Noting that "new residential construction has screeched to a virtual stop," Anderson says in a report that the sunset of the J-51 tax abatement program across most of the city in July '08 accounted for "some of the disparity" between '08 and '09. "However, that is just part of the story. Right now, the demand, and thus the financing, has not been sufficient to start new residential projects."
The New York City Department of Buildings issued residential permits for 6,057 units across 1,014 buildings last year, compared to the '08 total of permit for 33,911 units at 2,434 properties. The previous low point in the past decade was the year 2000, when permits were issued for 15,050 units.
Brooklyn suffered the steepest decline, coming in with just over 1,000 permits last year compared to 12,744 in '08, a dropoff of 92%. Manhattan's 86% decline represented a change from 9,700 permits in '08 to 1,363 in '09. Faring best of the five boroughs was the Bronx, where the decline was a relatively shallow 34%, and Staten Island, with a 55% decline to 570 units. Queens dropped off from 7,730 permits in '08 to 1,474 last year, an 81% decrease.
An earlier Building Congress analysis suggests that the declines grew steeper as '09 progressed, although not steadily. Construction starts on housing units totaled $935 million in the first quarter of '09, $494 million in Q2, $668 million in Q3 and $410 million in Q4.
This year has gotten off to a slow start, with just 463 units permitted citywide during January and February, compared to 576 permits issued in the first two months of '09. Meanwhile, the per-unit cost of construction last year rose to $114,013, compared to $90,215 in '08. The disparity is likely due more to the '09 workload tilting toward higher-end units rather than a spike in material and labor costs, according to the Building Congress.
In a separate review of the S&P/Chase Shiller Home Price Indices, the Building Congress found that New York City housing prices have stabilized over the past year. Although January 2010 prices were off 5% from the year prior, they're very much in line with prices for most of last year. At present, housing prices are similar to what they were in 2004, according to the Building Congress. "The Case Shiller data offer some cause for very cautious optimism, as housing prices appear to be stabilizing, which is an indication that the residential market could be finding its footing," says Anderson.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
