31 - Aug. 27, 2003
On Anniversary, Local Group Issues
By JORDAN MOSS
Supporters and friends of University Neighborhood Housing Program (UNHP) filled the
small auditorium at Fordham University's Walsh Library on June 25 to mark 20 years
since the founding of the North Fordham-based nonprofit.
But it was hardly all celebration, as the group took the opportunity to issue a well-documented warning about a serious vulnerability in the borough's housing market.
UNHP often helps tenant and community groups purchase residential apartment buildings.
In doing so, the group figures out what an acceptable purchase price is by looking at the
building's rental income, building expenses, and necessary renovation costs.
In the course of this work, executive director Jim Buckley and his staff noticed a few years
ago that some Bronx buildings were selling for a lot more than they seemed to be worth.
"We were coming up with prices that were substantially lower than what the buildings were
selling for," Buckley said. "It made us wonder what was actually happening in the
UNHP then embarked on a research project that culminated in the report released at the
anniversary celebration. Entitled "A Real Estate Bubble in the Bronx? A Study of Trends in
Bronx Multifamily Housing Pricing, 1985 to 2001," the report discovered clear signs of a
speculative market in the Bronx.
While discovering that sales prices for Bronx buildings have been rising since 1996, UNHP
found no comparable increase in net operating income.
And, for several reasons, the prospects for generating the kind of higher rents associated
with up-and-coming neighborhoods are severely limited. The Bronx has the lowest per
capita income in New York City. Bronx residents are also paying a higher percentage of
their income in rent than their counterparts in the four other boroughs. Finally, Bronx
buildings have the highest level of housing maintenance deficiencies in the city, according to
UNHP's research, which was done with help from the Citizens Housing and Planning
But none of these warning signs have slowed the buyer's rush to scoop up buildings for
less than they are worth. And that could eventually lead to a bursting bubble.
"Speculative investment patterns, while possibly profitable for individual investors, will
contribute to a general overvaluing of the Bronx multifamily market and when that bubble
bursts, building deterioration and foreclosures are likely to increase significantly," states the
report, which was co-written by Buckley and Catherine O'Leary, a political
Buckley says that when a prospective landlord buys a building, he or she is not necessarily
intentionally planning to neglect it. But the complicated economics of maintaining a healthy
building sometimes gets lost in the process.
"People get kind of caught up in the moment of the deal," Buckley said. "[They are] so
focused on trying to buy the property, [they are] not playing out what it actually means to
run the property. [They may not] be entering the business to milk the building to reduce
operation costs and services, but frequently that becomes the result."
Buckley believes banks providing the mortgages are culpable when new owners are unable
to maintain their buildings. If the buyer of a single-family home brings a lot of cash to the
closing, "the bank is going to have all kinds of questions about where that money is coming
from," Buckley said. "We're suggesting that the same type of inquisitiveness be brought
to [the buyer of a] multi-family dwelling as well."
In addition to its research, UNHP has relatively recent history to back up its warnings. In
the 1980s, the Federal Home Loan Mortgage Corporation, known as Freddie Mac, made
dozens of mortgages to Bronx properties for sale prices that were far beyond what the
landlords were able to pay back. As a result, landlords neglected the buildings and many
ended up in foreclosure.
And that's what worries UNHP and other housing advocates. "Foreclosure takes a while,"
Buckley said. "It can take up to a couple of years if the entity that's being foreclosed on
exercises all of its legal rights. Buildings end up in limbo. [No one] is going to sink money
into major repair work. If the building is lucky, it enters into slow decline; if it's not lucky, a
To forestall foreclosures and auction of buildings, a process that leaves tenants in dangerous
building conditions for an extended period of time and threatens neighborhood stability,
UNHP unveiled a proposal for the creation of a Mortgage Foreclosure Prevention
Clearinghouse to identify and lend assistance to problem properties. Community groups,
city agencies, owners, banks and lenders that are involved with distressed properties could
access the clearinghouse which would "move troubled properties quickly to new ownership
or to ensure that critical rehabilitation funds find their way to the property to avoid further
deterioration of services and building conditions, while also avoiding the lengthy and
expensive process of foreclosure."
To get the idea off the ground relatively quickly, UNHP suggests that the clearinghouse,
which "would attempt to work with the existing owner and the financial institution to devise
an action plan to improve conditions in the building," be housed within an existing
organization that currently deals with lenders and with non-profit and for-profit real estate
transactions. While especially pertinent to the Bronx, Buckley said the clearinghouse could
service troubled buildings throughout the city.
Naomi Bayer of Fannie Mae, a company that works in the secondary mortgage market and
has been involved with buildings in the northwest Bronx, supports the clearinghouse
"I think it's in everyone's best interest," Bayer said. "No one wants to deal with a
property that is going into default or is in distress. Anything that can be done to prevent that
is a good thing."
Ed. note: For more information on UNHP's report and its other activities, call (718) 933-3101 or visit the group's Web site at
Back to News
News | Opinion | Schools
| Features | Continuing Stories | Home
About Us | Past Issues