Our favorite 21st-century bad guys—banks and hedge funds—are aggressively entering the real-estate market nationwide, buying pools of foreclosed properties from Fannie Mae and selling them to developers at a profit, according to a March 19 Wall Street Journal article. The developers then convert these former condo properties into rentals and reap a hefty profit. But why should we care?
The trend of converting condos to rentals is most intense in Williamsburg, where the average rent has increased 10% over the past year, particularly for multi-family dwellings. The result has been a quiet reverse exodus of rental residents from the 1990s who had the intention of living long-term in Williamsburg-Greenpoint, but who couldn’t afford to buy property due to gentrification. I’m sure you know neighbors who moved out (sometimes to Manhattan no less!) because the rents in Williamsburg were “too damn high.”
The immediate and steady cash flow from rentals for the developers is exceptionally tempting. For example, renting a 100-unit building takes months, as opposed to years for sales in a similarly sized condo building. The 113-unit condo at 175 Kent Avenue rented out in six months. Because of this demand, Williamsburg is engaged in that exclusive Manhattan ritual—rental bidding wars.
These dynamic economic shifts are also rapidly changing the political landscape. The demographic trends point to a vastly greater population of transient residents, with little long-term interest in the community, who will outnumber the property owners and long-term rental residents. With additional mega-development projects targeting renters, the core constituency will be in the extreme minority and lose political clout. In a perverse twist of demand and supply vs. politics, owners will benefit from higher property values.
Higher property values means higher property taxes. In this rapid demographic shift, it results in taxation without adequate representation for property owners. In other words, they’ll be real-estate rich, but politically poor, the new under-served. In America, outnumbered means outvoted.
The activists and influencers of Williamsburg-Greenpoint have a huge challenge. Because big corporations apply the “divide & conquer” strategy to obtain what they want, they’ll pit the newly arrived residents, who are accustomed to Starbucks, Duane Reade, and Whole Foods on every other block, against the low-maintenance, long-term residents. That’s why it will be more difficult for the long-term Williamsburg-Greenpoint residents to persuade the newcomers that over-development—Manhattanization—is detrimental to the quality of life expected in the outer boroughs.
Furthermore, we must convince community leaders to support long-term solutions to ensure a good quality of life and controlled, managed, and responsible development in collaboration with the needs of the entire neighborhood. The trickiest part is trying to define the ever-changing constituency, particularly with this year’s major elections looming on the horizon, and for 2013.
Albert Goldson is an architectural and engineering contract manager specializing
in transportation mega-projects, energy, and urban planning. He has been a resident of
Williamsburg for ten years and is an internationalist and jazz aficionado.