More Housing Gloom

The transitional "cluster-sites" are just one of the many housing stories in the west Bronx in early 2009. The number of 1-4 family foreclosure notices filed continue to rise, half-built 3-family houses sit vacant on lots where occupied larger single family homes once stood, and the question of over-leveraged apartment buildings that sold at the peak of the housing boom looms over many neighborhoods throughout New York City.

In Harlem, the 1,228 unit Riverton went into foreclosure on February 3, and the Times is reporting that a State Supreme Court judge appointed a receiver to oversee the complex yesterday. Harold Shultz of the Citizens Housing and Planning Council is quoted extensively in the article, pointing out that the tenants are not likely to suffer since the owner did not contest the foreclosure.

For buildings in the Bronx that are similarly over-leveraged (meaning someone can't afford their mortgage payment based on the building's income), things may not be so rosy. The article continues:

Or, if the lender is unable to sell the property quickly, Mr. Shultz said, Riverton could languish with a “hands-off” managing agent that knows that it will eventually be replaced by a new owner. In those instances, the lender would have every incentive to cut operating costs and defer expensive maintenance projects until the complex is sold. And that may take some time, given that financing for large real estate investments is tough to come by these days.
Mr. Shultz, as well as tenant advocates, say that landlords at dozens of other poor and working-class tenements purchased in 2006 and 2007 are already putting off repairs and deferring maintenance. They say a cycle of disinvestment could quickly envelop the surrounding neighborhood as the buildings deteriorate.

UNHP is tracking code violations and city liens in buildings throughout the City to help identify properties at-risk for foreclosure in an effort to be pro-active. Based on past history of foreclosure waves in Bronx apartment buildings (see: Freddie Mac 20 years ago), don't expect things to turn out so wonderfully. In fact, some landlords who can't make their mortgage payments may try to increase their revenue by turning their buildings into cluster-sites.

The Bronx and Affordable Housing

When it comes to local affordable housing trends, University Neighborhood Housing Program, a nonprofit based on the Grand Concourse, is usually the first to spot them. In the late 1980s and early 1990s, the group identified the disturbing lending practices of Freddie Mac, the quasi-federal mortgage outfit that didn’t seem to care or notice that the landlords it financed were taking on a lot more debt then they could pay back. The result: a pattern of foreclosure and neglect that scarred our northwest Bronx neighborhoods.

UNHP also pointed out the problems of sub-prime mortgages and foreclosure rates long before the current national media obsession.

On Tuesday, at Fordham University, UNHP issued its latest report, “Shrinking Affordability: Housing Prices, Quality & Preservation in the City’s Last Expanse of Affordable Private Rental Housing,” which documents, among other trends, how rents are rising while the people moving in are getting poorer and the housing stock itself is increasingly in disrepair. The well attended Fordham forum featured feedback on the report from bankers, city officials and real estate industry representatives.

We’ll have more to say about the report in our print edition, but we hope to strike up a conversation right here on these important issues (just click the comment button below). Check out the report. We, and UNHP, look forward to the discussion.