Affordable Housing For Who? HDFC Helps Trust Fund Kids

HDFC helps those with net worth but low incomes. Seems to have a slant towards those with money in the bank.

By Team Agorafy October 10, 2016
Park Place between Vanderbilt and Underhill Avenues in Prospect Heights, New York. Photo: Spyder_Monkey

It’s a conundrum that faces many a potential New York City buyer who isn’t a millionaire with a hedge fund: How can one own a personal slice of the Big Apple? One answer may lie in the magical ‘Housing Development Fund Corporation’ or HDFC for short. Nothing shy of a Fairy Godmother, the HDFC allows those without the means to put down $150,000 on a co-op at market price, to buy their apartments under market value. There are also rental options available to those who qualify, but the co-ops are the magical fairy that everyone wants to capture.

Imagine if you will, a newly renovated two-bedroom under $300,000 in a great neighborhood with an eat-in kitchen. “Impossible!”, you may shout out your $2500 a month, 300 square-foot-studio rental window. But not so fast- if you’re looking at an HDFC apartment, it’s quite possible. However, like all too-good-to-be-true- things, there are a few ‘catches’—like income restrictions. Potential buyers for HDFC units must meet strict income caps that are linked to what’s known as the ‘area median income’, or AMI. That’s why a lot of the HDFC housing is found in Harlem, Hell’s Kitchen or the East Village in Manhattan, where income levels are historically lower. Other HDFC buildings tend to lie in outer boroughs.

But like a street fair on 5th Avenue, for those in the know, there’s a way around the boundaries. In an article in the New York Times last August, the tragic plight (sarcasm emoji here) of a young woman who just couldn’t seem to find an apartment that satisfied her massive requirements, wound up using a cash gift from her parents’ to score an HDFC co-op in, wait for it… Williamsburg. This article made a significant amount of lower to middle-income city-dweller’s blood boil. How can this 20-something get away with this?

The answer is that restrictions are based on income, not assets. In other words, the trust fund from Mommy and Daddy doesn’t count, but your internship at Conde-Nast, does. Most deposits on HDFC co-ops must be done in cash. Why? Because getting a mortgage in an HDFC building is challenging as most banks don’t comprehend the idea of regulated housing. Some HDFCs actually require an entire cash purchase. This is so buildings can re-coup depleted reserve funds for such things as repairs because the turn-over in an HDFC building is infrequent at best.

So who the heck are these people with a low annual income who are able to fork over a hefty amount of cash at whim?

Real estate agent Lee-Ann Pinder with Citi Habitats says, “I’ve seen every permutation that included buyers who had a change in circumstance in their life and buyers who had sold property and were going back to school. Otherwise, if you’ve got an income cap of $72,000 for an individual, and they are supposed to buy a property for $400,000, how’s the math going to work?”

Great question Ms. Pinder. Gregory Barrett, the director of NYC HDFC says, “In determining income eligibility, the city does not require HDFCs to look at assets. So if you’re a schoolteacher earning $50,000 a year, but have a $2 million trust fund you can potentially qualify.” Who said anything in New York was fair? We’re the ‘city that never sleeps’, not the city who’s ‘fair and balanced’.

“Vet their assets!”, some might say. However, HDFC co-ops are strictly run by volunteers so vetting assets is significantly harder with the high factor of fraud being a possibility. Each HDFC building differs in their structures, functioning like regular co-ops. This includes what caps there are on income and future sales, as well as flip taxes. Standardizing these laws might make some confusion disappear, but it would also narrow potential buyers who are seeking a profit in a few years. Would that be a bad thing or would standardizing work to keep out the trust-fund babies? Who knows? Either way, if you have the great fortune to move into an HDFC building, don’t go anywhere for a while and enjoy your version of Tinkerbell on the Island of Jealous Gothamites.

Team Agorafy



Our mission is to be the most accurate resource for commercial listings, residential listings, and property information, allowing users to make highly-informed decisions based on current market data.

    Stefano Boeri, the architect mastermind behind the famous plant-covered skyscrapers, is now designing Forest Cities in Liuzhou, China. #ForestCity #China
    Auction is the second scheduled in a month for a One57 unit and it could set a NYC foreclosure record. #BillionairesRow #Foreclosures
    Once a couch-surfing website, Airbnb moves on to luxury properties, further disrupting hospitality industry. #Airbnb #Luxury
Four Countries To Retire In With $200K In Savings—And How Much Real Estate Costs There
Ever dreamed of retiring abroad? You know, affordable healthcare, better climate, more positive news—becoming an expat seems like an enticing option, especially one you no…
While Other Real Estate Platforms Start Charging Agents $3-Per-Day Exposure Fee, Agorafy Remains Accessible To All
Real Estate searching platform are always finding news ways to diversify their revenues models. Case in point—on Tuesday July 18, Streeteasy, one of New York…
Is Real Estate Crowdfunding The Fix That Urban Housing In America Really Needs?
Saving money for a down payment? One can only hope. Most millennial in their twenties or thirties are mortified that they might never be able…
Brooklyn And Queens’ Real Estate Sub-Markets Continue Their Ascent To The New Heights
So, the sales prices in Brooklyn and Queens hit record highs. Again. Just like they did in December 2016 and at the end of this…
The Economy Of Car Services And Delivery Apps Might Be Making NYC Less Eco-Friendly
Living in an eco-friendly neighborhood is a good thing. And, as it always the case with the good things, it also costs more. High rents…
Building Communities: What The U.S. Developers Should Learn From Soho China
As our world emerges into the new period of globalization and technology, some of the most important by-products of this process are buildings that have…
Five Reasons Why All Entrepreneurs Must Keep Their Eyes On China
It is hard to overestimate the importance of Chinese influence on the modern global economy. Carving out a place in Chinese market and winning over…
Airbnb Up Their Game With A New Luxury Tier Featuring Mansions And Villas
Airbnb is about to seriously up their game. First, the company started testing a new service called Select in an attempt to push accommodation listings…