A similar situation occurred in the spring of 2008. After the adoption of a new, less generous, and more restrictive version of the 421-a program that would apply to any residential project started after July 1 of that year, a number of developers rushed to obtain the necessary permits and start foundations. As a result, the DOB issued permits for 26,851 residential units in the first half of the year, with more than 17,000 issued in June of that year alone.
“Residential construction spending was already at record levels, even prior to this recent surge, and barring an unforeseen economic downturn, we have every reason to believe the pace will continue and maybe even accelerate in the coming years,” Anderson said. “That said, we think it’s safe to predict that the number of new residential permits will cool considerably for the remainder of the year – and for at least as long as uncertainty remains over the future of the 421-a program.”
According to a parallel Building Congress analysis of New York City Dept. of Housing Preservation and Development data, construction started on 8,483 units of affordable housing in FY 2015, an 80% increase from 4,708 in FY 2013.
While the raw number of affordable units rose significantly, that number fell as a percentage of overall units authorized in the five boroughs. In FY 2015, the number of affordable units started equaled about 16% of the housing units authorized, compared with 23% in FY 2014. In 2010 when the housing market was still reeling from the recession, affordable housing starts equaled 55% of all authorized units.
“Mayor de Blasio has declared that he will create 80,000 new units of affordable housing over the next decade, and he’s off to a strong start,” Anderson said. “In order to sustain and build upon it, his administration, with the help of Albany, will need to find a way to entice developers to include an even greater percentage of affordable units in their market-driven development projects.”