Editor’s Note: This is a column written by Brian Crandall. To submit a response, contact me at jstein@ithacavoice.com.

— Jeff Stein

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Ithaca Is Bluegrass Jan. 23-25

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Crandall’s column:

Ithaca, N.Y. — Ithaca is seeing some of the fastest-growing income inequality in the country. A report from Mayor Svante Myrick cites a statistic that average wealth grew 37% in Tompkins County from 2005-2012, but the median value grew only 15%.

In other words, money is rapidly pooling at the top, in the hands of a select few. Of further note, Ithaca ranks #2 out of the 363 metropolitan areas in the U.S. for growing income inequality.

It’s not a good time to rent in Ithaca, either – Ithaca ranks just below New York City (11th of 363 metros) for rent eating a disproportionately high amount of income. The rental vacancy rate is 0.5%, when a healthy amount is 3-5%. I’m not going to beat the affordability drum in this article, but without a doubtit’s a problem.

Part of the problem is due to national, and international, forces that go way beyond Ithaca. Part of the problem is workforce-related — poor-paying jobs, lack of wage growth, and so on.

But wealth isn’t just about paychecks, it also includes assets like real estate. So here’s a look at Ithaca’s inequality problem and how it relates to real estate.

Let’s put it like this – If you own a million-dollar lakeside home, these are prosperous times. If you own a modest house in Fall Creek and plan on selling out and retiring to Florida in a few years, the outlook is as sunny as Miami’s beaches.

But if you rent or own a home on a modest income, and plan on being in the area for a while, the outlook isn’t so pretty.

Why is this? Some of the problems the city faces today is a result of Ithaca being a victim of its own success. The economy is one of the best-performing in upstate, and employment growth far exceeds the United States average (18.6% from 2000-2013, vs. 2.5% U.S. average). People are naturally drawn in to a growing, stable economy. It also helps that, contrary to some beliefs, the area is regarded as having a fairly high quality of life. That helps to draw in retireesdownstaters, and other transplants. There is a demand to live in Ithaca.

Now there’s the other part of the equation – supply. Development in Ithaca is expensive to do. But rather than hear me talk about it, I’m going to quote a comment on the Voice’s Facebook page from Ithaca town planner Dan Tasman regarding the affordable housing problem getting worse.

“There’s a big convergence of factors that make housing in the Ithaca area so unaffordable. It’s far more than just pressure from student rentals.

* Construction costs in the Ithaca area are very high ($150-$200/square foot, compared to a national average of $75-$100/square foot), due in part to the lack of large production homebuilders, lack of migrant labor, lack of skilled tradespeople nearby, and prominence of pricey custom “artisanal” builders. There’s not much choice between expensive custom construction or basic modular houses shipped in from PA.

* Local developers and builders are small, and there’s a lot of risk to speculative construction. Instead of building houses and waiting for buyers — with prices moderated from a supply of vacant units and competition between builders — almost everything is built to order.

* There’s a mismatch between zoning and market demand. In the Towns of Ithaca, Lansing, and Dryden, there’s plenty of land zoned for single family houses on large lots. However, demand for that kind of housing is limited. Younger homebuyers increasingly favor smaller houses on smaller lots, in more walkable neighborhoods – development like Belle Sherman Cottages, the Aurora Pocket Neighborhood, and the like. The Town of Ithaca is moving towards zoning that will allow more mixed use village-like development, but it’s still a few years away. Same thing with plans for Varna in Dryden.

* In the suburbs, owners of many large parcels that could be developed — close to town, favorable zoning, utilities in place — aren’t selling. In the city, a lot of developable land is held up in double and triple lots, side gardens, parking lots, and the like.

* There’s still a very strong anti-development and anti-urban sentiment in the area. People have to live somewhere, but there’s always a reason to oppose a project – traffic, loss of woods/fields, change in “character”, etc. Ironically, many that are opposed to development are transplants to Ithaca themselves, contributing to the traffic and sprawl they fight against.

* Many are willing to pay very high prices for houses that would be considered functionally obsolete almost anywhere else – the region’s large inventory of 120+ year old farmhouses and Folk Victorians. There’s no incentive to update older housing, and teardown redevelopment is economically unfeasible.”

In sum, several factors – zoning, location, market size, sentiment – result in a market where whatever gets built is inherently expensive. Some problems can’t be helped – Ithaca’s “centrally isolated” location is what it is. Being a small urban area with small, local developers means that buyable units (houses/condos) are rarely built on speculation. People shouldn’t be forced to sell vacant or underused lots if they don’t want to.

Other things, however, can be and need to be addressed. In the next entry in this series, I plan to look at what the city could do through its looming comprehensive plan to reduce inequality in Ithaca.

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Brian Crandall

Brian Crandall reports on housing and development for the Ithaca Voice. He can be reached at bcrandall@ithacavoice.org.