NYC housing court, created to protect tenants, has become a tool for landlords
nytimes.com
nytimes.com
I've been wondering this for a while, but haven't come up with a satisfying answer: to what extent do people have the right to live in a given community? Does this depend on if people have lived in a community for some time? Does it only depend on whether they can afford to live there? I feel like these questions aren't black and white, but there's also no clear middle part I feel comfortable committing to.
We want housing to be more affordable in LA, [a different but still local] we also want Amazon to come to town and bring in a bunch of new workers from out of town. Those two goals seems hard to reconcile.
I remember driving through the Bronx with my dad in the 80s when he worked there. It looked like a war zone. Bubbles tend to pop, and bankrupt buildings get boarded up, not cheaper.
This discussion reminds me of people who dare not go to the gym because they're afraid of getting unsightly muscles. We're so very far from what you fear!
We want affordable housing = existing residents who want to rent their affordable apartments or continue to own their single family house without additional traffic/school overcrowding and their network of friends to have that opportunity too, politicians who want to represent these folks
We want tech jobs, more office space, more apartments = real estate developers, young tech professionals who want job options, incoming residents who aren't aware of how uncrowded these neighborhoods used to be, politicians who want to represent these folks
Cities that can grow outwards, like Houston or Dallas, can punt on this problem for a lot longer than LA or SF or NY can, but I'm very interested in seeing what that looks like long-term. Maybe Dallas hits a continuing density-vs-sprawl equilibrium that results in mostly-reasonable prices w/ mostly-reasonable commute lengths (people seem pretty tolerant up to 45-min one direction, IME) just over a wider and wider footprint without ever needing to densify - not many natural barriers for a while. But maybe it doesn't.
SF/SV -> Sacramento
NYC -> Newark
LA -> San Diego
High level management can day trip it via 1-2 hour train/car/shuttle ride to the secondary headquarters without the expense/complexity of plane rides and overbite hotels, or conversely the employees can day trip it to primary headquarters. Plus there is no timezone difference for conference calls. And most importantly the employees can still be within driving distance of their social network and have a very similar quality of life (climate, outdoor recreation, etc.) but not all of their paycheck is spent on housing.
We already tried that. Google, Apple, etc. located themselves in the small orchard towns of Mountain View and Cupertino instead of the big San Francisco. San Jose responded by building up its downtown, anchored by Adobe, and investing in light rail. A similar story played out in L.A., with media companies moving to Burbank.
This didn't solve the problem. There's really no way around building housing.
At least, this is my own particular experience. It took me years to learn how to ask good questions. Before, I would either:
1) When I ran into something that seemed frustrating or inefficient, I would assume that the task was just difficult and I needed to put my head down and slog through it.
2) Ask broad questions to try and build a mental model that would let me work more efficiently and know what to focus on, hear the feedback "you're trying to understand the universe", and think that meant I should stop asking questions and just keep punching. It was only at my current employer (where everyone is in the same office and my tech lead and I could have in-person 1-on-1s) that I got feedback on how to be more specific and contextual in my questions.
Do you think it matters that they were in-person? The fact that you called them 1-on-1s implies dedicated chunks of time for direct communication. Would they not have worked just as well over VoIP? Did you have to schedule time for 1-on-1s in the office, or was it more spontaneous?
FWIW, I'm visually impaired, and I spent most of my career so far on a distributed team where the same was true of my boss and most of my coworkers. So maybe there's some aspect of in-person communication that we're just used to doing without. Edit: Then again, remote work _is_ on the rise in the wider software industry.
yes.
I wish I had an explicit enough understanding that I could give you a solid explanation of why I believe this, but I don't.
San Diego is already a nightmare for commuters with the growth of tech in north county. I think major mass transit would have to go in first before additional growth would be feasible.
Its not on any of the main line's into London and not that well placed for anyone living in London let alone commuting in from more affordable places.
The difference between Texas and California is not geographical but political. Texas is pro housing. California is anti housing.
There are certainly hot spots in places like NY and SF, but it's not just one area. Lots of cities are growing. And it's not all due to evil corporations running amok, at a certain level it's just capitalism itself that requires growth - the GDP has to keep growing year over year, and the population probably has to grow slightly to provide for that growth. Immigrants move in, and children grow up and need somewhere to live. Add in the generational effect of baby boomers, i.e. that older people retiring and staying in their homes mean that we need more housing for the same number of jobs.
Specific booms like tech in SF may exacerbate the problem even more, but fundamentally our way of life just requires continual growth. This is at odds with the NIMBY attitude that I have a right for not just my home, but every building in my neighborhood, to stay exactly the same as the day I moved in. It's not at odds with affordable market rate housing, that just requires supply keeping up with demand.
So fighting residential development locally to try to push companies to other areas may be a rational strategy for some.
I'm not convinced that perpetual population growth will always be required for economic growth.
No there isn't. All the places with viable logistics and water supply are pretty much full up. Urban areas need barge transport, good rail grades, aqueducts, and rivers to carry away waste. You can't plop a city down in the middle of nowhere. The energy economics mean it will never work. All the sites worth building on have been built on. A lot of the places supplied mostly by truck are of questionable viability in coming years.
Probably the only area of the country that could long term sustain a much higher population density is the great lakes region.
If Oklahoma had the population density of the Netherlands it would have an additional 72 million people living in it...and oh by the way it’s got huge oil and gas reserves and some pretty enormous inland ports...
