Another Post-War, Middle-Class Enclave in Default

First it was New York City’s Cooper Village and Stuyvesant Town, and now, another enclave built by Metropolitan Life in the 1940s for veterans and middle-class families has run into financial distress after being purchased by speculators during the recent real estate boom. The owners of the 115-acre, 3,221-unit Parkmerced apartment complex in San Francisco, which houses upward of 6,000 tenants, will default on their $550 million mortgage, which comes due in October. The reason? Overspeculation, of course, and trying (and failing) to replace rent-regulated tenants with those willing to pay market rates — similar to circumstances surrounding New York City’s massive defaults. Andrew Florio, an analyst at Real Capital Analytics, told The New York Times, “[i]t’s pretty interesting that they have all ended up in the same place. People assumed they could boost revenues by kicking people out and raising rents.” We’d like to think they’d think twice about that assumption next time.

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