Page 9 - CooperatorNews July 2021

COOPERATORNEWS.COM
COOPERATORNEWS —
JULY 2021
9
as asking prices realign and more buyers
return to the city now that COVID-related
restrictions are lifting.”
In Boston, condominium sales are not
only bouncing back—they’re breaking re-
cords. According to the Greater Boston As-
sociation of Realtors, this April, which saw
a 60.3% increase in condo sales over last
April, had a record-setting 1,220 units go
into contract. Douglas Elliman Downtown
Boston’s recent market report notes that
Q1 2021 had the highest number of condo-
minium sales in a first quarter since 2006.
“The statistics are mind-boggling,” says
Gene Hashkes, a realtor/broker at William
Raveis in Newton, Massachusetts, “and I’ve
been doing this for 25 years. With more
people vaccinated, with us returning to
work and back to life, you’re seeing a resur-
HOW HAS COVID...
continued from page 1
gence in the condo market.”
Additionally, thanks to historically low
interest rates many first-time homebuyers
may find that they’re now able to afford a
city condo, while the numbers might not
have worked a year or two ago. “This is an
excellent opportunity to buy a condomini-
um,” says Hashkes. “So, where you’ve seen
[single-family] home prices appreciate over
the last 12 months, condos have just been
going up since the beginning of the year.”
Gail Spreen, Senior Vice President of
Sales for Jameson Sotheby’s in Chicago,
foresees a recovery in the market there,
too—not just as an end to the pandemic
and its economic fallout, but as a shift from
the uncertainty and tumult felt over the
last year-plus in general. “I think it’s actu-
ally a great time to be a buyer,” says Spreen,
“because we’ve got great interest rates, our
prices are down right now, and there’s a real
positive energy.” She describes Chicago as
feeling “electric,” with people getting back
out in the great late spring weather, dining
at restaurants, sitting outside, and going to
the recently reopened Navy Pier.
According to Spreen, the Chicago co-
op and condo sales market did see some
dips in pricing, but activity remains apace.
Much of this can be attributed to the ease
with which buyers, sellers, and agents have
taken up—and mastered, in many cases—
the technology available to them, including
virtual open houses and property tours.
“We still had a really decent selling season,”
Spreen says, “even if our prices were down
a bit, we still had people buying. And some
had never even gotten in to see the condo
before they actually closed on it.”
Technology has changed the experi-
ence of apartment hunting—and by most
accounts, the changes are for the better.
Tours are happening online, through photo
and video sharing, or via teleconferencing.
Buyers, says Spreen, can narrow down their
searches at their realtor’s office or at home,
saving in-person visits for properties in
which they are truly interested. This makes
the process easier for agents as well: No
more Sundays spent open-house-hopping.
No more taking clients to see a unit they
really have no intention of putting an offer
on. Advance scheduling and limited walk-
throughs makes things easier on buildings
and associations, too. What began as an
adaptation to dire circumstances definitely
seems to be a trend with staying power.
The Leaps
Where Northern cities like New York,
Chicago, and Boston saw a distinct out-
ward migration of residents during the ear-
ly days of the pandemic, cities in the South,
with more access to open space and favor-
able weather, experienced an influx—and
in some cases, a veritable boom.
For example, the Miami Realtors As-
sociation reports that aside from a slight
price dip in February 2021, South Florida
has been one of the hottest markets go-
ing for the last year-plus. The migration of
buyers from the Northeast and West Coast
has fueled strong demand for homes there,
says the Association, noting that between
March and April of this year alone, condo
prices rose by at least 20% for Broward and
Miami-Dade counties.
The year-over-year picture is even more
remarkable. Between April 2020 and April
2021, the total number of condo sales in
Broward grew by 126.9%; in Miami-Dade,
that number is an astonishing 234.2%. Me-
dian condo sales prices climbed in the two
counties 19.9% and 23.0%, respectively.
Florida Realtors points out that the
pricing disparity can partly be attributed
to using April as a comparison month—
lockdowns were in full effect in April of
2020—but there is still a “severe shortage”
of homes for sale compared to historic lev-
els (as well as to high-inventory areas like
New York City), which the organization
says is the main contributor to these price
surges. They also note that in parts of South
Florida and Tampa Bay, 50%–60% of condo
and townhome deals were all cash.
While this is good news for sellers, buy-
ers—particularly first-time homebuyers
looking to finance their purchase—are fac-
ing some unforeseen obstacles. “First-time
buyers in particular are having trouble se-
curing that first home for a multitude of
reasons, including not enough affordable
properties, competition with cash buyers,
and properties leaving the market at such
a rapid pace,” says Lawrence Yun, chief
economist for the National Association of
Realtors (NAR).
The trajectory and longer-term implica-
tions of this trend are uncertain. Yun sees
the pandemic’s ebb as an impetus for “more
inventory com[ing] to the market later this
year as further COVID-19 vaccinations
are administered and potential home sell-
ers become more comfortable listing and
showing their homes.” He also expects a
falling number of homeowners in mort-
gage forbearance to be an inventory driver.