The Netherlands is, too, in the long run. But for now it's economically sustainable.
None of the other developed countries have vast interior deserts. The east and west coasts and some parts of the Mississippi and Great Lakes watersheds are plenty overpopulated.
I wouldn’t want to live there, but seems like a lot of bulk commodities, and products come in and out of Oklahoma and there is still plenty of room...
There are a few interesting studies in this area, California's agricultural section's tug-of-war with its residents for water is the biggest one that comes to mind, and the lesson you get is that industry uses up the lion's share of the water out of greed and sloth, but enough pressure will force them to curtail usage.
Have you looked at what it takes to make housing pencil out in the city? Developers are not "printing money". Construction costs are incredibly high, especially with inclusionary zoning.
I don’t live in SFO, but real estate and local politics are like white on rice. Developers are just one variant of real estate industry player. It’s often an old money game.
Historically, cities responded to this by building more housing, thus reducing the tension. In the 1970s, in certain locales like the West Coast, they stopped doing that. Forty to fifty years later, a massive housing crisis resulted.
We could start by acknowledging our mistakes and working to correct them.
Also, wouldn't you want your kids to be able to afford living in their hometown?
Many interests paint this as an all- or nothing- problem: "the developers just want to pave over Golden Gate Park!" "The NIMBYs just want their property values to increase!"
In reality, nobody credibly advocates this. Building high-density apartments in previously single-family home tracts is one solution. Paris is an excellent example of housing that is both beautiful and functional. Apartments are limited to six stories, and have good public transit available, so congestion isn't like Jakarta.
> At the meeting, one woman fretted that the tall building would violate the privacy of a nearby public school.
> When Tillman said he saw his project as necessary so people like his daughter could afford to come back and live in the city, one particularly motivated activist said she wished his daughter was killed in a terrorist attack.
> Parroting many of the Mission activists' concerns, Commissioner Rich Hillis complained that the design was "bulky, and a bit out of character" with the neighborhood, while Commissioner Kathrin Moore said that erecting an 84-foot tall building would be like "plopping a foreign object into this area and not thinking about the consequences." Commissioner Dennis Richards said, "I think a project absolutely belongs here. The question is what kind of project."
https://reason.com/blog/2018/02/21/san-francisco-man-has-spe...
So why people are not trying to buy land and build something on it instead? Buying a house will cost magnitude more than buying land and building your own house. Building will take time and resources, but... paying for a loan for 30 years? I think i can spend two years building my own home for the fraction of a cost of buying existing one.
Why no one is doing this?
Even in SF there are a lot of land for housing! For example, there are hundreds of body repair/tyre shops in SF. Why city ever need them in the city where Uber wins over owning your own car? But you can't just buy them and build more housing - in most cases you need to wait several years to "clean up" the soil.
Yeah, well...those places are already in use. And if you want to change that use, you first have to buy the land from the people who are already using it. And that's expensive, because people know what the land is worth. In other words: those auto repair shops are there for a reason. You can't just ignore the reason(s) and pretend that the land is vacant.
It's not as if every SF landowner is behaving in an economically suboptimal way because they're all stupid.
This is exactly what i am saying - it is economically suboptimal. They will be there until they are profitable.
But problem not in the land price itself, but also waiting for 3 years until you will be able to start new construction, this delay will increase actual price of this piece of land up to 30%.
There are many ways to reduce this delay.
No, you believe they're economically suboptimal, and you're making up excuses why reality disagrees with your theory.
"But problem not in the land price itself, but also waiting for 3 years until you will be able to start new construction, this delay will increase actual price of this piece of land up to 30%."
Proof of work required. You're going to have to prove that three years is a typical delay; that this results in the stated 30% price increases; and that this is the actual reason that your hypothetical auto-repair shops aren't all apartment complexes.
There's a simpler explanation: just as commercial rents are higher than residential rents, commercial uses of land are typically far more valuable than apartment buildings. If a redevelopment doesn't pay landowners a significant multiple of their current (commercial) revenue, they're not going to do it. Most apartment projects can't come close.
Sorry, i am not native speaker, but isn't it the same as "economically suboptional"?
> There's a simpler explanation
This neighbourhoods are mostly commercial districts that requires the first story to be commercial and other stories to be residential. Building up doesn't change commercial use of this buildings but just add more housing.
> No, you believe they're economically suboptimal, and you're making up excuses why reality disagrees with your theory.
I am not "believing", this is just a one hypothesis. I could be wrong, of course.
I'm saying that on average, whatever you observe in the world is already "economically optimal". You may believe that there's a better way to use land, but if reality doesn't agree with your beliefs, there's usually a good reason.
"This neighbourhoods are mostly commercial districts that requires the first story to be commercial and other stories to be residential. Building up doesn't change commercial use of this buildings but just add more housing."
It doesn't matter. If the trade doesn't benefit the current owner, it won't happen. Someone has to pay for the redevelopment, and I'd wager that in most cases, owners have to take on debt in order to finance redevelopment. So they go from having an annuity (fixed cash flow), to payments on debt, for a (possible) future gain. Maybe this is attractive for some owners. For many others, probably not.
So what about selling? Couldn't an enterprising developer buy the land and re-develop it for them?
Sure! Except: the current owner is making significant income from the business right now. That will go away, and they're going to want to be compensated for the loss. They're also not stupid, and know that the buyer is going to redevelop the land and charge more for it. Thus, they will (logically) ask for the buyer to pay them now for many years of future cashflow under the new use of the land.
