An apparent Donald Trump fan responded to my evaluation of Kamala Harris’ housing plan, to which Barack Obama devoted 23 seconds of his DNC speech, writing:
“If people were genuinely enthused by Obama’s reference to housing, it seems to me they should reinstate the man that has actual and successful development and building experience.”
It’s a point I had not addressed in the column.
My piece highlighted that Democrats have finally begun to describe the affordable housing problem as a supply issue. That’s an important shift for people in the business of building homes, who too often are presented with obstacles rather than a red carpet by local governments.
Before the Financial Crisis, developers were building 2 million homes per year in the U.S. Since then they have averaged 1.1 million. Just to keep pace with demand, they need to build 1.5 million annually.
As a result, the housing shortage has worsened and prices have surged, as Conor Dougherty wrote in a compelling New York Times article featuring families from around the country.
“The problem for the Denneys and millions of other renters is that they are searching for homes that were never built,” he wrote.
That’s why I tried to assess whether Harris’ plan would actually increase supply.
But the reader raised the issue of the candidates’ skill sets and experience, so I replied that I would write a separate piece on whether Trump, as an accomplished developer, would be better at increasing the housing supply.
“My initial thought is: He was president for four years, and he didn’t propose any plans to increase housing. In fact, he opposed his own government’s efforts to increase multifamily development in the suburbs. To me, this holds more weight than his record building casinos, hotels and luxury housing.”
Trump certainly understands the supply/demand problem. But his campaign platform doesn’t get into it, instead listing simple promises that appeal to his voters, such as, “Rebuild our cities … making them safe, clean, and beautiful again.”
That web page links to a 16-page Republican agenda that includes reducing demand for housing by making it harder for foreigners to enter the country (which could also reduce the supply of construction workers).
Trump has built apartments in the suburbs, albeit only luxury units. But as a candidate, he sided with single-family homeowners who react negatively to multifamily projects in their towns. He dubbed a federal effort to get towns to welcome apartments “Biden’s war on the suburbs.”
What about his opponent? Harris has never built housing of any kind. She probably doesn’t know the difference between cap rates and rate caps.
But solving America’s affordability crisis requires policy solutions, not project finance know-how. So it makes sense to focus on the candidates’ ideas and their track records advancing pro-housing policies.
What we’re thinking about: The optimal amount of money laundering is not zero, an expert said on a recent economics podcast. The reason: Achieving zero fraud would require incredibly burdensome rules that would handcuff legitimate transactions. Will that be the case with FinCEN’s new reporting requirements for all-cash home sales? Email me at eengquist@therealdeal.com.
A thing we’ve learned: Similar to the spikes in multifamily development that occur whenever the state tax break for it expires, there was a building boom triggered by the city’s sweeping rezoning in 1961. Projects that scored permits before the rezoning were allowed to proceed under the old, more permissive rules, according to Manhattan Institute senior fellow Eric Kober. For a few years in the early 1960s, the city exceeded 50,000 new homes per year. It hasn’t happened since. The average since 2010 has been 21,250.
Elsewhere…
— One of the largest real estate consultants for nonprofits in the city is closing. The urban planning, design and community development nonprofit Hester Street is shutting down after 20 years. Its board announced that it has determined the organization’s financial model was “unsustainable.” The farewell message said Hester Street had helped direct more than $750 million of public investment in low-income communities of color and secured more than $50 million for community-owned capital projects.
— Sometimes loan numbers in ACRIS don’t mesh with those announced by the actual borrowers and lenders. Recently, city property records showed loans had closed for 422 Fulton Street in Brooklyn for $164.2 million, $129.2 million, $90.7 million, $83.5 million and $73.5 million. That adds up to $541.1 million. Yet the borrower, Tishman Speyer, said the refinancing was $301 million.
If anyone is inclined to sort through the loan documents and explain the discrepancy, the links are above.
ACRIS sometimes has typos. I recall it reporting a $300 million mortgage for a hotel development near the old Ebbets Field site in Brooklyn. It’s difficult to imagine a large hotel there. Turns out it was a $3 million loan. Somehow, two extra zeros had made their way into the document.
— Real estate lawyer Stuart Saft is among those fighting the Safe Hotels Act, which seems to have an ulterior motive because some provisions have little to do with crime. He says the legislation would give the Department of Consumer Affairs and Worker Protection immense power over hotels.
“One of the most egregious parts of the bill that has not received any press is that hotels cannot be transferred, or their operators changed, without the approval of the [consumer affairs] commissioner,” Saft said via email. “This will severely impact the saleability, financeability and value” of hotels.
Bill sponsor Julie Menin says she is amending the measure to address critics’ concerns and expects it to pass eventually. A public hearing would have to be held first. One was scheduled and then canceled after an outcry from the hotel industry.
Closing time
Residential: The priciest residential sale Thursday was $5.3 million for a 5,600-square-foot townhouse at 16 Eighth Avenue in Park Slope. Linda Leon, Charlie Pigott and Jackie Torren of the Corcoran Group had the listing.
Commercial: The largest commercial sale of the day was $780,000 for a 6,148-square-foot, eight-unit walkup at 1890 Walton Avenue in the Mt. Hope section of the Bronx.
New to the market: The highest price for a residential property hitting the market was $9.4 million for a 3,135-square-foot condominium at 7 Harrison Street, in TriBeCa. Aimee Scher of Compass has the listing. — Matthew Elo