot state-funded mixed-income housing. The Colorado Legislature passed a bill in 2022 to develop 3,500 middle-income housing units. Hawaii passed bills to create condos with 99-year leases.
Imagine how communities in the Highlands could develop mixed-income housing that would meet the needs of a broad spectrum of renters, such as older people downsizing, young people and low-income residents, but also have more-expensive units.
Projects could be more extensive than just a cluster of apartment buildings — they could include amenities like supermarkets, restaurants and other elements of fully fleshed-out neighborhoods. The municipality can use bonds or state funding to develop this social housing and will have an ongoing revenue stream to offset costs.
Next month, I will take a hard look at what Gov. Kathy Hochul has laid out in her state budget plans, and how that might support social housing.