In other words: owners know what the land is worth, and they're going to ask for it. The buyer is going to be paying not just for years of lost business income, but also, a significant percentage of her future revenue. And she's going to pay for redevelopment. And maybe that pays off, but it certainly doesn't pay off quickly -- and it isn't necessarily obvious that an apartment building is worth more than an auto repair shop. It depends on the health of the business!
This is why you can't just look at an auto-repair shop and say that it "should be" an apartment complex. It has nothing to do with regulation.
I got it, this is just misunderstanding. I meant that upbuilding is "econimically suboptimal", but current situation is optimal.
> In other words: owners know what the land is worth Actually, no. Some of developers told us that the problem with market is that most of the land is not for sale because owners just don't know that they can sell on a good price, they are not thinking about this at all. Developers are willing to buy land up to x10 more that they are currently buying.
> It has nothing to do with regulation.
In regions where there are a huge crisis in housing local government can introduce a new type of a Tax - Underdevelopment Tax. This will reduce margins of the owners that hold their land for "investing" opportunity and force them to sell their land to developers. Even if this tax will be low, they will start to think about selling their land right now and this help to the market a lot.
B. It can be much harder (higher down payment/harder to qualify) to get a land loan and a construction loan, Vs. a mortgage + more expensive as you need to pay for all of that for the time the house is being constructed and also pay for a place to live...
C. Often times lot values imply the highest density development e.g. in order for the purchase price of a lot to make sense you can’t just build a single family home but need to build 3 town homes for the economics to workout
The paperwork alone would be a nightmare!
Housing has come a long way since the days of the mail-order Sears & Roebuck assemble it yourself house.
Also frequently it’s property taxes that force people out of neighborhoods (eg their families own a place for years, and then the property values go up making it too expensive for them to live in). If property taxes were eliminated, this would displace fewer people. Naturally you don’t see any politicians talking about this since they don’t want to eliminate a source of revenue for the state — they’d rather blame Airbnb!
Prop 13 wouldn't be so damaging if it were easier to build. Unfortunately Prop 13 incentives and/or minimizes the consequences of communities restricting development, so it had this weird feedback effect. Regulations have unintended consequences and so we should be rightly wary of them. But that reality shouldn't be dispositive on whether we should attempt them.
Market dynamics are like gravity: you can't ignore gravity but gravity doesn't make human flight impossible, it just constrains the solution space. Arguing that we shouldn't attempt market interventions is like arguing that we shouldn't have attempted human flight because God didn't equip us with wings or that we should've waited around until we evolved wings.
If you eliminate property tax, or prevent it from rising, you make the absentee owner who only cares about a payoff 20 years from now leaving perfectly livable homes empty many magnitudes worse. (as evidenced by california)
eliminating property tax only incentives blocking all new development to drive up property values and encourage rent seeking
I'm quite interested to see your reasoning behind that statement. Don't people still want their property values to go up even with property taxes? Except in a no property tax scenario, people who own their homes outright would still be able to stay if they wanted to. Perhaps no property taxes would more highly encourage local owners to restrict newcomers. Isn't the government also interested in increasing property values so they can receive more revenue? In that case I suppose they would in a sense be "earning" the taxes they levy.
- Edited for clarity
Bingo. Rampant NIMBYism. Also growing the local economy should be the priority for local governments not creating a housing bubble
There is an argument that can be made that people who cannot afford to live in prime real estate in an economic powerhouse should sell their house and move somewhere else to enable growth or allow more housing to be built. But picking neither is not a productive outcome
I was just trying to point at that local governments are also encouraged to have high property values for tax revenue. They also tend to have a bit more power to be able to affect large areas property values by force. If people cannot/don't utilize the government to enact policies to force people out, it seems to me that it would be pretty difficult for people to enact those policies without governmental power.
What we see in places like San Francisco are property owners and governments teaming up to drive property values up in a mutually beneficial relationship.
Edit - It could be said that the government itself is rent-seeking in such an arrangement.
The problem is, many cities like NYC and San Francisco are trying to have their cake and eat it to. Liberal residents want to keep their suburban-style single family neighborhoods while simultaneously appearing to care about skyrocketing rents. You simply cannot have it both ways. The ONLY viable solution is to relax the rules blocking the construction of new housing. SB827 in California, which would have overridden local zoning to legalize the construction of higher density buildings within walking distance of transit stops, was a valiant effort to do the right thing, but it failed because of a strong anti-development sentiment from anti-capitalist tenants rights groups and pro-housing-appreciation single family home owners (in a particularly absurd moment, the mayor of ultra-tony Beverly Hills, which has built almost no new housing in the last few years, claimed to be against the bill because he was concerned about all of the "luxury housing" it would build in his town).
Those two cites are not the same at all. NYC has few suburban style neighborhoods and the ones we do have aren't that relevant to these discussions.
New York is at least somewhat functional as a large city, and can and does permit the building of massive amounts of high rise residential development. From where I stand in downtown Brooklyn, the skyline has become nearly unrecognizable in recent years. And predictably, rents are starting to fall noticeably.
San Francisco doesn't operate this way at all.
Yes, rent control exacerbates an already existing problem, but it doesn't create it. The same landlords who profit from the high prices of housing in our urban cores actively oppose new development because of that same reason.
