MONEY real estate

NYC Apartment Building Will Have Separate Door for Lower Rent Tenants. What’s Up With That?

Rich door and poor door
New Yorkers are calling it the "poor door." Sarina Finkelstein—Marcus Lindström/Bronxgebiet/Getty Images

A new luxury high-rise on the Upper West Side of Manhattan will include a separate entrance for tenants in "affordable" housing units.

New York City has approved plans for a new luxury high-rise on the Upper West Side of Manhattan that will include a separate entrance for tenants in “affordable” housing, reports the New York Post. Even the conservative Post manages to see the class angle, calling this a plan for a “poor door.” (The quotation marks are the Post‘s.)

This controversy has been roiling in New York for a while. The Daily Mail unearths a 2013 quotation in a real-estate trade paper from the developer of another project (not the one on the West Side) defending separate entrances. It’s one for the ages:

‘No one ever said that the goal was full integration of these populations,’ said David Von Spreckelsen, senior vice president at Toll Brothers. ‘So now you have politicians talking about that, saying how horrible those back doors are. I think it’s unfair to expect very high-income homeowners who paid a fortune to live in their building to have to be in the same boat as low-income renters, who are very fortunate to live in a new building in a great neighborhood.’

Let’s keep the rich and not-so-rich in separate boats. Nice. You can make arguments for what the developers are doing here—here’s one—but, wow, that’s not it.

If you don’t live in New York and you aren’t familiar with the crazy real estate market here, this story might need a little translation. Your questions answered:

If the developers don’t want to mix different tenants, why include “affordable” units at all?

Because they are getting subsidies—pretty valuable ones—to build them.

There is not enough of any kind of housing in NYC, but housing for people with low-to-middle incomes is especially scarce. The long-term answer to that is to build lots more housing, and there’s a case to be made that building in NYC should just be a lot easier than it is. The fear on the other side is that new construction will mostly go to the luxury end of the market.

One stop-gap has been to encourage developers to encourage builders to include various kinds of affordable units in their projects. There may be tax benefits passed on to buyers of condos in buildings with affordable units, for example. The Upper West Side project, developed by a group called Extell, got zoning rights to build more units, says the blog West Side Rag, and Extell can sell those rights to other nearby developers.

West Side Rag also says the developer argues that, since the affordable units are in a separate part of the building, it legally must have its own entrance. That could have been avoided had the affordable units been mixed throughout the building. But this particular high-rise offers coveted views, including of the Hudson River. Spreading the units around would presumably have meant giving up some prime spots to affordable units, cutting profits for the developer.

What’s “affordable”?

To qualify for these units, a tenant would need to earn less than 60% of the area’s median income, adjusted for family size, says West Side Rag. For a family of four, that’s about $52,ooo a year. That’s twice the Federal poverty line and above the median U.S. household income, though making ends meet in NYC on that much, with a couple of kids, isn’t easy. That family could rent a two bedroom under this program for about $1,100 a month. So yeah, New York’s version of affordable is different than in other places.

TIME Economy

Motor City Revival: Detroit’s Stunning Evolution in 19 GIFs

One year ago today Detroit became the largest city in US history to file for bankruptcy. See what changes took place in the city in the years leading up to the momentous declaration.

The Motor City, the former automotive capital of the nation, has seen a steady and precipitous decline in population and economic growth over the last half-century. The automotive industry’s move out of Detroit, poor political decision-making, and the collapse of the housing industry can all be viewed as causes for the city’s decline, among other reasons. On July 18, 2013, unable to pay its looming debts, Detroit became the largest city in U.S. history to enter bankruptcy.

However, this momentous step did not happen overnight. Detroit was hit with a housing crisis in 2008, a sign of economic trouble that foreshadowed the city’s bankruptcy. A major outcome of that crisis is the city’s ongoing blight epidemic. Vast stretches of abandoned residential property lay on the outskirts of the once sprawling 139-square-mile city.

