Affordable Housing Developments are More Costly than Market Rate Projects

A recent article by The Real Deal questions the claim by Democratic Mayoral candidate Zohran Mamdani’s “that he can build affordable housing for $500,000 per unit — with union labor, no less,” while speaking of $100 billion in funding — “$30 billion in city funding already lined up plus $70 billion from new bonds he would issue, if Albany allows it,” and plans to cover borrowing costs through new taxes, which also require state approval. Citing in example is Grand Street Guild’s 15-story affordable housing project at 145 Broome Street in Manhattan’s Lower East Side. The $176 million project is part of the city’s Senior Affordable Rental Apartments (SARA) program and will deliver 191 housing units upon construction completion at an approximate cost of $921,000 per unit. The core of the financing reportedly includes $19.5 million form the New York City Department of Housing and Preservation (HPD), $12.5 million from the Housing Development Corporation’s (HDC) New construction Finance program, $105 million from taxable and tax-exempt bonds issued by HDC, and $11.3 million from Richman Housing via Low Income Housing Tax Credits. The new building will be “fully electric powered and engineered to Passive Standards.” In contrast, developer Eli Lever is nearing construction completion of his 8-story, 49-unit market rate development at 1663 East New York Avenue, in Brooklyn’s Brownsville neighborhood having acquired the multi-parcel assemblage in July 2023 for $3.75 million. Despite some unexpected challenges that elevated construction costs, Lever reportedly expects to complete his market rate project for only $350,000 per unit; and although the address was not disclosed, one reader noted that the developer of an affordable housing project on the next block was spending $725,000 per unit despite not having the expense of purchasing the site.

According to comments affordable housing expert Michael Lappin shared with The Real Deal, contributing to the heightened cost of affordable housing development is “lengthy processing, multiple social goals, and multiple sources of financing,” which come with fees, in addition to prevailing wages and layers of bureaucracy. And yet, it seems the city administration and housing advocates have failed to acknowledge what is increasingly becoming apparent — the current city programs intended to make New York City more affordable have not been effective in alleviating the demand for shelter. Instead of re-evaluating and seeking alternative options, the city continues to invest more and more of resident taxpayer money into these programs including the fully city-funded City Fighting Homelessness and Eviction Prevention Supplement (CityPHEPS) program which has ballooned from the $25 million cost in fiscal year 2019 to an expected more than $1.1 billion in fiscal year 2025 according to the February 2025 report by the Citizens Budget Commission (CBC).

At a time when the growing use of technology and artificial intelligence is eliminating jobs in many fields and making it more difficult for some to enter the job market, perhaps a better investment in taxpayer dollars would be for the expansion of vocational training programs and classes for the teaching of in-person services such as hair stylists, manicurists, etc., that require physical presence and interaction and can’t be directly obtained online, thereby helping some to elevate their financial situation. Perhaps in some cases, the city’s willingness to subsidize housing has reduced people’s motivation to seek paths to better their situation. Another question that arises is whether the city has enough oversight to monitor all recipients of housing assistance to avoid the continued providing of support when the financial situation or household size of those occupying a rent-regulated or rent-stabilized home has changed so that they become ineligible. Perhaps the city administration should take a closer look at Argentina, where efforts by President Javier Milei to turn around a failing economy included the repeal of a rent-control law in late 2024 passed by the National Congress in 2020. According to a recent article by Newsweek, while some leftist and socialist organizations criticized the move at the time, arguing it favored landlords at the expense of tenants, but instead, the result has been the opposite. The removal of the regulations has led to a thriving housing market in Buenos Aires with the supply of rental housing increasing 195% and a 10% lowering of median asking prices as more apartments returned to the market.

Source:    https://therealdeal.com/new-york/2025/07/18/homework-could-help-zohran-mamdani-lower-housing-costs/

Source:  https://www.newsweek.com/argentinas-javier-milei-keeps-proving-his-critics-wrong-2095695