We can't solve this problem by banning rent control. The only way to solve a capacity problem: adjust supply or demand. I don't see demand changing anytime soon.
In such a situation, there'd be no real real-estate speculation, and levels of rent-extraction above cost would be controlled by municipal bylaw (as they'd effectively be a tax.) Property development companies would all either be nationalized, or would be private government-exclusive subcontractors.
Basically: imagine China, but instead of privatizing every industry all at once, they had kept construction and property management state-run. How would that look?
https://www.forbes.com/sites/sarahsu/2017/03/21/good-news-fo...
"Last Wednesday, Premier Li Keqiang said a real estate protection provision that would ensure individual’s access to property under a 70-year lease would be renewed unconditionally is being drafted.
This will help to quell ongoing fears that wealth garnered from one generation will be removed after the 70-year lease ends by the government. And while this does not address the fate of 20-year leases, the precedent set in Wenzhou may be replicated in other areas."
I don't know how well this works (I only have a superficial knowledge of the property market from my travels and relations) but I imagine it becomes a problem when you have major improvements. For example, imagine a condominium. As a political matter the government isn't going to kick out 100 tenants just because the leasehold on the land terminated. So I suspect that in terms of revenue the governments are no better off than relying on property taxes. In the few cases I'm personally familiar with the typical scenario seems to be that the government offers renewal terms at a highly discounted rate a couple of decades before the lease expires. It seems like a pointless contrivance.
Certainly freeholds are nicer from the perspective of efficient markets because you don't have arbitrary dates to contend with. Imagine trying to sell land with only 10 years remaining on the leasehold. The seller can expect very little, which is to be expected and not per se problematic. But more importantly 10 years limits the types of things you can use the land for, especially if you're risk averse. In general buyers will find it difficult to find land with a remaining term long enough to recapture the value of improvements, so liquidity would suffer significantly. Seems to me property taxes are a much simpler, more consistent, and theoretically fairer way for governments to capture the value of land. And that's ignoring Henry George-style land-value taxes.
I suppose leaseholds may make it easier for governments to actually kick people off land if they're committed to doing so. The end of the lease is a nice, neutral date to implement some difficult policy objective.
Here's a short, interesting article a quick Google search found: https://www.straitstimes.com/singapore/housing/understanding...
What caught my eye was
"And when the flat reaches 69 years, CPF savings cannot be used to finance the mortgages."
From what little I've gleaned from my travels and from the academic literature, I think Americans enjoy an exceptionally liquid property market and efficient financing market, particularly for residential property.
Lots of important land uses like airports, factories, train stations require huge investment with returns spread over decades or centuries, it would be harder to get people to make these investments on leased land.
It seems you have no idea what unintended consequences you're preserving by staying beholden to an ancient status quo.
The law generally -- and correctly -- recognizes that making someone homeless is a very serious thing, and should not be done on a mere whim, no matter how much someone might want to argue that as a property owner their whims are sacred.
I think UBI would significantly help relieve housing pressure in large metro areas and perhaps help revitalize some currently-dying small towns and rural areas, which after all will need more services with increased population.
Even places that are economically barren see people just go onto Social Security disability (perhaps a form of UBI) instead of moving to regions with jobs.
There are also people who move when they retire, or when they have kids. This could facilitate that happening earlier which would also reduce the pressure on housing in cities.
It's because of zoning. Allow more high rise to be built and allow more expansion and demand can be met.
It's not some mystery. It's local laws that prevent people increasing height of buildings and prevent expanding the area.
It's a problem that can be seen around the world due to similar planning laws in many places. See the Demographia report below:
http://www.harriscountytx.gov/CmpDocuments/74/Budget/FY18%20...
It's grown by 67% since 1990. Far greater than NYC or LA or SF in percentage terms.
The other thing that should be mentioned is that Texas has fairly high property taxes. They also help.
I suppose there are other problems like lengthy process of permitting (basically at least 1 year for issuing building permit) and entitlement (unpredictable). This huge delays reduces margins of a projects and in some cases they became unprofitable.
That is the entire problem. The entire problem of building more dense housing - even 3-4 stories in SF is negotiating every single thing besides the literal physical feasibility of construction.
If your startup doesn't think this is the key problem to solve, I'm not sure you have a complete grasp of what you're trying to do here.
1) There's a major time delay here. Most rent-controlled apartments have rent increases tied to inflation. Had zoning and land development policy over the last 50 years kept up, maybe in aggregate affordability within communities could have been preserved. As it stands, we are so far behind what would have been needed to keep things affordable that it's basically unworkable in the short to medium term (10-20 years) to expect changing zoning laws to solve our problems now. NYC would need an insane capital infusion, and any economic downturn would make the building market freeze up (as we saw in 2008).
2) New development in price-controlled neighborhoods doesn't solve the issue for people paying significantly under market. That's exactly what happens now, in fact: new development once a neighborhood is rezoned allows developers to buy up old properties and build luxury high rises. There is SO much demand for luxury (i.e. Manhattan yuppie) housing that, again, in the short-medium term, long-time residents are still necessarily displaced without protection.
3) To what degree should a community be able to resist change? Other than the fear of being displaced, renters also fear their communities being torn apart by gentrification, slowly dissolved by a changing demographic and rising prices. Now, I lean more on the side that communities don't necessarily have a right to exist (i.e. NIMBYism in CA), but there's definitely some leeway here, especially when those communities are classically disadvantaged (socioeconomically, racially, etc.). Rezoning a neighborhood that is fragile can have majorly negative impacts on the communities, and make things even more dire for the most vulnerable segments of the population.
