American cities need more homes

Restrictions are being lifted in New York City and elsewhere in the US to allow offices to be converted into apartments

On the edge of Manhattan’s financial district, a 1960s brutalist tower designed with narrow slits of glass to look like a computer punch card has been given a fitting facelift. Formerly occupied by back-office staff at JPMorgan Chase, the renovated building at 25 Water Street is America’s largest office-to residential conversion to date.

Apartments advertised for rent include studios starting from about $3,600 a month. And in a nod to the hybrid working era, for about $7,700 you can rent a studio with two home offices.

The 1,300-apartment building is among dozens of office conversions that New York City council hopes will help address the housing shortage.

In December the council voted in favor of the Yes for Housing Opportunity proposal, which would add 80,000 housing units beyond otherwise anticipated supply over the next 15 years. The policy includes lifting a restriction on converting offices built after 1961 into housing and moving the cut-off date to 1990 instead. Lawmakers in states across America are exploring quick fixes to boost the supply of housing.

Last year Arizona and Hawaii passed bills permitting vacant offices and other underused commercial space to be converted into homes. California, Hawaii, Massachusetts, Arizona and Rhode Island also passed laws allowing spaces such as basements, garages, attics and backyards to be turned into so called granny flats, or accessory dwelling units, to help increase the provision of affordable homes. Mark Zandi, chief economist at Moody’s Analytics, estimates America has a shortage of 2.8 million affordable homes.

Homelessness across the US rose by more than 18 per cent last year because of high housing costs, natural disasters and a rise in migration to large cities.

A survey in January last year for the US Department of Housing and Urban Development found that 770,000 people were in shelters, temporary housing or had no shelter, the highest number since the annual survey began in 2007.

Academics trace the country’s housing shortage back to the implementation of single-family zoning laws in the 1910s, which restricted certain areas to single family houses and prohibited the construction of apartment buildings and other properties such as factories.

The first such district was established in Berkeley, California, in 1916 to protect the neighborhood from infiltration by the working classes and ethnic minorities.

Jerome Powell, chairman of the US Federal Reserve, warned Congress last week that the central bank could not solve the affordable housing crisis simply by lowering interest rates.

President Trump has signed a presidential memorandum “to deliver emergency price relief for American families”. He ordered federal agencies to come up with proposals to drastically lower the cost of housing and expand supply.

Officials have been told to find red tape to cut that could lower construction costs and so make homes more affordable, and to review land-use policies to promote developments, such as higher density properties.

On this point, Trump has some shared beliefs with liberal politicians. After the devastating wildfires in Los Angeles last month, Gavin Newsom, California’s governor, signed an executive order suspending environmental reviews and ordering state agencies to identify regulations holding back construction.

Housebuilders have welcomed the move towards deregulation. However, they said the Trump administration’s decision to impose 25 per cent tariffs on all steel and aluminium products imported into the US would deter new development and frustrate efforts to rebuild after natural disasters. “Ultimately, consumers will pay for these tariffs in the form of higher home prices,” the National Association of Home Builders said.

Until regulatory reforms are implemented and building materials costs stabilize, more American city workers will be forced to consider creative housing solutions.

Source: The Times

Trump’s Policies Could Raise US Home Prices

Tariffs and deportations threaten to make housing more expensive, pushing homeownership out of reach for millions.

Donald Trump campaigned on bringing down the cost of living, including house prices. But his administration is embracing policies that probably will make housing more expensive. Putting tariffs on Canadian lumber, drywall from Mexico, and imported appliances raise home prices. And deporting millions of undocumented workers will hamstring a construction industry where just under a quarter of workers are undocumented immigrants, said the left-leaning Center for American Progress.

“Anything that pushes the price of a home [or] build costs higher is going to be net detrimental for home buyers right now,” says Rick Palacios Jr. of real estate research firm John Burns Research and Consulting. “They are having a tough time as it is.” The new Trump policies come at a precarious time for the housing industry. Home prices hover at record levels, largely because construction has failed to keep up with demand.

The combination of high home prices and high mortgage rates has pushed homeownership out of reach for millions of Americans. There are few reasons to think the picture for buyers will dramatically improve this year. “The spring selling season will be very challenging if we don’t see some relief on rates,” says Ivy Zelman, executive vice president of housing research firm Zelman & Associates.

Mortgage rates have fallen to a recent 6.76%, but remain high. To be sure, Trump’s drive to cut regulations and lower interest rates could spur both home building and housing demand. The president directed agencies to lower the cost of housing and increase the supply of homes in an executive order decrying the burden that regulatory requirements add to the costs.

Treasury Secretary Scott Bessent’s focus on lowering long-term yields could also be a boon for buyers. The U.S. housing crisis is a supply and- demand problem. It would take three or more years of home building at current rates to meet the need for 3.7 million units, estimates Freddie Mac Deputy Chief Economist Len Kiefer.

The country has built an average of only one million single-family homes over the past five years, a trend that forecasters expect to continue in 2025. “The only way that we are going to solve [high home prices] is to put more supply on the market,” says Jim Tobin, CEO of the National Association of Home Builders, or NAHB, noting that both presidential candidates ran on improving housing affordability. “Some of the actions we’ve seen after that are maybe running counter to that.”

Inflation hit every part of the economy in the wake of the Covid-19 pandemic, and home materials were whacked particularly hard: The cost of construction materials is up more than 30%since the pandemic began, according to the NAHB. As lockdowns snarled supply chains, builders faced significant shortages of nearly everything, from windows and doors to home appliances, right when buyer demand was reaching its zenith.

It could get worse. New tariffs, including those on Canada and Mexico, complicate home building supply chains and ultimately drive up costs for buyers, the industry warns. “The cost of building is now just going to go up, and is ultimately going to be borne by the home buyer or renter,” says the NAHB’s Tobin. Tariffs on Canada and Mexico, which produce lumber and the gypsum used in drywall, are of concern—as are appliances from China.

