It Was Never a 'Great Recession' In New York City

Sometimes success creates a problem. That's what happened in New York City with housing and homelessness.

New York's housing market is very strong. The median price for a new condo in Manhattan rose to $1.73 million during the first quarter of 2014, up more than 30.6% from the first quarter of 2013, according to a market report from the real estate firm Douglas Elliman. Across the East River, the median price for a Brooklyn home reached $570,110, up 11 percent from a year earlier. The average monthly rent in Bushwick, a central Brooklyn neighborhood, which as recently as the 1970s was a filled with vacant buildings, jumped 8.2 percent to $2,005. "Bedford Stuyvesant is unbelievably hot," one broker told the Daily News, referring to a part of Brooklyn that once was called a slum.

And the people keep coming. For the third consecutive year, New York City's population gained more than it lost through migration. For the year ending July 1, 2013, the combination of more move-ins with fewer move-outs led to the city gaining more than 60,000 residents. At 8.4 million people the city is now at its all-time high.

Joe Salvo, the director of the population division of the Department of City Planning, told the New York Times that the number of New Yorkers had grown by 2.8 percent since 2010. "That's big," he said to the Times' reporter.

How did this happen? First, the city's economy has been significantly stronger than the rest of the country. As my former boss Mayor Michael Bloomberg liked to point out, the city went in to the recession later and came out sooner than the rest of the country. In fact, it wasn't a Great Recession in New York. The recession in the 1980's was worse. In the old days, when the city was losing population, the city always seemed to suffer more than others. Back then, local politicians said that when the nation caught a cold, New York City got the flu. They wanted New Yorkers to think that the city's problems were beyond their control.

The city is a lot stronger now. Combine a growing economy, with less crime, better schools and a robust transportation network, and then add an urban renaissance drawing more people to cities, and you have a booming metropolis like New York.

There is a downside to the good times though. The number of people staying in the city's shelter system is also at an all-time high. The supply of housing has not kept up with the demand. The rising homeless population was the Achilles heel of the Bloomberg administration. Welfare caseloads remained low, crime in poor communities was down, jobs were up, and poverty stayed flat. But homelessness exploded.

I'm not talking about people sleeping on the streets. Street homelessness actually declined during the Bloomberg years as the city instituted an intensive street outreach effort. Street homeless might be what most Americans think of as the homeless, but the official number is the actual number of people residing in New York City shelters.

Shelters vary. Some can be pretty unpleasant, those with group sleeping areas and shared bathrooms for example; or they can be well-maintained, with individual apartments in buildings with permanent neighbors. But whether the shelters are shoddy or acceptable, being in the homeless system is meant to be temporary and it isn't where people want to live. For those of us who worked for the mayor, the increase in shelter residents was a big problem - the mayor had promised a decline in the shelter population, not an increase.

One solution was to provide "move-out subsidies" funded by city and state dollars to people in the shelter to help them afford market rents. Sounds nice, right? Shelter residents got a little boost for their rent at a new apartment for two years and they were able to leave the shelter and no longer be part of the homeless count. The only problem was that the existence of such a program attracted some people to the shelter system as they saw that they could get some help affording housing if they put up with staying in a shelter for a while.

So despite the city's subsidy, and the construction of more than 160,000 units of affordable housing, the shelter population did not go down as much as we planned and when the state decided it could no longer afford to fund its share of the program, the city gave it up too.

The recently-passed New York State budget offers the city a second opportunity to create a "move out" subsidy program - which the city officials say they have designed. It is supposed to be for shelter residents who are working and is limited to a few thousand participants.

But if jobs keep growing and the city remains as popular, I don't see how another try at subsidizing people's exits from shelters will lead, by itself, to a dramatic reduction in the homeless population. That's why the new Mayor and his team are embarking on a massive effort to build more housing. That will take time.

The city could cool off - job growth could stall, the population could drop, housing could be more affordable and there would be fewer people staying in city shelters. That could happen, but I hope not.