4) It's unclear how much remaining demand is unsatisfied because of housing prices in NYC. Think of the surplus of people commuting in on major rail lines each day. Surely some fraction of them live in the suburbs for lifestyle reasons, but I'm sure a large fraction of them are simply priced out of the city. So demand for housing may increase if prices are lowered substantially. Depending on this unknown demand, rezoning could have little to no effect on the populations we're discussing here.
Rezoning is an extremely important part of the solution here, and the city should DEFINITELY be making aggressive moves to rezone in various places. But it's not a silver bullet, and in the short-medium term doesn't solve most of the problems that rent control have attempted to solve.
How much do tenants actually value a guaranteed right to live in a given community? When we look at anywhere in the U.S. that isn't rent controlled, we figure out, it's not much at all.
There is nothing illegal about signing a very long lease with a landlord. Commercial real estate contracts routinely include a a clause which allows tenants to extend a lease at a very similar price for many years in the future.
Landlord would absolutely love to do leases like this. But the reason this doesn't exist in the non-commercial settings is because no one cares enough about living in a place long enough to actually pay for that option.
Rent control only exists because its a a popular transfer of wealth, and is emotionally appealing, not because it actually makes people better off.
Tenants with kids value continuity of school districts. It’s a major reason why buying a house is so important. Tenants don’t seem to care because most tenants are high-income-no kids, old, or poor.
Usually bigger developments require no-negotiation, ironclad leases to make sales and financing easier. Smaller landlords and public housing are sometimes more flexible.
Philosophically, I don't like placing two sympathetic groups on opposite sides of a scale and weighing them, because that's usually a false choice and there is some external factors unaccounted for that make the choice less normative. In the case of rent control, this externality is clearly that it depresses new unit construction, exacerbating the problem. So I oppose rent control.
I find measures to limit the amount that property tax can increase on a property you own and occupy much easier to stomach than measures like rent control.
This city is full of landlords who got rich with the existing rent control system. It’s just preventing some of them from getting mega buck wild rich. So sad.
But perhaps that's the root of the problem? With so many units at below market rates, the current new to the market units get priced to cover the "loss" of the controlled units? And then of course there's the incentive.
I'm not defending the practice. But I am suggesting - similar to housing and a college edu - that "government intervention" often has unintended consequences.
These are the circumstances that have created the housing crisis we have now and previously took down the entire economy. I’m confused as to why you single out trying to intervene on behalf of the average person over the wealthy as the source of the problem when the “free market” term setting has caused the massive distortions and unaffordablity.
There is definitely something very 'i am very smart'-like about tech nerds defending 'the market' against any attempts of humanizing life. "um, actually the free market will..."
Governments exist to provide super-market force. Safety regulation being kind of a prime example, especially for employees. OSHA is anti-free market -- there should be no safety regulations, and let employees the freedom to choose safety or pay and let the free market work it out.
Right?
Countries with freer economies like Switzerland and Hong Kong have higher standard of living on average. Countries which free up their economies have higher relative standards of living after doing so. Countries which oppress their economies have lower relative standards of living after doing so. (By relative, I mean relative to the growth rates of neighboring countries and before the changes, as standards of living rarely decrease absolutely).
In general I agree with you that markets allocate resources far better than the most earnest central authorities. That said, market failures often happen without regulation from governments.
That's not the case. I'm only pointing out that X years ago the gov set out to Y and now X has become Z and is eating X alive.
Now there are so many units under market value that:
1) there is an incentive for landlords to be aggressive.
2) any unit that comes off rent control is driven up in value; to make up for the "loss" of control units; and control keeps units off the market which also drives up price.
Long to short, yesterday'price fix is today's mega-cost __and__ shady biz / landlord practices.
Does that help? I wasn't trying to be vague. I honestly thought the gist of the situation was fairly obvious. Sorry?
There's good and bad to everything and every policy, but this statement is meaningless. How many people have been educated in government-owned colleges, which includes ever public university in the U.S.? Whatever the unintended consequences, it seems to have done an enormous amount of good.
They created artificial demand - for housing and for higher edu - and as we all know that drives prices up.
I hope this clears things up.
The point is, when you squeeze a balloon...shit happens.
That doesn't make it a perfect policy, of course. I think grants to students or simply free education at public universities may be the best options. But that costs more money than loans.
On this specific point: I have yet to see much consensus in research that the loans drove up the cost of college; last I knew there was one paper. AFAIK, it's a story started by the partisan 'shrink-goverment-at-all-costs' crowd, and the repeated.
Demand drives up price.
Loans also increased the price the market can bear.
A study for Ecom 101 just feels like more gov excess.
Those are the people who can afford to weaponize the courts. Us little guys still have to play by the rules as we don't have deep pockets and lawyers on retainer.
The gov grabbed a balloon and now that bubble is bursting, just in a different way.
Again. Not saying it's right. Only that it's really not a surprise. Not at all.
Evicted by Matthew Desmond is a great book on this issue. It is infuriating some of the predatory, senseless, ruthless, scumbag business practices that slum lords use and crazy to discover that this is a recent development starting from the 60s.
