How Would You Like to Buy a New York City Apartment for $250?
Last week, I wrote about how the need for housing assistance in the country has grown so great that an angry, desperate mob of 30,000 recently gathered at a public housing office in Georgia. This week, I have a more positive housing story for you: A program in New York City is allowing some low-income people to buy apartments for as little as $250.
There are no typos in that sentence; I really did mean to say "buy," not rent, and I didn't leave off any 0s. But, let's just say there are some buts, which I'll get to in a minute.
The program I'm referring to is run by a nonprofit called the Urban Homesteading Assistance Board (UHAB), which buys up troubled apartment buildings in poor neighborhoods, such as those that have been seized by the city for tax liens, and coverts them into co-ops that are owned by the tenants. These "shared-equity cooperative" buildings enable low- and moderate-income families to purchase apartments for a nominal price — anywhere from a few hundred to a few thousand dollars.
There's no denying that getting the opportunity to buy an apartment in New York — the most expensive city in the country — for the cost of an IKEA sofa is a colossal deal.
But (here I go with those buts), naturally these mega-low-cost apartments are hard to come by. Since UHAB was founded in 1973, the group has converted a whopping 1,700 buildings with help from city funds, but as you can imagine, units don't open up very frequently.
When an apartment does become available, there are strings attached: anyone who buys the apartment must agree to sell the unit to another low- or moderate-income family, which significantly limits price appreciation, and some of the buildings in the program require sellers to share equity profits from a sale with the entire building. In other words, the co-op units don't have the same potential as traditional apartments for building long-term wealth or equity. And although the apartments come without a mortgage, tenants must pay co-op fees, which, in the case of one $2,500 apartment, come to nearly $1,000 a month.
Some experts have gone so far as to criticize the program for not offering tenants all the benefits that traditionally come along with home-ownership. However, because participants don't have to take on the mortgages that traditionally come along with home-ownership, in my eyes at least, it seems like a win-win situation.
Unfortunately, UHAB building conversions are likely to slow down in the coming years. Although the recession has led to an influx of abandoned and troubled buildings in New York City — great material for UHAB — ironically, it has also meant that there’s less city money with which to fund the organization. Let's just hope the funding stream comes back on soon, before New Yorkers go the way of Georgians.
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