Jennifer Kopp decided early on, growing up in public housing as a child in Brooklyn’s Sheepshead Bay neighborhood, that she would be the first in her family to own a home.
That fall seemed closer to that goal: After more than 20 years of renting, Ms. Kopp was accepted into a program that would help cover a down payment if she found a spot by December.
The city-operated program, called HomeFirst, is designed to provide a loan of up to $100,000 to first-time buyers who are New York City residents on limited incomes. A family of four earning less than about $106,000 could qualify, and the loan can be granted if the recipient keeps the home as a primary residence, among other things.
But Mrs. Kopp, 42, a teaching assistant with a young son, soon got into trouble. Prices were out of their reach, driven by a pandemic spending spree that left very few homes on the market. Interest rates, at their highest in two decades, made mortgages too expensive. Ms. Kopp, who earns about $45,000 a year at a Brooklyn public school, may need to take out a loan for her retirement savings or give up looking.
“It makes a living person go from paycheck to paycheck trying to achieve just a small piece of what they used to call the ‘American Dream’ — it makes it literally impossible,” she said.
With this widespread housing shortage and economic volatility, many Americans are finding it increasingly difficult to afford a home. But the challenges may be greatest in New York City, where residents like Ms. Kopp may have to postpone the dream indefinitely.
The city’s homeownership rate, at just over 31 percent, is about where it was in 2011, about half the national rate and lower than almost every other major American city. Between the second quarter of 2019 and 2022, when the typical home price nationwide rose to nearly four times median family income, the price of a home in New York City remained more than nine times that of New York, according to the Federal Reserve Bank.
The situation adds to concerns about the city’s long-term health: as homeownership becomes more unattainable, racial wealth inequality could widen and more middle- and working-class families could be displaced.
“It’s one of those tough, tough issues that we have to tackle, or we’re going to end up with a city that’s only affordable for the very, very wealthy,” said Christie Peale, chief executive and executive director of the Centers for New York City Neighborhoods, a nonprofit group dedicated to promoting affordable home ownership.
The city’s large proportion of tenants is mirroring other cities and reflects the “huge flows” of people coming and going, particularly young and transient people drawn to the city’s job opportunities and cultural life, Mark Willis said , Senior Policy Fellow at New York University’s Furman Center.
“Home ownership makes less sense if you’re not there for the long term,” he said.
The homes that are being built tend to be more expensive because of the high cost of land and development, said Jonathan Miller, president of Miller Samuel, a real estate appraisal and consulting firm.
Almost everything is more expensive now, in large part because of the city’s housing shortage. But the economic and social upheavals during the pandemic have made the situation worse.
“They had a tremendous rise in house prices, coupled with a tremendous rise in interest rates,” said Laurie Goodman, institute fellow and founder of the Housing Finance Policy Center at the Urban Institute, a nonprofit research organization. “The result has been a huge increase in unaffordability.”
According to an analysis by the Harvard Joint Center for Housing, the income required to afford a home in, say, the middle-third of the New York market was about $117,450 as of September 2019, assuming a 30-year fixed-rate mortgage studies. That was up more than 59 percent to nearly $187,000 in September 2022.
Frederick Ferby Jr., 33, grew up with his mother in a Rockaways, Queens apartment that was plagued by pests and other problems. His father struggled to keep and pay off the loan on a home in Jamaica.
These experiences influenced Mr. Ferby’s choice of where to buy a home.
An IT engineer, he pays about $700 a month, below market rate, for an apartment in Fort Greene, Brooklyn, and could afford a mortgage of about $2,000 a month. He checked out a few places in the Bronx that fit his price range, but none seemed big enough for the price.
“It’s difficult to find anything decent, at least in the districts,” he said. He is now considering moving to New Jersey.
Mayor Eric Adams has made promoting “affordable homeownership” — and trying to bridge racial wealth gaps — a key element of his housing agenda. The homeownership rate for Black residents is about 27 percent and for Hispanic and Hispanic residents about 17 percent, well below the 42 percent rate for white New Yorkers.
When the mayor announced his housing plan earlier this year, he said he wanted to “put the dream of home ownership back in the hands of working people and remind New Yorkers that leaving this city is not an option.”
It’s unclear if black and Hispanic homebuyers have been hurt or helped by recent market changes. Some data show that in New York state and nationwide, the homeownership rate for Black and Hispanic renters increased between 2019 and 2021, likely in part due to low interest rates early in the pandemic.
In the last fiscal year, the city spent $9 million to help people with down payments and helped fund renovations for more than 120 single- to four-family homes as part of a broader focus on home ownership.
But efforts still fall short of the kind of transformative public investment that could significantly increase homeownership rates. Some left-wing advocates and politicians are calling for significantly higher investment and the creation of new forms of multi-family housing owned by tenants and neighbors or non-profit organizations.
There are trade-offs to government investment in home ownership, housing advocates concede.
Because the initial cost is so high, it means public money may not reach as many people as rental-targeted programs. Enabling people to build wealth essentially means that a home has been valued and isn’t as cheap as it used to be.
“The challenge for Government is: How do you invest in affordable housing in a way that is affordable for generations to come?” Ms Peale said.
Without additional help, owning a home remains unattainable for many.
Originally from Bangladesh, Jewel Ghosh came to New York City in 2014 because of the large immigrant population and robust public transportation.
Mr Ghosh, a doctor, lived in a basement before moving to a two-bedroom apartment in Ozone Park, Queens, this summer. He now lives there with his parents, wife and little boy.
He was looking for a bigger store. But as a city health worker who makes about $70,000 a year and uses that income to support his entire family, he can’t afford the $700,000 homes he sees on the market.
“In my personal opinion there is no balance between income and expenditure,” Mr Ghosh said. “One of the basic needs – life – is very difficult.”
For Mrs. Kopp, the teaching assistant, the lack of financing for an apartment is one reason why she dreams of leaving the city. But she is afraid of uprooting her life and that of her son.
“I have a city pension, I have health benefits and I have job security,” she said.
But she added, “I’d definitely like to leave New York.”