Also shout out to Justfix.nyc, a startup using tech to tackle this issue. One of their projects is this website they made to help.
Word of advice to anyone who picks it up. Read the final chapter or two first. It's where he gets into the weeds of the data and such. If you start at the beginning and get bored, get distracted, give up, etc. before the end you're going to miss the best part.
Don't get me wrong, the stories are great. But just the same it gets disheartening, if not depressing.
I can certainly understand how you might find it disheartening and depressing, but I don't know I could quite see bored. The retelling of the situations was captivating, and the descriptions of how the system fails those most in need was harrowing at times. I've been recommending it to anyone who will listen.
However, the truth is, plenty of books get started and are never finished. Since the bit at the end was so factually important to the discussion of the issue, I didn't want that to be missed.
Imho, he should have started there.
(Obviously this is entirely a personal perspective.)
Few enjoy such books. But more need to be more aware of the (data) truths that define the issue.
The real value of that book is in the stories and descriptions of the inner workings of how evictions work in the two cities he profiles, which it does an excellent job telling throughout the rest of the book, and because of that I would highly recommend it.
It’s not clear what would be better. Should landlords always evict at the first missed check? That seems even more cruel. Or never? That has a certain appeal as a revolutionary-socialist redistribution of all apartments to their current occupants, but also means no more rental market going forward, or least higher prices on honest payers to cover the risk of deadbeats.
My takeaway from Evicted was that rents are too high and wages are too low, and regulation is a hopelessly ineffective way to paper over those structural problems.
There was a story later in the book about a slum lord's property that burned down because she cheaped out on fire detectors. Her tenant lost her baby but the slum lord walked away with even more money from insurance to buy 3 more properties.
The same slum lord took advantage of government housing incentives too by renting her dilapidated apartments at artificially higher rents to those lucky enough to be in a government program. Not to even mention how most of the tenants that are evicted can't even afford to literally get to the court house for the hearing.
The Tenancy Tribunal exists to mediate disputes between the landlord and tenants, both the landlord and the tenant can bring cases. For example, landlords can use it to get tenants to pay for damage caused, and tenants can use it to get the landlord to fix something they are legally obliged to fix. The tribunal is non-biased, and the decisions they make tend to be fair.
The problem though is that all tenancy tribunal case are public. With the names of the tenants and landlords published, as well as the case and the outcome.
A lot of rental applications ask if you have ever been to the tenancy tribunal, and a lot of real estate agents will search the tribunal records (which go back 5 years) when you apply for a rental. It doesn't matter if you were in the right or wrong, or if you won or lost. Landlords are reluctant to rent to anybody that has been to the tribunal, as they are considered troublemakers.
Because of this, tenants are scared to go to the tribunal, even for justified cases, where they are in the right and would win. The opposite doesn't occur for landlords because there is more demand than supply for tenants, and also tenants often don't know that they can search the tribunal records.
Rent regulation in NYC is easily the least effective way to make housing affordable for people of "modest means". It's criticized even by advocates of affordable housing for this reason. The only reason it still exists is because there are a large number of tenants grandfathered into the system (over a third of all NYC tenants) and that makes for a formidable voting bloc.
Rent control is all-but-gone - only a very small number of units are still eligible, and that's because the tenant has lived there continuously since 1975. Rent stabilization is less broken, but still horribly broken. Anybody can live in a rent-stabilized unit, regardless of whether or not they'd be able to afford the market rents, and there's no effort made to make those units available to people who can't afford market rents.
There are plenty of other programs in NYC, like Mitchell-Lama, which are much more effective at providing affordable housing. Rent regulation is not one of them.
Early 1970, actually.
> Anybody can live in a rent-stabilized unit, regardless of whether or not they'd be able to afford the market rents, and there's no effort made to make those units available to people who can't afford market rents.
But there is a strong effort to eliminate these units. Most of the rent stabilized inventory is not in desirable places to live. The rent can be increased every two years.
The rent guidelines board has voted for a freeze only one time in its 49 year history. On average the increase is 2% every vote and two increases of about 7.5% in the last 5 years. This interest compounds, obviously and also scales up MCI rent increases for capital improvements.
Once your rent hits $2700/mo, you are no longer stabilized. If you actually work out some examples, you'll find from this chart that rent stabilized tenants have had their rent increased _at minimum_ by roughly 34% for two-year leases in the last decade. If your landlord is anything like mine, it's probably close to 45%.
http://www1.nyc.gov/assets/rentguidelinesboard/pdf/guideline...
That's actually not true. At $2700, landlords have the option to petition for deregulation, but there's no guarantee that they'll succeed.
Under $2700, they can't petition for a high rent deregulation. The income threshold also only kicks in at this threshold, so a unit rented for $2000 can be occupied by a person who makes $500,000/year, and there's nothing that the landlord can do about it.
In addition, I'd have to check, but I believe the increase for the two years before DeBlasio was reelected was 0% for single-year leases.
I've seen this happen in building after building going on 20 years now. Usually they just wait for a few tenants to hit around 2500/mo and then stop renewing leases and let the vacancy rate pull the rents over the threshold for them. It's really easy.
(Note: they also lowered the tenant's personal income threshold in 2015 to ~200k/yr for two consecutive years)
They are required to renew the leases of stabilized tenants.
> or use the court to evict you and the apartment automatically becomes unregulated.
Nope, the apartment is still regulated even if they re-rent it. They have to go through the deregulation process through the courts if they want to take it off rent regulations.
