What Andrew Yang's Affordable Housing Plan Means for NYC Real Estate
Published by Jordan Girard on June 6th, 2021
Andrew Yang's housing plan has three main components:
- Fixing New York’s housing crisis with unprecedented funding
- Focusing on deep affordability (households earning less than 40% Area Median Income)
- Rezoning for greater density and better socio-economic mix
Mayoral candidate Andrew Yang was leading New York City's mayoral race until recently. Notorious for his Presidential run in the 2020 campaign, little is known about his ambitious, multi-billion-dollar housing plan for New York City. In this month's newsletter, we dive into Yang’s plan.
Fixing New York City's Housing Crisis With Unprecedented Funding
YangforNY's housing plan is straightforward: the city must create significant economic and political incentives to boost the construction and maintenance of affordable housing across the five boroughs. Yang acknowledges that the construction of affordable housing has not been economically viable for the private sector for too long, which has further decreased the availability of affordable housing. In response to this, Yang proposes a $4 billion a year budget for the construction of 250,000 new affordable housing units over the next eight years. This figure represents 2.7 times New York City Housing Preservation and Development (HPD)'s 2020 budget. The $4 billion funding would be added to the existing $5.9 billion annual capital commitment to affordable housing – a line item that Yang is looking to keep or increase unlike de Blasio.
All in all, Yang proposes a 2022 housing budget well over $10 billion, an ambitious plan that the candidate deems necessary given the scope of New York City housing crisis. Yang's plan would add 20% of regulated units to the existing 1.246 million regulated units' stock.
Focusing on Deep Affordability
De Blasio's administration has been widely criticized for setting an affordable housing success metric tied to the overall number of units built or renovated as opposed to a metric tied to the access for lower Area Median Income (AMI) families. The AMI in the New York City Region is currently $107,400 for a three-person family.
Yang's financial plans specifically targets projects with deep affordability components, meaning households earning less than 40% AMI, or $42,960. This plan makes perfect sense: with limited resources, especially at the onset of Yang's plan, the goal is to help families the hardest hit by the housing crisis and Covid-19.
Rezoning to Enable Greater Density and Better Socio-economic Mix
Andrew Yang's housing plan proposes an important rezoning restructuring. As a first step, Yang is looking to free up some of the 1,039 acres of vacant public land (representing 1,346 sites) in New York City for affordable housing construction. He then intends to rezone areas of New York City where no affordable housing is required, such as SoHo in Lower Manhattan (while the current administration has attempted a rezoning, current plans will not move forward due to a lack of time). Indeed, one of Yang's criticism of de Blasio's affordable housing plan is that the latter only up zoned poorer areas of New York City, creating further divide between the haves and the have nots.
Yang is offering a fresh look at the tight permitting processes in New York. To enable a faster call to action, he proposes to end parking minimum requirements. The minimum number of spaces required is a percentage of the total dwelling units based on the characteristics of the specific district. For example, in an R5 district (higher density neighborhood with a 1.25 allowed FAR as of right), 85% of the dwelling units must have a parking space.
Lastly, Yang has encouraged the construction of micro-units that have been popular in many U.S. cities including San Francisco. Micro-units enable a larger number of apartments to be bult within the same building footprint, adding supply to the market without densifying the urban fabric. Recent improvements in design and modular construction have enabled the development of micro-unit projects at an unprecedented pace. Designs such as Ori's Cloud Bed and Table Edition enable micro-unit residents to automatically turn an office into a bed in less than 20 seconds.
Historically the Department of Building required all dwelling units (read: apartment) to have measurements of at least 400 square feet. Since 2016 this requirement has changed for most of the city. Yang's validation of micro-units is another validation of this step forward.
Yang's Anti-NIMBYism: A Pro-Real Estate and Development Mayor
*NIMBY: Not in My Backyard.
Yang's value proposition is simple: unnecessary bureaucracy destroys private incentives to build affordable housing. Yang wants to bring those incentives back. He appears to be one of the most pro-development and pro-real estate mayoral candidates in decades. However, there is less clarity about the development for non-regulated housing which plays a significant role in the city, especially since the city's objective would be to shift as many households as possible from affordable housing to non-regulated housing.
What the Rise of Affordable Housing Means for Free-Market Housing
Significant funding of affordable housing is not without consequences especially given the size of affordable housing in New York City. There are currently 2.183 million total rental units in the city. 1.246 million are regulated units (57% of total units). Under a Yang administration, this number would increase to 1.496 million (69% of total units).
A sudden and large increase in development incentives for affordable housing will shift developers' focus from non-regulated to affordable projects, thereby reducing the amount of construction for non-regulated housing. If the demand for non-regulated housing remains steady, non-regulated housing rents will increase through 2023 and 2024. The Department of Buildings would have to allow the issuance of more non-regulated housing building permits to balance that phenomenon. We asked Yang's campaign about this matter several times. We have not heard back.
YangforNY proposes an ambitious housing plan with annual housing spending of over $10 billion, the largest in the U.S. Unlike any of his competitors, Yang is the only candidate who offers a number-driven approach to housing – and all other matters. Known for wearing a “MATH” campaign tag throughout the presidential bid, Andrew Yang has proven that his plan holds but is not without flaws.