The president announced the tariffs in early February before postponing enforcement of those on Canada and Mexico. An indication of future construction, the NAHB’s sentiment index, dropped in February by five points, its greatest decline since last May. “Uncertainty over the scale and scope of tariffs has builders further concerned about costs,” says Robert Dietz, the trade group’s chief economist.

“There is now more concern around deportation risk,” says Zelman, the housing researcher. A quarter of home builder respondents to the firm’s January survey said that the fear of immigration service raids resulted in higher levels of absenteeism among subcontractors, with the greatest impacts in Baton Rouge, La.; Chicago; Bakersfield, Calif.; San Antonio and Austin, Texas; Greensboro, N.C.; and Myrtle Beach, S.C. Risks exist outside of home supply.

Fannie Mae and Freddie Mac, the two mortgage market giants that buy, securitize, and guarantee loans from lenders, have been under government conservatorship since the 2008-09 financial crisis. The first Trump administration sought to remove the companies from conservatorship but stopped short. If the mortgage giants ultimately lose their implied government guarantees, mortgage rates would probably climb. “Our housing finance system, while it’s probably not how you would have drawn it up on a whiteboard from scratch, is the envy of the world,” says Bob Broeksmit, the CEO of the Mortgage Bankers Association.

“Any responsible exit would be accompanied by a legislated explicit guarantee on the mortgage-backed securities of Fannie and Freddie so as not to jeopardize that system.” How—and whether—the administration releases the companies from conservatorship has yet to be seen. Bill Pulte, Trump’s nominee to lead the Federal Housing Finance Agency— which regulates Fannie and Freddie— noted the risks at his confirmation hearing in February.

“While their conservatorship should not be indefinite, any exit from conservatorship must be carefully planned to ensure the safety and soundness of the housing market without upward pressure on mortgage rates,” said Pulte, whose grandfather started home builder PulteGroup, of which Bill Pulte is a former director.

Home purchases have already slowed because of high prices and a lack of resale inventory. Builders have been offering incentives to lure buyers, and investors are souring on the sector. The iShares U.S.Home Construction exchange-traded fund is down about 6.1%so far this year, compared with the S&P 500 index’s 1.9%loss. “The worry in the stocks is that margins are going to compress,” says BTIG analyst Carl Reichardt.

The headwinds could weigh on new-home construction for months or even years. That could push up prices further. “Anything that makes home prices increase more than they would otherwise is concerning,” says Broeksmit of the Mortgage Bankers Association. “We don’t want a generation that has given up on homeownership.” 

SourceL: Barrons

Parking for the upwardly mobile

Inside Bentley tower’s $6m apartments with high-rise parking in Miami

These $6m apartments could help, writes  It is one of life’s great first world problems. You buy a luxury apartment in a high-rise building but then have to lug your Whole Foods shopping from the communal car park to your door.

It was a conundrum bosses at Bentley, the carmaker, were keen to solve in its first branded residential tower, which opens in 2028 in Miami. The Dezervator lift — named after Bentley’s partner, Dezer Development — is designed to be the “ultimate in seamless privacy” allowing residents to travel directly up to their apartments inside their cars.

Each apartment will have its own huge garage next to it. Residences on the east side of the building have an 144 square metre area that can hold up to four vehicles, while those on the west side have 106 square metres, where they can park three cars.

The 216 residences will be spread over the 62 floors, while each balcony will have its own private heated swimming pool and summer kitchen — with sweeping views of the ocean.

Prices for the apartments start at $5.8 million. The building will also have a private residents’ only restaurant led by Todd English, a four times winner of the James Beard culinary awards, who will curate the dining experiences.

There will also be a cinema, a whisky bar and a beauty salon complete with hair styling, manicure, pedicure, and make-up facilities. Four-legged residents will be able to indulge at the pet spa that is “designed in partnership with Bentley Motors” and features washing and drying services.

Ben Saltmer, the product and lifestyle design manager for Bentley, said: “We have applied the same attention to detail that goes into our cars into this very building. “Each space is different, but with distinctive Bentley design cues styled harmoniously throughout — right down to a functional area like Bentley pet spa concept.

“Despite practicality being paramount, the area should have an elevated experience. We achieve this through exquisite materiality and subtle Bentley design signatures, an ethos we’ve followed throughout the design of the building.

“For instance, in the pet spa we’ve used the Bentley diamond motif when giving the surfaces a non-slip quality. This diamond signature extends graphically to the shelving above the main bath area that houses towels, shampoos, and pet-friendly fragrances.”

Saltmer said that pets visiting the spa will be “guided up the steps, washed in the bath, guided up to the grey marble surface for drying, then guided down the steps once dry”, adding: “This is a practical space but also a luxurious sanctuary for pet and owner.”

The building’s cinema has been designed to mimic the concept of a Bentley car interior. Saltmer said: “A cosseting sofa wraps around the back of the rear three walls, embracing residents in the space.”

There is also a “state of the art” games room equipped with VR headsets and golf simulators.

“The whisky bar design is inspired by the iconic matrix grille of Bentley’s cars,” Saltmer added. As it will be suspended from the ceiling, the bar will appear to be floating.

Car manufacturers moving into bricks and mortar has become a trend recently. Porsche has already opened a property in Miami while Aston Martin is preparing to do the same. Mercedes-Benz and JDS Development Group are celebrating the sales launch of the second tower at Mercedes-Benz Places in Miami.

It is the brand’s first real estate project in the US and one of the largest under construction in Florida. It launched Tower 1 last year and sold all 100 apartments in just four days.  

Source: The Times