Most public benefit programs in NYC require you keep on-file a current lease agreement. Withholding a paper lease is a deliberate tactic to make people choose between keeping their apartment and keeping their benefits.
I mean, we can keep doing this back and forth about where we agree on how things should work and I'll agree with you, but then I can tell you about how my family or I have been going to court with our landlord at least every other year since the late 80s.
I am a rent controlled tenant in a 95% rent stabilized building and the landlord does incredibly shady shit to try and get myself and others out. In fact we're going through the regular "didn't pay rent" routine right now that will bring me to court again probably this August or September -- the bank checks that I send certified mail every month are being refused delivery by the management company again.
Landlords here actually like non-agressive social-benefits tenants, as the rent get's wired directly by the state and the benefits won't pay for an apartment in an expensive area anyway, which, combined with the apparently rather liberal zoning, as far as high-rise buildings are concerned, makes the situation rather bearable.
That's true in the US as well, but again, the point is that a landlord who wants to make your life hell and drag you through the court system has plenty of opportunities to do so.
We could keep doing this back and forth, and I'd encourage you to do so, because you're just proving mu original point: rent control and rent stabilization are terrible at serving their stated purpose of providing affordable rent for people of modest means.
Rent control is about providing stability. I think 80%+ of home mortgages in the U.S. are fixed-rate. People pay a premium because stability in housing expenditure is extremely important to individuals, couples, and especially families. It provides an anchor point with which to organize their economic life, but mostly I think its human nature to prefer and need that stability. As a practical matter, though, there's no such thing as a 30-year, fixed-rate, residential lease. (Or more similar, a fixed-rate life estate as after paying off a mortgage nobody can kick you out.) It's possible but for historic reasons it's simply uncommon, and because such terms lack the ubiquity of the 30-year fixed-rate mortgage, you'd doubtless be paying a huge premium.
Ultimately, providing this stability to renters is a collective action problem. In order to the minimize the cost (and obviously there is a significant cost to property owners that should be fairly internalized by renters) you want a way to quickly channel a large segment of the market into using something like a fixed-rate perpetual lease. Ergo, rent control.
Affordability for low-income renters (or any renter) is a different matter and it's a shame that we've conflated these things. But we live in exceptionally conservative times such that the only way to publicly justify any manner of government regulation--even in liberal cities--is to sell it as a way to improve the lot of the most impoverished. The working- and middle-class have been utterly relegated to the vicissitudes of private markets and we no longer even have a vocabulary to discuss public policies targeting the larger population.
There are only 45000 of these left in the city. 30,000 of these are co-ops. If you discount the co-ops that leaves you with just above half of the inventory of rent-controlled units.
My single-mother sat on the waiting list for over 20 years before giving up and we were really poor.
Why discount coops? They're units too.
In any case, I didn't say Mitchell-Lama as it exists today is sufficient, but it's a thousand times better at achieving the stated goal.
My landlord has hit between 4.8% and 6% every year without exception since 1991...for what? Besides the lobby I can't tell.
I'm very well aware of Georgism. In fact I agree that LVT is likely the least bad tax. However, there are challenges to implementation; mainly how to fairly assess the value of the land and what to do with capital improvements to it.
We can't just say no to everything that doesn't work perfectly if it adds a lot of value to society.
There is no magic wand to end discrimination entirely, but encouraging highly competitive markets is the best way to bridge the gap.
If you want more detailed information about market discrimination, I suggest you read "Product Market Structure And Labor Market Discrimination"[0] The same principles apply to the housing market.
[0]: https://www.amazon.com/Product-Market-Structure-Labor-Discri...
As long as the choice of tenant is a risk people will act as people and use superficial traits to infer suitability as a tenant. They will use past, unchallenged experiences which are more commonly called prejudices.
When it comes to soda however, a highly competitive market, things change completely. You can raise supply much quicker and you receive payment right away, and the customers ability to not honor the commitment is very limited since they consume the soda. Even if you believe all kinds of things about a black man's ability to keep a steady job, what types of people come over and visit him, his recreational activities and his family situation it doesn't matter, he's got the money for soda and you've got the soda, what happens after the transaction is of no concern to you. Even if you're a straight up racist it would be foolish not the take the black man's money and give him a soda. However, when the purchase is him signing the dotted line and you getting money every week or month you get more reserved about who you do business with.
capital improvements are not taxed in an LVT scheme. That's the L in LVT.
What? You thought that power was going to be used on behalf of the powerless? That may have been the stated intent. But the powerful tend to know how to use power better than the powerless do...
Whenever someone says 'it's unfair that I must provide these social benefits', let's recall the enormous amount of social benefits that each of us receives, especially in developed countries: Security, safety, a system of laws, roads, education, food supply, healthcare, sanitation, infrastructure built by generations, rights, research on everything from health to history to gas fracking to something once called APRAnet, etc etc. And then there are the benefits each industry and many private companies obtain from government, licitly and otherwise.
We all benefit more than we ever can repay. So yes, optimally the costs should be distributed in a very systematic, fair way. But at the same time my general response is: stop whining when asked to pull your weight a little.
