New York's Low Apartment Turnover Hinders Affordability
citylab.com
citylab.com
We've been a rent-controlled 1br apartment since 1969 (lucky...) and the rent is around $1500.
Also that rent-stabilized apartment doesn't go to market rate just because they move out. Depending on how much of the building is rent stabilized, it would likely stay rent-stabilized until the rent threshold crossed ~$2700. A rent-controlled apartment would become rent-stabilized.
1) It makes prices that much higher for units that aren't rent controlled and whose prices are set by the market. If the rent for these rent control units was allowed to fluctuate based on the market, the turnover would be higher and there would be more apartments available in total.
2) It incentivizes less units being put on the market because (a) A potential landlord (e.g. someone who wants to rent a room out in their 2 bedroom apartment or an owner of a townhome / brownstone who wants to rent their basement out) won't be able to make a profit or maintain their unit at the artificially low price set by regulation. (b) Real estate developers also won't want to build new apartments / condos if they know that they won't be able to get their money back by renting (because the govt is forcing them to rent at a super low price).
b) "Rent-stabilized" apartments account for a significantly larger percentage but the majority of stabilized apartments in the more desirable areas (all of Manhattan, Astoria/LIC, Sunnyside, close parts of Brooklyn) are within 20% distance of market rate and lose their classification once they cross ~$2700/mo.
c) On the whole, owners of buildings renting to rent-stabilized tenants are not losing money and can afford to make capital improvements (which increase rents) and hire management companies just like with any other building.
Notably almost none of these units are "affordable", except a certain number of lottery-dispensed rent stabilized units that the buildings allocate in exchange for certain tax abatements.
Even so, growth continues to outstrip housing supply, but with the exception of certain historic preservation areas, developers are putting up units as fast as they can. Real estate is still expensive, and developers can't get the land to build on for free, or force people to sell in the face of skyrocketing housing prices.
What you're describing is a city where a large-in-absolute-numbers-by-some-arbitrary-standard amount of housing is being built while also not being enough. As sufficiency for demand is the operative question, I submit that a better set of words is "sufficient" and "insufficient".
Given that it's less than the amount of population growth, I would characterize it as an insufficient amount of housing supply being built.
Yes, demand far exceeds supply, even with growth. The statement that I was disagreeing with was that some outgrowth of NIMBYism or zoning restrictions were to blame for the lack of growth of supply. I feel like the developments that are in progress are indicative of the fact that those are not the problem.
I don't know what the problem is or have good ideas on how to fix it. Possibly the problem is, as I outlined above, that real estate is just getting very expensive, and developers who would very much like to build large-scale housing are simply priced out by the capital expenditure to even acquire the real estate itself. Maybe the affordable housing initiatives have backfired to a greater extent than anyone realizes. Or it's possible that new supply is in fact outstripping demand, but the lead times are such that once the units come online the market will experience a pull-back as they have trouble renting or selling the new units.
For instance, NIMBYs requiring near-infinite shadow studies in SF. It doesn't prevent building, but by raising the costs and extending the timelines it helps reduce the amount that gets built. What does get built costs more. The result is fewer and pricier units, and what maybe could have been a 25% subsidized building is now 10% in order to make the numbers work. Or maybe a building goes from five stories to three and no longer has any affordable housing at all. At scale, lower-margin proposals go from further down the list while still being in the black to being in the red and never being built.
Which is to say that developments in progress should not be taken as proof that there are no problems with zoning or NIMBYs. Just that it's possible to overcome them if there's enough money to be made.
Of course, the point of new development is to ensure the housing price house of cards continues.
Unfortunately in the US, people consider their home an asset that needs to gain value, I'd actually rather have the states or the government own the property instead and just rent it to the people, but that's "COMMUNISM" and the end of the world.
I'm wondering how big the bottom falling out will be.
I used to live in one of the newer high rises in downtown Brookyln and my unit was technically rent stabilized, but since I was paying a "preferential" rent of $2500/month vs the "real" rent of $3700/month (that no one in their right mind would pay), they were able to raise my rent beyond the approved increase once the lease was up for renewal, and could have raised it far beyond the market value if they really felt like it.
