New York University Furman Center Report Examines Homeownership Trends in the City: Hispanics Lag Far Behind All Other New Yorkers; Subprime Lending in the City Outpaces the National Rate
New York University Furman Center Report Examines Homeownership Trends in the City: Hispanics Lag Far Behind All Other New Yorkers; Subprime Lending in the City Outpaces the National Rate
Escalating home prices, combined with stagnant income growth, have resulted in a startling reduction in the number of homes affordable to New Yorkers with low or moderate incomes, according to a new report by New York University’s Furman Center for Real Estate and Urban Policy. The report, the State of New York City’s Housing and Neighborhoods 2006, finds that the median home sales price in New York City rose by 68 percent from 2000 to 2005, adjusting for inflation. This is welcome news for existing homeowners, but it also means that homeownership is harder to attain. Fewer than 5 percent of home sales in 2005 were affordable to New Yorkers earning the City’s median income ($43,434), down from 11 percent in 2000.
“It’s well known that New York has a hot housing market, but that figure shows just how tight the market has become for middle-income New Yorkers” said Vicki Been, director of the Furman Center. “Homeownership isn’t an option for most New Yorkers. And more of those New Yorkers who bought in the last few years did so with the aid of subprime loans.”
According to the report, the percentage of home purchase loans that were subprime more than tripled between 2002 and 2005, from 6.5 percent in 2002 to 22.9 percent in 2005 - more than six percentage points higher than the national average. The share of refinance loans that were subprime also saw a sharp increase, rising from 17.1 percent in 2002 to 32.1 percent in 2005.
While Manhattan homebuyers rarely rely on subprime lending (only 1.1% of home purchase loans were subprime in 2005), the Bronx, Brooklyn and Queens have experiencing the highest rates of activity: in 22 of the City’s 59 community districts, over 30 percent of all home purchase loans were subprime in 2005, and in five, the share of home purchase loans that were subprime was fifty percent or higher.
In addition to its analysis of the affordability of homes on the market today, the report provides an overview of who owns homes in New York City, and the costs that they bear:
- Homeownership rates in the City rose more than four percentage points between 1990 and 2005. All racial/ethnic groups have experienced increases. Still, the city’s homeownership rate (33 percent) remains lower than that in other major U.S. cities, and there is significant variation across ethnic groups.
- Hispanic New Yorkers have the lowest rate of homeownership in the City. With a homeownership rate of just 16 percent, Hispanic New Yorkers are only half as likely to be homeowners as the average New Yorker, and one third as likely to be homeowners as Hispanics in the rest of the country. This is at odds with national trends, where Hispanic rates of homeownership have outpaced the rate of black homeownership. In New York City, the pattern is reversed: 16 percent of Hispanic households own their homes, in contrast to 28 percent of black households.
- Lower-income homeowners are stretched extremely thin by their housing costs. Three quarters of the City’s homeowners with outstanding mortgages who earn less than $50,000 a year pay more than half their income on housing; the median household in this group is left with just $621 a month in residual income to spend on other goods.
The report, which is available online at http://furmancenter.nyu.edu, also features detailed analyses of all five boroughs and their 59 community districts, examining factors such as racial and economic diversity, housing quality, and subprime lending, as well as trends in public safety, education and health outcomes.
For more information, contact Amy Armstrong at 212.998.6697, or armstrong@juris.law.nyu.edu.
About the State of New York City’s Housing and Neighborhoods
Recognizing the need for a comprehensive source of information on trends in New York City’s housing and neighborhoods, the Furman Center began publishing this report annually in 2001. Earlier volumes have become the standard reference that policymakers, non-profit organizations, and community leaders turn to for reliable and timely housing and demographic statistics in New York City.
This edition of the report-the 2006 State of the New York City’s Housing and Neighborhoods-can be downloaded free of charge on the Furman Center website: http://furmancenter.nyu.edu. All data included in the report-as well as data on more than 1,800 additional measures of New York City’s housing and neighborhood quality — also are available in the Furman Center’s on-line information and mapping service, the New York City Neighborhood and Information System (NYCHANIS): www.nychanis.com.
About the Furman Center for Real Estate and Urban Policy
The Furman Center for Real Estate and Urban Policy is a joint initiative of the New York University School of Law and the Robert F. Wagner Graduate School of Public Service at NYU. Since its founding in 1994, the Furman Center has become the leading academic research center in New York City devoted to the public policy aspects of land use, real estate, and housing development. The Furman Center is dedicated to providing objective academic and empirical research on the legal and public policy issues involving land use, real estate, housing and urban affairs in the United States, with a particular focus on New York City.