Friday, February 16, 2007
The good news: Many cities are getting more residential units built in their downtowns. The bad news: In some places, many of these units are second homes for the wealthy. Accordingly, while these units have provided work for the construction industry, they do less than might be expected to improve the economic and social life of the city.
The Wall Street Journal reports that many of the new condos in Manhattan in recent years have been occupied by out of wealthy out-of-towners desiring a pied-à-terre. Although no one worries that often-empty condos will cause New York sidewalks to collect dust, the phenomenon does drive up the market price for all housing, further exacerbating New York’s painful affordable housing situation.
Nearby me, in St. Petersburg, Florida, the once-sleepy tourist town is experiencing a boom in towering downtown waterfront condos, selling for extraordinary sums. Most of these units, I’m told, are bought by part-time winter residents only. St. Pete’s pleasant little downtown is being shadowed by the high-rises, but they may not do much to help the year-round health of the city’s shops and restaurants.
I have often bashed government meddling with market forces recently. Let me change my stripes here and suggest a role for government interference to respond to the second-home phenomenon. Law takes various steps to help “homesteads” –- primary residences –- that it reserves from second homes. If government could figure out a way to impose a sensible “impact fee” upon the use of limited urban space for a second-home, the city might get fewer pied-à-terres, and, eventually, a few more low-cost apartments.