But Joel Kan, associate vice president of
economic and industry forecasting at the
Mortgage Bankers Association, says that
data suggest that “in the short-term, inven-
tory shortages will persist.” The ever-rising
costs of labor and materials, plus a current
labor shortage, are putting a proverbial
wrench in new construction nationwide.
Shrinking inventory isn’t the only prob-
lem. While interest rates have reached
historic lows in recent months, sparking
some of the increased activity in the hous-
ing market nationally, many real estate and
financial professionals predict a change in
this environment. Freddie Mac chief econ-
omist Sam Khater sees it happening sooner
rather than later. “Consumer inflation re-
cently has accelerated at its fastest pace in
more than 12 years and may lead to higher
mortgage rates in the summer,” he says.
The Grandes-Jetés
Since the first COVID-19 vaccine in
the United States was administered on De-
continued on page 10
affordable housing,” he says. “The Grinnell is
a great example. It has both middle-class and
working-class residents. It has worked re-
ally well for both groups for many years. The
crunch comes when the original rules govern-
ing the economic status and requirements of
residents expire. Will the residents make new
rules and go to market rates, or will they con-
tinue with their previous approach as a com-
munity? The debates become fierce. Who are
we to tell someone they can’t make a million
dollars selling their apartment?”
The more recent ‘80/20’ program sought to
achieve economic integration on a more mi-
cro level. The program set aside 20 percent of
apartments in newly constructed luxury rent-
al buildings for lower- and middle-income
residents in exchange for tax benefits to the
developers. The 80/20 rule has had mixed re-
sults, coming under much scrutiny in the past
decade—and perhaps even worse publicity.
CooperatorNews
spoke with several lower-
income families who live in 80/20 buildings
and who prefer to remain anonymous to pre-
serve their privacy. They say that while they
have benefited from the opportunity to live
in a state-of-the-art building at an affordable
price, they have not found the environment
to be welcoming. For one thing, they say that
there is little social integration in these build-
ings—the market-rate tenants and the lower-
income tenants rarely mix, and in some cases,
developers have made a point to physically
separate the two demographics. The existence
of two separate entrances for market- and
reduced-rate residents, the latter colloquially
known as “poor doors,” has been periodically
called out in the press, and the very concept
has left a bad taste in the public’s mouth. Some
developers have also tried to limit the social
impact of the inclusion of reduced-rate ten-
ants by accepting only retired individuals on
fixed incomes (as opposed to young singles
and families), fulfilling the letter of the law,
but not necessarily the spirit intended by the
program concept to begin with.
Snyder puts it bluntly: “No, 80/20 hasn’t
been a successful model. It doesn’t provide
enough affordable housing, and it’s also
viewed as a wedge to drive people out of the
neighborhood, like in big redevelopment
deals such as the one proposed for Inwood in
upper Manhattan just prior to the pandemic.”
NOMICs
One of the unintended consequences of
the housing market’s evolution over these
past few decades is the emergence of natu-
rally occurring mixed-income communities
(NOMICs). These communities often result
when longtime residents of a co-op or condo
building age in place while younger, growing
families move in. Because many older resi-
dents live on fixed incomes and are therefore
more impacted by even modest cost of living
increases, and many younger residents see
an expanding economic future and want to
capitalize on improving and expanding the
value of their apartments and the building
as a whole, it’s not uncommon for friction to
develop between the two demographics over
how the community allocates its spending.
Stuart Halper is vice president of Impact
Management, a management firm with offic-
es in New York City, Long Island, and West-
chester. He manages over 100 buildings and
says that “often the conflict erupts between
older and younger residents. The younger
residents have more spendable cash, and want
to do more in the building. Generally, it comes
down to who steps up to be on the board, be-
cause spending is a board decision. As prop-
erties gentrify and neighborhoods change, a
new wave of people may come in. The boards
change, and a real balancing act comes into
play. The moving targets may change. Which
projects are needed, and how to pay for them?
When you don’t want to do it by assessment,
you can finance the projects through borrow-
ing and disburse payback over a longer time
period. That said, by law there is no exemp-
tion for anyone from an assessment. There
cannot be a two-tiered situation. There can be
options to pay an assessment up front or over
time, with an interest component—I’ve seen
that done. It doesn’t happen often, but it helps
older senior residents.”
“In the end,” says Halper, “what happens is
that those who can’t afford rising maintenance
costs and assessments will sell their units.
There are safety nets for short-term problems,
but when it’s not affordable anymore, ulti-
mately the people will sell.”
So as it does on many other levels, eco-
nomic integration in the context of multi-
family housing remains elusive. Pros agree
that some models of housing development
and social engineering have been success-
ful, and some haven’t. Some are the result of
natural forces—though that doesn’t necessar-
ily make for a smoother process, or one that
truly works for everyone. Success in the lon-
ger term will likely depend on a combination
of ingenuity, commitment, and sociopolitical
will.
n
AJ Sidransky is a staff writer/reporter for Co-
operatorNews, and a published author.