NY Housing Production Slumps in 2023 as Developers File Permits for 4,046 Units, 16% Below Historical Average

The year 2023 marked a disappointing end for the housing sector, as construction activity in the fourth quarter faltered. According to the Real Estate Board of New York (REBNY), developers only filed permits for 4,046 units during this period, a slight decline from the previous quarter's 4,190 filings. These numbers reflect a continuous downward trend over the past couple of years, with the fourth-quarter total standing 16% lower than the historical average dating back to 2008.

Even more concerning is the stark contrast between the current state of housing production and the ambitious targets set by Mayor Eric Adams. In his vision to tackle the housing crisis, Mayor Adams emphasized the need to construct approximately 12,000 units per quarter to achieve a goal of 500,000 new units by 2033. The significant disparity between these targets and the current reality hints at a challenging road ahead for fulfilling the city's housing demands.

A Dearth of Large Multifamily Buildings Stifles Development in New York City

The availability of large multifamily buildings with 100 or more units, which could significantly impact housing inventory levels, remains alarmingly low in New York City. According to data from the Department of Buildings analyzed by REBNY, only nine permits were filed for such buildings citywide between October and December 2023, continuing a trend that has persisted for the past four quarters. The scarcity of these types of buildings can be attributed to a variety of factors, including elevated loan costs and a lack of tax incentives. Developers face substantial financial challenges in constructing affordable housing in an expensive city like New York, making subsidies essential. REBNY has advocated for the reintroduction of a property tax break similar to the expired 421-a program, which would help alleviate the burden on developers while ensuring public benefits. Critics argue that such programs amount to taxpayer-funded giveaways to developers.

In an effort to address the issue, Governor Kathy Hochul proposed an alternative solution known as 485-x in January. This new program offers extended breaks of up to 40 years for affordable projects, allowing residents the opportunity to purchase homes at affordable prices.

A Housing Crisis Looms: Urgent Need for Policy Intervention

A critical issue plaguing the housing market is the shortage of rental properties, and this problem cannot be left to resolve itself. In this regard, the call for action is resounding as elected officials in Albany are urged to take immediate measures to address the pressing need for new housing. Zachary Steinberg, an esteemed senior vice president at REBNY, emphasizes the urgency to foster the construction of additional rental housing, which is crucial not only for the housing market but also for the overall economy.

The multifamily housing sector, encompassing residential buildings with four or more apartments, has witnessed a decline in construction activity. In the fourth quarter of the previous year, developers pursued permits to build 3,176 units distributed across 51 projects. Although substantial, this figure pales in comparison to the 4,277 units planned in the third quarter, the 3,088 units proposed in the second quarter, and the 2,195 units sought after in the first quarter, as reported by REBNY. (It is worth noting that REBNY altered its methodology for tallying permits recently, necessitating adjustments to prior data.)

While it is uncertain whether the fourth quarter of 2023 marks the lowest point for the year or even the entire decade, the decline in housing production evokes memories of the sluggish construction environment during the Great Recession. During the sleepiest period of that era, where the national banking system teetered on the edge of collapse, a mere 827 units were proposed in New York across 33 multifamily buildings in the fourth quarter of 2009. Interestingly, many notable proposals continue to focus on affordable projects, particularly in the Bronx. Notably, the largest project from the fourth-quarter batch is an impressive 26-story, 420-unit tower situated at 1387 University Ave. in the Highbridge section. It is worth highlighting that this remarkable endeavor, orchestrated by the nonprofit organization Samaritan Daytop, is dedicated to both affordability and eco-consciousness, as it represents an all-electric structure.

New Developments: Transforming East New York and Turtle Bay

A wave of transformative development is sweeping through East New York, Brooklyn, and Turtle Bay, Manhattan, as two prominent development partners take on ambitious projects to revitalize these neighborhoods.

L+M Development Partners is spearheading a groundbreaking endeavor at 895 Erskine St. in East New York. This expansive development will feature 425 well-designed units, promising to breathe new life into the community and create an exceptional living experience.

In Turtle Bay, SK Development is set to embark on an exciting venture at 401 E. 51st St. The project's vision encompasses an 86-unit residential complex that will redefine contemporary living in this vibrant neighborhood.

With these innovative initiatives, both L+M Development Partners and SK Development are demonstrating their commitment to elevating urban landscapes and providing residents with modern, thoughtfully designed spaces that enhance their quality of life.