As Steven Gray wrote in 2009, “If there’s any city that symbolizes the most extreme effects of the nation’s economic crisis and, in particular, America’s housing crisis, it is Detroit.”

While many of the buildings and houses within the city have disappeared, evidence of a former era can be found in the more than 80,000 blighted houses remaining combined with an estimated 5,000 incidents of arson each year, according to the New York Times Magazine.

Despite all this, the Motor City could have a bright road ahead. There has been a recent surge in growth, spurred by a sense of opportunity in the ever-evolving city. New businesses are popping up and property is being rebuilt and re-purposed for urban farming, startups and public art.

Google Street view images, compiled here into GIFs, offer a unique look at how Detroit’s landscape has changed over the past four to six years leading up to the city’s bankruptcy a year ago.

MONEY

What Six Californias Would Really Look Like

Under a tech mogul's proposed breakup plan, some "states" are more equal than others.

Tim Draper, the Silicon Valley venture capitalist behind companies like Tesla and Skype, has a crazy idea. In order to make California more responsive to the needs of local communities, it should be broken up into six separate states: South California; Central California; North California; West California; Silicon Valley; and Jefferson.

This concept might seem more fit for a speculative novel than reality, but Draper’s dream may actually get its moment in the sun. On Tuesday, he informed USA Today that his Six Calfornias campaign had received 1.3 million signatures—far more than the roughly 808,000 required for the initiative to appear on the 2016 ballot.

Draper’s proposal still has virtually zero chance of ever happening. Even if the ballot initiative is approved (a December Field Poll showed only a quarter of residents support it), a California breakup would require the approval of Congress. And it is all but impossible to imagine a GOP-dominated House ever approving a plan that could potentially create 10 new Democratic senators.

That said, the venture capital mogul has apparently captured the imagination of many Californians who yearn for a more representative and responsive government than the one in Sacramento. In that light, it’s worth examining what six new Californias would really look like.

The major flaw in Draper’s plan is that the six new states he has outlined are not economically equal. In fact, they’re so unequal that many have wondered if the whole concept isn’t just a techno-libertarian plot to free Silicon Valley from having to share its wealth.

Under the breakup plan, some new “states” would be getting a pretty good deal. Others, well, not so much. Here’s a breakdown of each region and how it compares on various economic metrics. (All state comparisons are relative to the current United States.)

The common theme: Things look pretty darn good for Silicon Valley and West California (which includes Los Angeles), at the expense of making Jefferson and Central California two of the poorest states in the union.

Major Cities

Silicon Valley: San Francisco, Oakland, San Jose

North California: Sacramento, Santa Rosa

West California: Los Angeles, Santa Barbara

South California: San Diego, Anaheim

Central California: Fresno, Bakersfield

Jefferson: Redding, Chico

Population

West California: 11.5 million (8th in the U.S., similar to Ohio)

South California: 10.8 million (8th in the U.S., similar to Georgia)

Silicon Valley: 6.8 million (14th in the U.S., similar to Massachusetts)

Central California: 4.2 million (27th in the U.S., similar to Kentucky)

North California: 3.8 million (29th in the U.S., similar to Oklahoma)

Jefferson: 949,000 (45th in U.S., similar to Montana)

Personal Income Per Capita

Silicon Valley: $63,288 (1st in U.S., similar to Connecticut)

North California: $48,048 (7th in U.S., similar to Wyoming)

West California: $44,900 (15th in the U.S., similar to Illinois)

South California: $42,980 (21th in the U.S., similar to Vermont)

Jefferson: $36,147 (40th in the U.S., similar to Arizona)

Central California: $33,510 (50th in the US, similar to Idaho)

Percentage Living in Poverty

Silicon Valley: 12.8% (35th highest U.S., similar to Colorado)

North California: 13.7% (28th highest in U.S., similar to Illinois)

West California: 15.2% (21st highest in U.S., similar to California)

