News & INSIGHTS

Buffalo’s housing market is rebounding, but the recovery so far is largely confined to a handful of neighborhoods in a slice of the city, according to a consultant hired by the Brown administration.

Housing sales prices in these rebounding neighborhoods — a swath that extends from the waterfront through the neighborhoods by Elmwood, Delaware and Hertel avenues, as well as a piece of South Buffalo — averaged almost $250,000 in recent years. But that’s not the case with the rest of the city, the consultant found.

Thousands of houses are deteriorating elsewhere in the city, and tens of thousands of households are struggling to find enough money to improve their homes or pay their rent in much of Buffalo. Many of these homes are in neighborhoods where houses sell for less than $30,000, the study found.

Recognizing some neighborhoods were improving while others were not, the Brown administration last year contracted with a community planning consultant from Alexandria, Va., to study Buffalo’s housing market. The consultant, czbLLC, recommended housing strategies to both revive neighborhoods and maintain affordability.

The consultant’s report contains no silver bullet. There also is no single set of recommendations for the city as a whole. Instead, the report outlines different approaches that could help in different neighborhoods experiencing different housing market conditions.

That could mean more code enforcement, rental property inspections and targeted investment of federal funds and other money to help revive neighborhoods.

Other recommendations include micro mortgages to encourage home ownership, land trusts to encourage affordability and a new tax exemption to encourage income and racial neighborhood integration.

And voluntary inclusionary zoning — aimed at creating lower-income units in privately built apartment buildings in higher rent areas — is suggested for healthier neighborhoods in the rebounding swath, where some people are being priced out of the housing market.

“However fragile, growing demand in the most sought-after neighborhoods is translating into rising prices and rents after years of stagnation. These increases make access to housing in those neighborhoods difficult for many households…,” the report states.

But the rising rents and home sales prices are not identified as the basic barrier to affordable housing in Buffalo. The housing is not overpriced, according to the consultant.

The problem is that household incomes in Buffalo are too low, the report states. And poverty is too expansive.

The city has some 37,000 households — about one-third of Buffalo — whose incomes are so low they can’t afford to pay more than $500 — if that — in monthly rent, the consultant said. Most of these households receive housing subsidies, city officials said.

“Low incomes are the root cause of affordability problems,” the report states.

Also undermining Buffalo’s overall housing market, the report states, is economic and racial segregation. That can be addressed, to some extent, through housing policy, the consultant indicates.

Not only does such segregation leave some people feeling left out of Buffalo’s resurgence, but it’s also left entire neighborhoods at risk during economic downturns that have disproportionately affected minorities, the consultant’s report notes.

“The city is sharply divided by race and class… Buffalo’s history of inequality is a significant source of instability in its housing market and threatens a durable recovery,” the study concludes.

The Brown administration is using the analysis, which cost $90,000, to help develop a comprehensive housing strategy that Mayor Byron W. Brown said will be released in mid to late December. That strategy will, among other things, help develop mixed-income neighborhoods and steer people toward home ownership, the mayor said.

“It’s a complex market and there are not enough resources — there never are — to do all the things that need to be done,” Brown said. “We have to make very hard decisions, with surgical precision, so that when we spend money it’s having the greatest impact on the greatest number of people possible.”

Brown called the study a step in Buffalo’s evolution to address housing, poverty, jobs and racial equity.

“This is an evolution of a lot of work the city has already started, and it intersects with other ongoing initiatives the city and its economic development agencies have been doing,” Brown said. “This is not coming out of nowhere.”

Five market categories

The housing study breaks Buffalo up into 50 tract-level neighborhoods, and then puts those 50 neighborhoods in one of five housing market categories, from weakest to strongest, as reflected in housing demand. The consultants reviewed housing and census data, and also looked at Buffalo properties.

