The city of New York is planning to convert unsold apartments and condominiums on repo list into affordable houses for its residents.
As luxury developers struggle to fill empty units on condominium buildings or obtain financing to continue construction on stalled projects, many empty condominiums languish on the market, further depressing market values.
To put these under-subscribed buildings into use, the city is planning to populate them with residents who need affordable housing.
After City Council Speaker Christine Quinn announced the plan to turn vacant apartments on repo list into affordable housing, city officials started working to determine how best to convert these empty condominiums into affordable houses.
According to city officials, the plan to turn over empty condominiums to developers of affordable houses are starting to take shape while the official announcement of the program is expected anytime soon.
The existing programs for affordable housing in the city are limited in resources and therefore, could not cover all failed condominium projects. City officials explained that they would choose vacant condominiums on repo list and convert them into affordable houses.
Condominiums will be chosen based on the total amount needed to fund the project and how their conversion will help strengthen and stabilize neighborhoods. Department of Housing Preservation and Development deputy commissioner Holly Leicht said that the city wants to make sure that it gets the best deal from its investment.
Experts believed that more condominium units will be foreclosed by banks as developers continue to struggle meeting their financial obligations. Currently, there were 23 mid-rise and high-rise condominium buildings that are experiencing financial difficulties.
Some development projects were forced to cease construction because of difficulty obtaining financing, while other developers find it hard to sell units, resulting on construction loan delinquency.
Meanwhile, six properties in Manhattan with combined total of 2,300 units that were converted from apartments to condominiums are facing the threat of foreclosure, according to Capital Analytics, a research firm.
Additionally, many small condominium projects are nearing completion in a market experiencing slow sales and declining prices. A one-bedroom apartment in Brooklyn is priced between $337,000 to $524,500, depending on the location.
If these properties will be placed on repo list, they will be sold at less than their assessed value.
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