South California: 17.8% (7th highest in U.S., similar to West Virginia)

Central California: 19.9% (2nd highest in U.S, similar to New Mexico)

Jefferson: 20.8% (2nd highest in U.S., similar to New Mexico)

Median Home Price in Largest City

Silicon Valley (San Jose): $708,500

West California (Los Angeles): $520,500

South California (San Diego): $494,500

North California (Sacramento): $247,400

Jefferson (Redding): $207,600

Central California (Fresno): $165,000

Number of State Universities

West California: 9

Silicon Valley: 7

South California: 7

North California: 4

Central California: 4

Jefferson: 2

Sources: Zillow.com, U.S. Department of Commerce, United States Census Bureau, Huffington Post, California Legislative Analyst’s Office, 2008-2012 American Community Survey 5-Year Estimates.

MONEY Sports

WATCH: U.S. Men’s Soccer Star Alejandro Bedoya on His Biggest Money Mistake

Alejandro Bedoya, midfielder for the U.S. World Cup team, talks about blowing a paycheck, investment strategies, and an important money lesson from his father.

+ READ ARTICLE

Bedoya on his biggest money mistake:

My first paycheck, I remember, I put in the bank. And the second one…you know, in Europe everybody is always…they want to look good…and it’s probably buying one of those brand name designer things that, I remember, for that month it was like probably my whole paycheck. Buying things like that. I mean, those things are cool to have, but it’s not really important.”

Bedoya on what he’s learned from his father about money:

He’s always taught me that it’s not what you’re worth, it’s what you negotiate. That holds true in every aspect. It’s really how you handle things and how you go about what you think you deserve. I feel like that has helped me out a lot with the opportunities I’ve gotten with money and investments.”

 

 

TIME real estate

You’re Not the Only One Who’s Having Trouble Paying Rent

Condo Towers Rise From Boston to Los Angeles in U.S. Rebound
The EVO condominium building stands in downtown Los Angeles on June 23, 2014. Patrick T. Fallon—Bloomberg/Getty Images

Average rents in big cities rose more than 5% in the 12-month period ending in June 2013, while wages rose a measly 1%

Rent prices are going up in cities across the country even as wages stagnate, making it ever harder to afford to live in big cities.

In the 25 largest rental markets in the country, rents rose faster than wages, according to the latest data published by the real estate website Trulia.

Miami, New York, Dallas and Phoenix and 21 other big cities saw average rent increases of 5.5% in June compared with the same month last year. Meanwhile, annual average wages increased nationwide just 1.0% in 2013 compared with 2012, according to the Bureau of Labor Statistics.

The two data sets reflect slightly different time periods, but the trend is clear, said Jed Kolko, chief economist at Trulia: affordability is worsening.

“Wage data is up one percent,” said Kolko. “Rent is rising at a pace much faster than that.”

San Francisco had the highest median rent for 2-bedroom apartments, at $3,550, according to Trulia, while Miami residents paid the highest percentage of their wages on rent for an average 2-bedroom, or 62% of wages. New Yorkers paid 56% of their wages on rent, while on the other and of the spectrum, St. Louis residents forked out just 24%.

Rents are soaring in smaller cities like Denver (10.8% increase) and Atlanta (8.6% increase) as well.

San Francisco saw the highest increase in rents in June compared with last year at 13.8%.

MONEY Aging

Americans Want to Age in Place, and Your Town Isn’t Ready

Households headed by 70-year-olds will surge 42% by 2025. Who will drive them to the store?

The graying of the American homeowner is upon us. The question is: Will communities be ready for the challenges that come with that?

The number of households headed by someone age 70 or older will surge by 42% from 2015 to 2025, according to a report on the state of housing released last month by the Joint Center for Housing Studies of Harvard University, or JCHS.

The Harvard researchers note that a majority of those households will be aging in place, not downsizing or moving to retirement communities. That will have implications for an array of support services people will need as they age.

