News & INSIGHTS

Syracuse has relatively cheap home prices, but that doesn’t make it easier to provide quality affordable housing. In some ways, it makes it harder, according to a new study to be released today by City Hall.

Syracuse home prices – depressed by decades of population loss, poverty and job cuts – are so low they discourage new construction and major renovations unless they are heavily subsidized, according to the study by czb LLC, a Maine consulting firm.

And the city needs lots of building and renovation. Syracuse’s housing stock has suffered from decades of disinvestment. According to the study, one-third of all city homes are “visibly in decline,” and only 27% are in good or excellent condition.

The Syracuse housing study provides a new perspective that will guide City Hall’s efforts to create more affordable housing, said Sharon Owens, deputy mayor. City officials will host open houses tonight and Wednesday to discuss the findings with residents and gather feedback.

The study prescribes no specific solutions. But one key takeaway is that the city should broaden its housing strategy to focus on more than the construction of new homes for low-income residents.

Spending limited government subsidies every year to construct a few new homes for low-income families – that is, business as usual — won’t be enough. Syracuse leaders also will have to find better ways to encourage middle- and upper-income people who want to buy and fix up houses in the city.

To spur investment, city officials say they hope to identify new funding sources that could help property owners who don’t now qualify for income-based subsidies. But it’s not clear where that money would come from.

“That is the challenge,’’ Owens said. “I mean, I don’t know how we do it without the private market. So that’s a challenge for us.”

It will be a difficult balancing act to boost Syracuse property values without making rents even less affordable for the poorest residents, the study acknowledges. Nearly half of all city households get by on incomes of $35,000 or less, and most of them pay more than 30% of that for rent – often for dilapidated housing.

Only one out of every three low-income families who need help paying the rent gets any housing assistance, according to czb.

The Syracuse housing study argues for an all-boats-must-rise strategy to support investment in the stronger neighborhoods as well as the weaker.

“The part of it that definitely hits you is the magnitude of resources that’s needed, in either direction, in order for us to really be able to move forward,’’ said Michelle Sczpanski, deputy commissioner of neighborhood development.

The study also points out reasons for optimism.

Central New York expects thousands of new jobs and new residents when Micron Technology builds its promised chip fabs in suburban Clay. The Interstate 81 viaduct through downtown is scheduled to come down in a couple of years, sparking new housing development and jobs.

And there is strong demand for city dwellings among upper-income residents, as evidenced by hundreds of high-end apartments that have been created in empty downtown commercial buildings.

Rick DeStito, a Syracuse landlord who has renovated commercial and residential property on the once-desolate Near West Side, said he sees a glass half-full. People want to move into the city, he said. Homeowners and investors should think of this moment as a chance to get in on the ground floor of a long-term investment.

Only 27% of Syracuse residential properties are in good or excellent condition, according to a housing study by czb LLC, a consulting firm. The majority of the city's houses are "highly vulnerable'' to further decline, the study found. (Graphic by czb LLC.)

“For all those young professionals and those young investors that want to get into the real estate market early and let it grow over the next 20 years, 30 years, Syracuse is your place,” he said.

City officials will hold two open houses this week to discuss the study, which cost $261,000, paid for with federal stimulus money.

The first meeting is 5:30 to 7 p.m. today at the North Side Learning Center, 501 Park St. The second is 5:30 to 7 p.m. Wednesday at the South Side Innovation Center, 2610 S. Salina St.

Suburbs ‘eat the city’s lunch’

It isn’t just Syracuse where property values lag. All of Onondaga County is underpriced, making real estate in CNY a generally bad investment, czb reports.

Three decades ago, median home prices in Onondaga County were on par with the rest of the nation. But since then, national prices have soared while local real estate values have stagnated. Although CNY prices increased during the housing boom of the past couple of years, they are still significantly below average.

That is “not a trifling matter,’’ the report says, because it discourages private investment.

“A dollar invested in hundreds of alternative ways, whether in housing in another location, or the stock market, or something else entirely, would have greatly outperformed a dollar spent on housing in Onondaga County, effectively losing county property owners and the county itself substantial sums.’’