It seems like there's a lot of missing analysis in this article rather than just a jump to conclusions, blaming tenant rights, and calling it a day.
Brokers and sites that I've found claim you'll pay a broker one way or the other: if the owner pays the broker, then the owner increases the rent to cover the cost. If you find a "No fee" apartment (a designation that anyone who's rented in NYC knows, and it has a special status and banner on https://streeteasy.com/) then your rent is increased to match the market anyway.
Even if it's true that as a renter you pay for brokers no matter what, it's the deceit in advertising in NYC that irritates me. Brokers happily list "$3000/month" rent, and you have to email them to find out what their fee is. If you amortize the fee across a 12-month lease, that "$3000/month" might actually be $3250/month (1 month broker fee) or $3450/month (15% broker fee).
1. To have never had your name on a housing court case, even if it was found in your favor or you had a legitimate reason to be in housing court
2. A completed application including the contact information for your last two landlords who have to say nice things about you even if they were crazy/bad
3. Annual income at 40-45x the monthly rent, as reflected in your last two tax returns (hope you were making more money than you actually need to be able to afford the rent 3 years ago!)
4. Letters of reference
5. Months of bank statements
6. Pay stubs
7. Tax transcripts
8. Perfect credit (or 6 months of deposit-- you have $15,000 in cash for this, right? Oh it's okay, do you have a guarantor who makes 100x the rent (hundreds of thousands of dollars) that wants to put their SSN on your rent payment? Oh no?)
Getting approved for a tiny 100 sq ft studio is the same process as getting approved for a 10 million dollar loan. Normal people have no chance. Don't have your financial life in perfect order? You're garbage that doesn't have a right to live somewhere.
I would amend this to state "you're garbage that doesn't have a right to live in desirable New York City dwellings where more desirable tenants are available for the landlord to choose from".
One sentence ascribed to the intangible quality of life benefits of a stable community. A single sentence, with not even an attempt to quantify the positive effects of stability on living standards, even life expectancy.
https://nypost.com/2017/06/04/new-yorkers-are-living-longer-...
That said, I'm not convinced there's such a big connection between churn and affordability. Moving is really inconvenient, and there are a lot of good reasons to stay put.
1. City has a good mojo, not too big, not too small.
2. Not too unequal neighborhoods.
3. #1 and #2 attract startups, big companies.
4. Rents rise in the city.
5. Slowly there will be calls to increase housing density.
6. More houses get built, housing density increases, rents go down by $100-$200/month for maybe 1-2 years.
7. Rents bounce back in about 1-2 years and then continue on.
8. Calls to increase density further, eventually the city loses its desirable properties and poor people are still relatvely just as worse off as they were before.
9. The rich tech worker is still in the same position, relatively.
Important thing being, even after doing all these things, the median poor person in the name of which all this densification happened is still stuck in the same relative bad standing as he/she was before, only difference being the city lost its charm in the process as well.
Obviously, this doesn't apply in the case of NYC since it's been a big city for a long long time but the above story is worth keeping in mind for small cities in many states.
It might be a better idea to have companies distributed more uniformly than pushing for high densification of few cities. It spreads economic benefits around as well.
Rent stabilization alone isn't a solution the housing affordability, and maybe there's more to it than meets the eye. But New York's solution shouldn't just be to get rid of it. What model city would they be following?
Rather, changes in zoning laws could be really great, following Tokyo's model. The author hints at this. https://www.vox.com/2016/8/8/12390048/san-francisco-housing-...
We have rent control on units occupied before Costa-Hawkins went into effect (1995 I believe). SF builds very very few units per year, so this covers a very high percentage of the units in the city.
Is San Francisco known for its affordable rent?
On the other hand, there are obvious inefficiencies in the system (like empty nesters holding onto units larger than what they need because they can't afford to lose them).
Regardless of issues with New York's rent controlled housing, there's a wider national issue that there's an undeniable trend towards migration to a few top "innovation hubs", and these hubs are all simultaneously failing to urbanize as needed to satisfy the demand. What this country needs are federal subsidies and incentives to encourage/assist top hubs in developing good urbanism (which notably supports lower income people as well as just the wealthy).
What is good urbanism you ask?