But the housing age wave comes at a time when federal programs that provide those supports are treading water in Washington. Consider the signature federal legislation that helps fund community planning and service programs for independent aging, the Older Americans Act. The OAA supports everything from home-delivered meals to transportation and caregiver support programs—and importantly, helps communities plan for future needs as their populations get older.

States and municipalities use the federal dollars they receive via the OAA to leverage local funding. The law requires reauthorization every five years, a step that has been on hold in Congress since 2011. Funding has continued during that time, with one exception: During sequestration in March 2013, OAA programs were cut by 5%; many have since been reversed, but other cuts now appear to be permanent.

A survey last year by the National Association of Area Agencies on Aging (NAAAA), which represents local government aging service providers, found that some states had reduced nutrition programs, transportation services and caregiver support programs.

Recovery since then has been uneven, according to Sandy Markwood, chief executive officer of the NAAAA. “In some cases, states made up the differences, but many programs still are not back to pre-sequestration levels.”

But here’s the more critical point: Even if all the cuts had been restored, treading water wouldn’t be good enough in light of the challenges communities will soon face.

“From a planning perspective, putting in place things like infrastructure and transportation services takes time,” Markwood says. “We don’t have the luxury of time here.”

Indeed, aging of communities is shaping up as a signature trend as the housing industry continues its slow recovery after the crash of 2008-2009.

Young people typically drive household formation, but the Harvard study notes that millennials haven’t shown up in big numbers because of the economic headwinds they face. Real median incomes fell 8% from 2007 to 2012 among 35- to 44-year-olds, JCHS notes, and the share of 25- to 34-year-old households carrying student loan debt soared from 26% to 39%. Meanwhile, home prices have been jumping, and qualifying for mortgage loans remains difficult.

Millennials eventually will account for a bigger share of households as more marry and start having families, according to the study. But for now, boomers are the story.

The oldest boomers start turning 70 after 2015, and the number of these households will jump by 8.3 million from 2014 to 2025. Most will be staying right where they are. Mobility rates (the share of people who move each year) typically fall with age: Less than 4% of people over age 65 moved in 2013, compared with 21% of 18- to 34-year-olds and 12% for those 35 to 45.

Mobility has been on a downward trend since the 1990s, and the housing crisis accelerated the trend, according to Daniel McCue, research manager at JCHS.

Aging in place could create problems in suburbs, which are designed around driving, McCue says. “People are going to need a more distributed network of services for transportation, healthcare and shopping in the suburbs. They’ll need some way to get to services or for the services to get to them.”

There is one possible silver lining in this story: The needs of aging-in-place seniors could spur better community planning. If so, the elderly won’t be the only group that benefits.

“When you do things to make roads safer or increase public transportation, or add volunteer driver programs, that’s good for everyone in the community,” Markwood says. “It’s not a zero-sum game.”

Related story: Why Most Seniors Can’t Afford to Pay More for Medicare

Related story: The State of Senior Health Depends on Your State

MONEY home improvement

4 (Mostly) Cheap and Easy Ways to Green Up Your Grass

Greening up the grass
Jason Schneider

Brown patches and weeds getting you down this summer? To keep your turf lush and thick, try some of these cost-effective tactics.

Does it feel like the grass really is greener in other people’s yards? Summer’s heat and low rainfall are tough on turf, so neighbors sporting lush lawns this time of year probably have better species of grass, higher-quality topsoil, and automatic irrigation. You, too, can have all that—for perhaps $10,000 or more—with a complete lawn replacement. Or you can try more affordable approaches to keeping your existing grass verdant.

Mow smarter

“Taller grass holds more moisture and stays greener than short grass,” says Mark Schmidt, principal scientist at John Deere. “Plus, it shades the soil, helping to keep the roots wet.” Set your mower deck to three inches (or as high as it will go). Also, inspect the grass right ­after mowing. Jagged tears indicate that the blade is dull, and these wounds sap moisture from the plants. Get a replacement blade for $10 to $40 or take your mower for a tune-up ($75 to $200), which includes blade sharpening.

