Prior to last night’s reportedly tame fare hike hearings, the MTA made a pledge to the City Council. While speaking with the council’s Transportation Committee, officials promised that, despite debt levels that will continue to rise, the agency will not cut service to the extent they did this June any time soon. “There are no,” Hilary Ring, the MTA’s head of government affairs, said, “future service cuts on the table.”
For New Yorkers who need their subway system but are wary of the MTA’s always-impending financial doom, this promise is good news indeed, but for one subsection of the city, it’s even more welcome. That group consists of those who are buying and selling homes and are searching for certainty in the city’s ever-changing transit landscape. Earlier this year, sellers saw value plummet while buyers saw good deals disappear as subway lines were rerouted and buses slashed. Now, with stability from the MTA, the location-based market can settle.
It’s no secret that the city’s real estate values are tied in with transit. Any apartment listing will feature proclamations that the place is “just steps” from the nearest subway, and real estate values decline as homes are further away from the nearest subway stop. Last week, Melanie Lefkowitz tackled just this topic in The Wall Street Journal. She explores how the MTA’s June cuts left the real estate market in flux:
Location, location, location lies at the core of any real-estate transaction. In New York City, mass transit is an equally essential factor. The loss of the V and W subway lines and the scaling back of bus service in all five boroughs hit commuters hard, for sure, but also appears to be affecting the property values of homes in their now-abandoned paths.
Real-estate data compiled by StreetEasy.com show a dropoff in sales in some neighborhoods along the bus routes since they ended this summer. In Kensington and Ditmas Park, Brooklyn, where condo buildings along Coney Island Avenue and Ocean Parkway can be a half-mile walk from the nearest subway, the X29 stops on Coney Island Avenue could mean a quick ride into Manhattan. That bus was cut. The number of home sales dropped 60% in Kensington and 83% in Ditmas Park between July 2009 and June, when bus service ended, but that is likely due to a spike in June when the first-time home-buyer tax credit expired.
Not every neighborhood where the buses ran is affected. For example, Jackson Heights, where the QM22 culminated, has been relatively untouched because of easy proximity to several subway lines. Other neighborhoods farther from Manhattan already appeal primarily to those who commute by car to jobs in the other four boroughs or nearby suburbs. But in more far-flung, gentrifying areas, where buyers were willing to accommodate longer commutes in exchange for bargains, brokers say they are already feeling some pain.
“The buyer who buys in Astoria is looking for a cheaper price and to get into Manhattan quickly,” said Ms. Palmos, adding that she is having the same problem with a condominium building in Upper Ditmars, north of Astoria. Apartments there that she said would have easily sold for $500,000 with the express bus nearby are now languishing on the market at prices about $420,000.
Some real estate brokers in Lefkowitz’s piece clearly have no knowledge of the topic. Matthew Giordano, a vice president at Massey Knakal, says, “The N and the R, they’re older trains—the Never and the Rarely. They just don’t seem to have that frequency.” Knakal clearly hasn’t seen the R160s even if his gripes about less frequent service — especially along Brooklyn’s 4th Ave. where the R is now the sole local train — may inadvertently ring true.
But overall, real estate brokers recognize a simple fact of life in New York City. As Charles Sciberras, an Astoria broker said, “The closer to the train the higher the demand. Two to three blocks away from transportation is very easy for me to rent.”
For New York City, these real estate fluctuations represent the law of unintended consequences at its finest. The MTA doesn’t mean to depress property values by cutting service; it’s just trying to meet its own budget demands. In fact, the MTA says it doesn’t consider the market impact of its potential service changes. Yet, something as simple as a bus cut can knock nearly 20 percent off of an apartment’s price. It is yet again a remainder of how New York City operates because of the subways, and even as the state’s transit policy languish, the subways will rule the city.