The Real Cost of City Living
Mayoral candidates' estimates of the price of a home in Brooklyn reveals more than just their lack of awareness. Are real estate buyers getting what they pay for?
Ex-Citigroup executive Ray McGuire and former Housing and Urban Development Secretary Shaun Donovan estimated the median cost of a home in Brooklyn to be $80,000 - $100,000. The actual figure is $800,000. - Business Insider
During the 2021 New York mayoral campaign, the candidates were asked to estimate the median price of a home in Brooklyn. Some of their responses displayed an out-of-touchness that one might find disqualifying.
The ex-Citigroup executive Ray McGuire estimated that the middle figure was about $80,000 to $90,000. That may buy a high-end SUV, but it’s not going to house a family in New York City
Former Housing and Urban Development Secretary Shaun Donovan guessed $100,000. You might say that as the supervisior of housing issues for the entire nation, Donovan gets a pass for not being familiar with the current real estate prices in a New York City borough. But he was also the Commissioner of the New York City Department of Housing Preservation and Development until 2009, so maybe his estimate should have been closer than 1/8th the actual median cost.
That’s right, the median cost for a home in Brooklyn is $800,000.
What’s that buy, exactly? If you look at Zillow in that range you’ll be browsing a lot of two-bedroom, two-bath connected row houses in varying states of perfection or imperfection. And assuming you have 10% to put down, the remaining 3.5% APR 30-year fixed mortgage will cost you $3,233 a month.
The Real Shame Is What We Get Compared To What We Pay
It’s easy to be peeved that some mayoral hopefuls are unaware of the extremely high cost of owning space in this city. But the real maddening issue is the price of city real estate and what we get for it. Property sellers get top-dollar for space in this city, especially when the buildings are new. But are buyers getting top-quality?
Chances are that buyers and renters don’t know that more than 50% of new building construction is being done by non-union subcontractors — too many of whom lower their prices and increase their own profits by abusing their staff. Some steal wages, some don’t provide adequate safety standards, others defraud their staff on health insurance.
And if you believe that working under those conditions helps the staff to focus on the job at hand and to do their very best quality work, well, then we’ve got some Brooklyn real estate to sell you.
As they cut corners, the thing non-union contractors count on most is that the high New York City sales price will not reflect how much the workers were paid, or whether they were abused, or if they couldn’t do their job properly. The price per square foot will be the going New York City rate for the neighborhood. And all that money that was saved through unethical behavior will go into the bank accounts of some wealthy and powerful people. No, none of those savings go to the shopper, the person who will pay for and live inside the property.
Shoppers: Start Demanding The Best, Ask for Union-Built
Here’s what renters and buyers need to know about New York City construction: Wage theft, safety negligence and insurance fraud do not happen inside New York’s unionized labor force. Unions have built-in safeguards and a culture that will not allow such shenanigans, and as a result the quality of their output is the best in the world.
Unions have a message to send to people shopping for a home in Brooklyn. If you’re about to pay top-dollar for a home, then demand top quality for that price. Ask your realtor whether the building you’re seeing was put up by unions.
Buying union-built is the best way to get the most for what you’re paying. That’s a promise you could take all the way to city hall.
The maddening issue is the price of city real estate and what we get for it. Property sellers get top-dollar for space in this city, especially when the buildings are new. But are buyers getting top-quality?
Who Saves? Not You
When a building costs less to build shouldn't it also cost less to buy? Well, that's apparently not how real estate prices work in New York City. Take a look at one comparison of the rental costs between one building that was built more affordably and one that was built for more.