Do not feed the plants

When a lawn turns brown, it’s not dead—it’s just gone dormant to save energy for cooler, wetter times. You may be tempted to apply fertilizer and weed control, but if not done right, those chemicals can burn a heat-stressed lawn, says Oregon State University horticulture professor Alec Kowalewski.

Water on schedule

Dragging around the hose and sprinklers to hydrate parched grass may do more harm than good. “Coming in and out of dormancy can kill the lawn,” says John Stier, a playing-field consultant to several National Football League teams. “So don’t water unless you’re going to be superconsistent about watering all season long.” That’s probably not realistic with manual efforts, so either let nature take its course or go for automatic irrigation, a $2,000 to $4,000 expense for which there really isn’t a good low-cost workaround. To maximize your investment, ask the installer to arrange sprinkler heads into zones based on the quirks of your property so that shady, sunny, poorly drained, and sloped areas can get programmed for their own watering needs. Opt for a rain sensor too (around $150), which will override sprinklers when Mother Nature provides irrigation for free.

Aerate in autumn

Whether or not you irrigate, think of lawn restoration as a multi­season project. In the fall, plan to aerate—cutting hundreds of holes to loosen the soil—and top with compost and a mix of grass seed bred for your climate ($500 to $1,000 to hire out the job). Repeat for several seasons, and you’ll gradually improve the soil and grass type, making your lawn more drought-resistant, and yours the greener side of the fence.

MONEY Investing

Are You On Your Way to $1 Million? Tell Us Your Story.

There are many ways to build lasting wealth. MONEY wants to hear how you're doing it.

The number of millionaires in America hit 9.6 million this year, a record high and yet another sign that the wealthy are recovering from the Great Recession, thanks in large part to stock market and real estate gains.

Are you on target to join their ranks? Are you taking steps—through your savings, your career decisions, your investments, or your rental properties—to make sure that by the time you retire your net worth will be in the seven figures? MONEY wants to hear your story.

Related: Where Are You On the Road to Wealth?

There are many paths to that kind of wealth, and they don’t necessarily involve a sudden windfall, a big head start, or a six-figure salary. You can build up a million or more in assets through steady saving, a sensible approach to investing, modest real estate holdings, or a winning small business idea. Are you finding ways to boost your savings at certain point of your life, like when the kids are out of school or the mortgage is paid up? Are you planning to take more or fewer risks with your investments as you near retirement? And if you invest in real estate, do you find that owning even one or two rental properties is enough to achieve prosperity?

Got a story like this to share? Use the confidential form below to tell us a bit about what you’re doing right, plus let us know where you’re from, what you do for a living, and how old you are. We won’t use your story unless we speak with you first.

MONEY retirement planning

Saying No Put Me on the Path to Financial Independence

House key in ring box
Dmytro Lastovych—Alamy

How I learned delayed gratification means opening the door to your true goals, like a home or a comfortable retirement.

I was raised around a lot of money—not my own, but other people’s. Granted, by any reasonable national standard my family was well-off, but growing up in New York City meant that my playmates were the children of media moguls and Wall Street titans, so my comparison group skewed upwards several tax brackets. For a while this environment created both a sense of longing and, unfortunately, entitlement. Everyone else has a summer home, why can’t we?! That feeling of financial inadequacy turned out to be a blessing in disguise however, because it taught me what those moguls and titans probably already knew, which is that the most satisfying wealth is the kind that you create for yourself, dollar by dollar by dollar.

Financial independence is certainly easier to achieve with a good income. But you can also get there, or at least come close to it, by saving and investing no matter what your salary is. (See The Millionaire Next Door.) And so at the most fundamental level, independence requires that you always live well within your means. If you are not living within your means, then you are not saving, and if you are not saving, then you are not creating wealth, you are creating the opposite: need. Financial independence means not having need.