The problem is not evenly distributed.

Within Onondaga County, suburban towns have enjoyed much more housing investment than Syracuse. From 1980 to 2020, the number of occupied housing units in Syracuse decreased 16%, from 67,000 to 56,000. During the same time, housing units in the suburbs grew 33%, from 99,000 to 131,000.

The average home price in Syracuse was $129,000 between 2020 and 2022, compared with $224,000 in the suburbs, czb reported. (Nationally, the average home price during that time was $459,000.)

“By leveraging the same structural advantages enjoyed by most American suburbs, Onondaga County’s suburbs have been able to eat the city’s lunch for half a century,’’ the study concludes.

Home HeadQuarters is building these homes for income-qualified buyers near the corner of Otisco and Ontario streets on Syracuse's Near West Side. Home HeadQuarters will sell the homes for less than half of what they cost to build, a sign of Syracuse's low home values. (Dennis Nett | dnett@syracuse.com)

Without housing policies aimed at reversing that trend, including “heavily subsidized redevelopment in the city,’’ the gap between Syracuse and the suburbs could grow, the report says.

Houses ‘visibly in decline’

Syracuse has a different kind of housing crisis from a place like New York or San Francisco, where sky-high housing costs can price median-level wage earners out of the market. Rising real estate equity in those markets keeps investors’ money flowing.

In Syracuse, it’s hard to encourage private investment in housing development without financial incentives.

There’s a happy medium where housing prices are high enough to sustain investment but still low enough for average people to afford homes, czb says. Onondaga County home values are too low to achieve that balance, the report says.

Housing prices are lowest in Syracuse’s most distressed neighborhoods. Those areas also have the highest concentration of residents who struggle to pay the rent. Nevertheless, those rents often are not high enough to encourage private investment to improve the properties, czb says.

As for new construction, houses cost more than twice as much to build as they can be sold for in low-income Syracuse neighborhoods.

It costs nonprofit housing agency Home HeadQuarters about $400,000 to build a three-bedroom starter home, about the same amount it would cost any builder in the suburbs, said Kerry Quaglia, executive director.

The nonprofit builds a smattering of houses each year that it sells to income-qualified first-time buyers. That requires a lot of government subsidy. Even if Home HeadQuarters weren’t trying to keep the homes affordable, it couldn’t sell them for what they cost.

Home HeadQuarters sold several new houses last year on Baker and Woodlawn Avenues for about $150,000 each. The city assessed them lower, at about $116,000 at full-market value.

The same disparity between building costs and home values can be seen in a lack of upkeep afflicting many city homes, czb says. The consultants eyeballed every house in the city and rated one-third of them as “visibly in decline.” Only 27% were in excellent or good condition.

The housing study estimated the cost of resolving all the deferred maintenance on Syracuse residential properties at $3 billion. On average, that’s about $85,000 per house.

“We haven’t had (enough) growth of incomes and population in this area, probably for some 60 or 70 years,” Quaglia said. “So, it took a very long time to get into this position. And I don’t think it’s anything that is going to be quickly resolved unless we really take some super bold action.”

Avoiding past mistakes

As they work to develop a long-term strategy, city officials are determined to avoid mistakes of the past, including policies that concentrate poverty in certain neighborhoods. One of the measures of success, according to the housing study, will be whether the city can reduce the percentage of residents who live in Census tracts with poverty rates of 40% or more.

Even within buildings, city officials are committed to housing that accommodates a mix of incomes. The city council is expected to vote soon on a new zoning code that would require any new apartment building of 20 units or more to include income-restricted affordable housing.

Suburban towns have not adopted similar rules, but Onondaga County’s new comprehensive plan stresses the importance of affordable housing. Owens, the deputy mayor, said city officials hope to coordinate efforts with county planners, who also are revising their strategy in anticipation of Micron-fueled growth.

Owens said Syracuse officials are open to all ideas as they try to spur a new generation of housing.

“Who are our future city dwellers? And what does housing mean to them? I suspect, and we will learn, that it may not be traditional development as we’ve known it,’’ she said.