1. Density to support affordable commercial activity in or near hubs of existing commercial activity (ie, building skyscrapers downtown, most cities have this one down)
2. Expansion of transit that goes to said commercial hubs, particularly any transit that does not compete in traffic with private motor vehicles (subways, light rail, BRT, commuter trains, etc). The goal is to maximize the amount of land that can viably and reliably commute to the commercial hub within 1 hour without use of a private motor vehicle.
3. Densification of all land that can viably commute to the commercial hub within 1 hour. In particular, any neighborhood covered by the transit mentioned in (2) should (by some mechanism) be allowed to increase in density naturally in accordance to supply and demand (You can't let existing homeowners veto that new apartment building just because it's ugly).
These three rules were pretty much common sense prior to the spread of the private motor vehicle, but with cars we kind of just decided you can commute from anywhere now so it's a free for all. Hence the dispersal in our housing patterns this past half a century. Problem is, the free market has shown that top 21st century companies have no interest in placing well-paying jobs dispersed throughout many cities and many suburbs, but rather concentrated in a small number of innovation hubs, so we need to adapt our housing patterns accordingly.
And late 19th and early 20th century urban utopias were the result?
There are certainly problems with car culture (especially environmental impacts), but the idea that pre-car common patterns of urbanization were “good urbanism” is something which needs some support.
What I am suggesting is, for all their faults, urban design reflected the fact that people could not commute to work by car, because they did not own cars. It was categorically impossible that a cities poor workers could be pushed 50 miles out to some cheap exurb. And it turns out, the politically connected elite still needed cheap workers, and so urban design reflected the need for cheap housing.
No, cities weren't perfect. I'm not advocating a return to tenements, and I doubt anyone else is. But car dependence isn't just environmentally damaging, it is fundamentally unable to scale to the demands of modern innovation hubs. Cars are well-suited to the dispersed living patterns of the late 20th century, but as I already mentioned the dispersed living patterns of the late 20th century do not match the centralized work patterns of innovation hubs today.
If they're failing to urbanize it's due to their own myopic local politics.
> their own myopic local politics
Well yes, but when every locality simultaneously experiences the same issues with local politics it hints to a systemic issue. The federal government can help overcome systemic issues by lining up incentives for local communities to act in a way that's beneficial to the economy, rather than beneficial to their home prices.
It's pretty sad that the HN thought police have downvoted this into the dirt. Why don't you try answering the question, instead?
Anyways I think you're implying that removing rent stabilization would have a net downward pressure on prices. While that may be true and it seems reasonable, I'd like to see some data to back that up. You do realize that a major reason rent stabilization exists is to protect people from being evicted out of their homes as the price of the surrounding area increases, right?
You're arguing that people staying in affordable apartments makes their own apartment less affordable. Really. I love the logical backflips people will do to justify an ideological belief.
Do I really need to state the obvious? If someone is living in an undesirable situation solely because the rent is low, it's likely because they can't afford something better.
Might there be something more subtle here, though? Is it possible that we could be looking at a scenario where people being unable to find another affordable home is linked to lots of other people having affordable homes that they can't afford to leave? Perhaps people might be considered harmed if they do not have the option available to change their living situation in a way that fits with their needs?
Again, you're completely right. It's plainly obvious that people who put up with shitty situations do so because they don't think they have a choice that fits their needs. It just might be worth considering that this behavior pattern might have a greater impact when a large number of people behave this way.
You can certainly argue that rent-regulation (fun fact: virtually no NYC apartments are rent controlled, but ~50% are rent-regulated, which is very different) disfavors newcomers. This is what the article actually argues, and I don't really dispute the premise (though the magnitude of the impact is certainly up for debate).
Here's the thing: if you're going to argue that this is bad for everyone, you've got to do better than make some hand-wavy assertion that new people can benefit more from slightly cheaper units than the old people benefit from their existing, below-market rents.
Basically, this argument always boils down to new people complaining about old people.
It seems to me that having the option to move might benefit a wide variety of people in diverse life situations. I would love to hear if I've overlooked something!
"I think you'd have better luck phrasing the question earnestly and thoughtfully"
My remark was honest, and it was thoughtful. It just wasn't something people agree with on HN.