There is no saving without delaying gratification, saying no when you want to say yes—not just every once in a while but pretty much constantly. Saying no not just to the big trips or a car, but also to the expensive haircuts and the overpriced appetizers and the ballet flats with the big logo on them when a pair from DSW will do just fine. It means being chronically cheap and enjoying it. Because every no is a yes to getting things that you really, really, really want and can truly fulfill need, no matter what stage of life you are in.

In my 20s and early 30s, my biggest need, after I had established myself on a career track, was to have a place of my own. I had bounced from illegal sublets to 4th floor walk-ups and had literally begun dreaming of “discovering” an extra room in whichever cramped apartment I was occupying, a dream that I later found out was shared in the collective unconscious of similarly space-starved young Manhattanites.

At the outset, buying my own one bedroom seemed an impossibility. But after a job switch and salary raise, I began automatically withdrawing money from my checking account into a house fund. After several years, I had saved $60,000, at which point several of my relatives generously gave me gifts to increase my down payment and create enough of a cushion to meet co-op board approval. Buying that apartment at age 32 was my first major milepost on the road to financial independence, but I didn’t do it alone.

Related: Where are you on the Road to Wealth?

They helped me, I believe, because I had shown them that I understood what building wealth entailed: being a good steward of your own money, understanding that you have to teach yourself the things you don’t know, whether that’s fixed-rate versus adjustable mortgages or the value of compound interest, and yes, delaying gratification. Granted, timing was on my side—I bought the apartment in the early stages of the real estate boom as was able to later profit not only on its sale but the sale of a subsequent, larger apartment.

But having saved for a purpose once, I know that I can do it again in the future, although not whenever I want but whenever I am able. I would love to be putting aside money to install a master bathroom in my house, but right now it’s more important that my children, with whom I currently share a bathroom, have good childcare, and that I increase my funding to my retirement accounts. The master bath will have to wait.

So here’s where I’m going to get really preachy, because there’s actually another important lesson that all this delayed gratification has taught me. There will always be more and more things to save for: sleep-away camps, college funds, maybe even someday a summer cottage. Today, as I write this on a beautiful day at the end of June, I can honestly say that the path to financial independence also means being profoundly grateful for what you already have.

Ruth Davis Konigsberg, a fortysomething journalist and consultant to Arden Asset Management, writes weekly about retirement planning.

TIME real estate

Here’s Why Your Landlord Keeps Raising the Rent

Views Of Austin And San Antonio As Cities Bear The State's Financial Burden
A building stands under construction Austin, Texas,. U.S., on Friday, June 6, 2014. Bloomberg—Bloomberg via Getty Images

Turns out the rent really is too damn high

If you dread writing your first-of-the-month check, you’re not alone.

Apartment rents are continuing to rise rapidly across the country as landlords pushed through big hikes over the past year, even as household income remain squeezed.

The average monthly rent for an apartment rose to $1,099 in the second quarter of 2014, up 3.4% over the 12-month period ended in June, according to data from the real-estate research firm Reis. The second quarter was the 18th consecutive quarter of rent increases.

The ever-spiraling rental prices are because tight mortgage-lending standards keep younger people in the rental market longer, particularly in urban areas. With vacancies at just 4.1%, rental supply is tight — and as a result, average rents have increased 14% since the end of 2009.

In San Francisco, San Jose, Calif. and Seattle, rent growth exceeded 6% in the past year, and even cities like Charleston, S.C. and Nashville, Tenn.—cities not associated with high rents—saw growth of about 5% over the same period.

New York City was the most expensive rent market with an average rent of $3,152/month, with San Francisco the second most expensive.

Meanwhile household income stagnated in 2012 at $50,017, well below 2007′s peak of $55,627, adjusting for inflation, the Wall Street Journal reports, making it harder for renters to afford their apartments.

Maybe it really is time to vote for the Rent Is Too Damn High Party, the mostly New York-based political party that’s as frustrated with landlords as you are.

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