Among the findings:

• The highest demand areas are the neighborhoods generally identified with Buffalo’s resurgence, including the waterfront, and some neighborhoods along Elmwood, Delaware and Hertel avenues west of Main Street as well as the southeastern part of South Buffalo. Median income in these neighborhoods is $90,700 and the median home sale price from 2014 to 2016 was $195,000. Median rent (with utilities) is $730 a month. Ninety-eight percent of homes in these areas were considered in good or average condition, and 2 percent as distressed.

• The higher demand areas are located on the upper West Side, the west side of University Heights and parts of South Buffalo, all adjacent to the highest demand areas. Median income is $59,300 and median home sale price was $96,300. Median rent was $745 per month. Eighty-eight percent of homes were categorized in good or average condition, with 12 percent distressed.

• Moderate demand areas are scattered throughout the city, and represent about 40 percent of Buffalo’s population. Median income is $43,500 and median home sale price was $50,000. Median rent is $655. Twenty-four percent of homes were classified as distressed.

• Lower demand areas are all east of Main Street and north of the Buffalo River, and contain significant assets including Martin Luther King Park and the Erie County Medical Center. The area is 94 percent minority. Median income is $33,900 and median home sale price was $26,500. Median rent is $625. Forty percent of homes were classified as distressed.

• Lowest demand area is in the heart of the East Side, portions of the Masten and Fillmore council districts. Almost 50 percent of the residential parcels are vacant. The area is 99 percent minority. Median income is $24,400 and median home sale price was $22,000 from 2014-2016. Median rent is $610. Sixty-three percent of homes are classified as distressed.

• The total cost of needed upgrades to make the city’s entire housing stock marketable was pegged at $608 million — far more than is available through the public sector.

“The magnitude of the need so dwarfs the financial ability to respond,” said Charles Buki, president of the czbLLC consulting firm.

Housing and poverty

While the consultants were hired to help Buffalo develop public and private housing strategies for the various housing markets, the study makes clear that Buffalo’s housing problems don’t exist in isolation from its poverty problems.

And while the impact of rising housing costs on lower-income people may be the same whether the problem is low incomes or high rents, the distinction matters when trying to develop appropriate solutions, Buki said.

In cities such as Seattle or Boston, where high housing prices and rents create affordability problems, solutions require different tools than in cities such as Buffalo, Cleveland and Pittsburgh, where low-incomes are more to blame, said Peter Lombardi, a policy analyst for czbLLC.

“It’s an obvious but important distinction,” Lombardi said. “There are different sets of tools in markets with a large number of low incomes.”

It’s important that the correct approach be taken, particularly given the fragility of Buffalo’s recently reviving housing market, the consultants said.

“There was a moment in time, the market was not working. The market is beginning to work. But it is at a very fragile point in its life cycle,” Buki said.

City officials agreed with Buki’s assessment, with Mehaffy noting that development even in the strongest of the city’s neighborhoods still requires some type of government subsidy to be financially feasible.

Brown added that the effects of decent, affordable housing go beyond the home. Good housing can have health and financial benefits. But, he and Mehaffy said, housing problems are not creating the city’s poverty.

“The No. 1 issue is jobs, jobs, jobs,” Brown said. “And we are going to continue to focus on jobs for people that live in the city of Buffalo, working with all our might on all those other initiatives to train people, to employ people, to help the under employed get employment opportunities with family sustaining wages.”

One city, five different housing sub-markets

Lowest: Rental inspections, neighborhood improvement fund and land banking foreclosed property with goal of reducing concentration of low-income households.

Lower: Micro-mortgages to encourage home ownership, rental inspections, vacant land management and rehab loans with goal of reducing concentration of low-income households.

Moderate: Community land trust to maintain affordability, micro-mortgages, rental inspections, infill housing and rehab loans with goal of increasing home ownership.

Higher: Inclusionary zoning, inclusive housing tax exemption, community land trust, project-based vouchers and micro-mortgages with goal of expanding affordable housing options.

Highest: Inclusionary zoning, inclusive housing tax exemption, community land trust, project-based vouchers with goal of expanding affordable housing options.