That's not really how this works. You don't arbitrarily force property owners to bear the full cost of supporting these people. If society deems them worthy of support, then society should support them. If we collectively think these people shouldn't be forced from their homes, then great. Let's pay the delta between what we think their rent ought to be and what the market price for that rent is. Let's all pay it together. Randomly and capriciously forcing whoever happens to own that property at the time to foot the bill is short sighted and silly.
they already do - presumably they aren't dodging taxes, and is in a progressive tax system. This is about housing, and property owners might not reach an income level where the progressive system taxed them enough to produce a surplus to cater for the poor, and if so, making property specific taxes is one such way to force the burden on to them.
You mean the same progressive tax system inhabited by those property owners?
> This is about housing, and property owners might not reach an income level where the progressive system taxed them enough to produce a surplus to cater for the poor and if so, making property specific taxes is one such way to force the burden on to them.
...seriously? My point is that it's arbitrary and unfair, and you respond by saying, well, it might be that by chance some of these people escaped paying their fair share? How is that a response?
They do, in their own fields. Lawyers provide pro bono representation to the indigent, help charities and others who couldn't afford them, develop law to address problems, etc. Doctors do similar things, helping the ill regardless of their ability to pay. A-list actors use their status to draw attention to issues. Etc.
> A-list actors use their status to draw attention to issues
No way that compares...
Doctors treating patients is not voluntary; in many cases the doctor cannot turn away the patient. Lawyers' pro bono services aren't always voluntary AFAIK; sometimes the court appoints them. And it if it wasn't done sufficiently in a voluntary fashion, it would be required.
Clearly, that is not possible.
They then proceeded to harass their tenants, and to break the law, in an incredibly blatant and disproportionate manner.
If you don't want to follow tenancy laws, don't be a landlord. You have a choice in the matter, your tenants don't.
We need to make tenant abuse as ruinous to the landlord as it is to their tenants.
When we catch people selling drugs, we take their drugs, and their money, and throw them into prison. When we catch landlords doing this, we should take their properties. They aren't operating some secret underground criminal enterprise here - many of these abuses are well-documented.
I assure you, if you make an example out of a few landlords, the rest will stop with the frivolous evictions. The reason they are playing these games is that they have a lot less to lose then their tenants.
I suspect the landlords would up their aggressiveness to collect a higher risk premium on account of having a higher rate of getting busted. In expectation, it would likely be a wash.
Doing business (which renting out property is) is not a given right. The cost of doing business (taxes and regulations) is what makes possible the existence of the state at all - far from being a 'dysfunctional' concept.
narrow rent control law is a capricious policy in general, not just for property owners. a bunch of semi-corrupt political lotteries don't make a good government or just society.
The same goes for your own time and labor. You can't be a free person (as opposed to a slave) if you can't own your own time and labor -- if you can't sell your labor.
As with much else, the state gets to impose taxes and regulations. No argument there. But if those taxes or regulations prevent you from enjoying your ownership of property or self, then they are confiscatory and make you un-free. At the very least unreasonable tax/regulatory burdens make for a dysfunctional / distorted market, though as long as you can freely vote with your feet you're not so un-free as to be a slave. Still, just because you can move to some freer locality doesn't mean it's a good thing that the locality your leaving has high tax/regulatory burdens.
Hopefully the NY Times names and shames these crimelords and their companies.
Meanwhile the vacancy rate on rent-stabilized apartments over $2000/mo is 7.42%...
When you have a government where corruption and dysfunction is is tolerated or expected in some parts (police and MTA come to mind) that dysfunction inevitably seeps in everywhere else given the time.
As another commenter said the big real estate companies have the resources to work the system until they get what they want so as long as the system supports sloppy decision making and incompetence they can just work the system until they get the desired result.
Sure this is bad but it's not gonna change until the politicans apply pressure. They won't do that unless someone with connections gets screwed and makes it their mission to right the wrongs or something thrusts the issue into the public eye. It will probably take someone going postal for this to be thrust into the public eye because the people being screwed are mostly poor and nobody cares about what poor people do unless there's violence involved.
Without the politicians to applying pressure no change will happen and they won't apply pressure unless this affects people with connections or provokes outrage. Unfortunately that's just how these sorts of governments usually work.
>Punishable conduct is rarely punished.
As long as judges allow landlords to break the law without facing serious sanctions, they will continue to do so. Its the same behavior that encourages police officers to perjure themselves constantly on the stand and prosecutors to hide evidence and perform other misconduct in the pursuit of criminal convictions. In many cases throughout society, unfortunately, the law has become nothing more than a tool for the wealthy and powerful to punish and control the poor and powerless. Anyone interested in reading an excellent book on this subject should check out Glenn Greenwald's With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful.
These controls suffocate supply and now the owners of an artificially scarce basic resource have a lot of power. It's not exactly a surprise.
Who are we quoting again?
We have this list, we have credit score lists, CLUE, and even sex offenders lists... How about one more:
The "I'm a cartoon villain" list. If you, for example, evict a little old lady in your greed for more rent even though your net worth exceeds some given amount, you get added straight to the list. Because that's cartoon level villainy right there. That should follow you for life.
(i just looked up a bunch of major REITs, and only EQR, Equity Residential, has >1% ownership by insiders. despite that, it has ~96% institutional ownership, with vanguard at 14.4%.)
The real work has gotten very complex indeed.
"I'm just doing my job" when you're obviously taking a helpless old lady's home factors out to "I knew it was wrong, I just did it for the money".
Our loss of shame as a society and as individuals is truly dumbfounding.
To me, it's just tilting at windmills, but that seems to be becoming more popular these days.