[File photo via Bobby Williams]
The Times will have a piece in the magazine on Sunday on rent regulations... a version is now online titled "The Perverse Effects of Rent Regulation."
The East Village plays a starring role as writer Adam Davidson, co-founder of NPR's Planet Money, presents some what ifs about the elimination of rent regulations and other forms of housing subsidies. He goes over the two rental markets in the city: "Roughly half the apartments are under rent regulation, public housing or some other government program. That leaves everyone else to compete for the half with rents determined by the market."
One East Village realtor estimated that there are between 20-30 available apartments for rent in a given month.
He goes on to point out how "an East Village where nobody makes less than $90,000 a year might actually damage the city's long-term prospects" ... because the neighborhood has always "served as an initial toehold into this chaotic mess" of Manhattan.
Christopher Mayer, a housing economist at Columbia Business School, contends that these programs actually make the city much less affordable ... he lays out one scenario:
Eliminating rent regulation would be such a huge windfall for landlords, Mayer says, that he could imagine a sort of grand bargain. The programs go away, but landlords have to pay higher property taxes. The extra city revenue could go to a fund to help poor people afford market-rate apartments. In theory, this could be designed to make the shift win-win-win. The city could stay socioeconomically diverse without any six-bedroom apartments renting for $225.
Otherwise?
Writes Davidson: "What happens if all the rich people are on one island and the poor but creative are somewhere else? "
Anyway, there's a lot to take in with the article... too much to quickly recap in a post. Go read the article here.
57 comments:
I wonder if the article speculates removing housing from the market entirely?
Rent regulation would work if there was means testing. There is no reason lucky wealthy individuals should have low rent apartments when others with little income can not find affordable housing. Just like with other programs - one should have to qualify for 'affordable housing' - it should not be based on a lottery system that can be passed onto generations.
newsflash--rents would be LOWER---not for the public housing or rent regulated, of course, but for everyone else. you know, the one's who work for a living.
Anonymous are you talking about those NYU students who take up so many apartments ? Their work and contribution to the LES is so great that those blue collar workers in rent controlled apartments who have been paying rent to landlords for years need to move out.
"rents would be LOWER" -- pure speculation and wishful thinking. That's why it's stated without a single fact to back it up.
Really, the only thing that removing regulations would mean is that the rest of the rich people throughout the world could rent a place in the area that they only visit a couple of times a year. The vacancy rate would not change, but constant turnover would, and thus the monthly rents would not change.
10:09, wtf? Are you assuming poor people don't work? That those who are in public housing or in rent-regulated apartments are lazy asses who aren't working? What a sad, ignorant generalization of the poor and of those who live in such housing.
@10:09... I'm embarrassed for you and all of your ignorant kind.
"What happens if all the rich people are on one island and the poor but creative are somewhere else?" The rich chase the poor and creative. This is how the lower east side came to be more expensive than the upper east side in the first place.
Pro-Market Raters are the most inane people going. NEWSFLASH:
New York City (Manhattan) is a limited quantity (They aint making any more). All the Wealthy of the world in all their 'wisdom' have decided they must Live here or they dont rank in the Society columns. Without Rent Stabilization/Rent Regulation the rest of us have to leave.
I say TFB to the Pro-Market Raters.
So the Landlords make less, Boo hoo.
I HIGHLY doubt landlords would lower rents appreciably if they got to kick out "the poors" and deregulate / destabilize all apartments. Maybe some of the newly emptied units would be vacant for a while, but the influx of wealthy newcomers to NYC, and especially this part of Manhattan, would ensure demand at the outrageous market prices we are seeing. Higher supply wouldn't lead to much lower rents in a city constantly seeing more newcomers who can afford high rents.
Re: Mayer's assertion that "The programs go away, but landlords have to pay higher property taxes." Yeah, NYC landlords will TOTALLY let you raise taxes on them. And all that "extra city revenue" will DEFINITELY be enough to pay $2,500 rents for hundreds of thousands of poor NYers who currently pay $500 to NYCHA (through that "fund to help poor people afford market-rate apartments"). I don't oppose some form of means testing (I think rent stabilization ends if you make over $250,000 currently), but the idea of "six-bedroom apartments renting for $225" is ridiculous. Most rent-controlled and certainly rent-stabilized apartments are nowhere near as big or cheap. My rent-stabilized 1-bedroom in the EV is maybe $500 below market-rate. I'd love to check out that $225 6-bedroom though!
Housing in NYC has always been a issue of high demand with tight supply even progressive economist like Dr.Krugman say rent regulation will not work. Need much more in Manhattan affordable middle class housing NYCHA has to be reduced in size by 20-30 percent since no Federal dollars are coming in some of the Tower in the Park projects need to be demolished and new mixed developments built. In late forties they demolished the slums so now its time to rethink the model political courage is required with vision and there is no one in this race even coming close I'm afraid
Rent stabilization was effectively ended back in the 90s when the city council, and Anthony Weiner, voted for vacancy decontrol, which means when an apartment is empty landlords can raise rents by up to 20%.
In places like Stuy Town landlords have gamed the system by renting to students and getting higher turnover. Once the rent is over $2500 it can be rented at market rate. They can also decontrol an apartment if your income is over $200k for 2 years, but this represents only about 5% of the decontrolled apartments, putting to lie the idea that means testing will lead to a fairer system vs rent stabilization-- most renters are lower and middle income and the only way landlords can jack up rents is to get people out. Once destabilized, the market rent in a 2 Br in Stuy Town/PCV can go from $2500 to $5000-$8000/ per month. If anyone here thinks that's a fair market rent then I have a bridge you might be interested in buying.
With his vote, Anthony Weiner and the City Council eggectively helped kill rent stabilization since the decontrol rent of $2500/mo is now artificially low, but he is trying to lie his way out of this saying he voted for high income decontrol, which only affects a tiny portion of apartments. Vacancy decontrol has slowly killed the program and will one day end it altogether.
Meanwhile the percentage of New Yorkers already in unaffordable housing as defined by HUD has hit an all time high under Bloomberg and is almost 50%, this percentage was around 40% for the three decades before Bloomberg became mayor. Go figure, a billionaire mayor who doesn't think paying half your income for rent is too much money.
The only ones who want to end rent stabililzation are the owners, which is how you know that rents would in fact be much higher without it.
They keep repeating this tired bullshit. The only thing that will happen is rents will be jacked up. " That leaves everyone else to compete for the half with rents determined by the market" There is no competition, the landlords just charge what they want and write-off on their taxes when they can't rent it at that price. I'm rent stabilized and I still manage to spend more than 1/3 of my income on rent, the landlord isn't going to to suddenly put a super in all his buildings. Its such bullshit the Corporate lapdog and developer puppets like NYTimes love to repeat over and over.
Anon 11:32: I'd love to hear why people don't deserve to live "in dignity" in NYC; care to elaborate? Besides, you clearly don't understand that rent control / stabilization and public housing are completely separate things. Sounds that you're offended by public housing, which is not even the main topic here.
Yeah its the poor who are jacking the rents. Not opportunistic developers.
Lets get rid of affordable housing cuz its blocking us from having affordable housing. Makes total senses to me.
Or blame Canada.
Just say anything with authority ....TRY IT.' "Four plus four is six." See how many people go along with you. You would be suprised.
Thanks for this post, EVG!
As noted by director of N.Y.U.’s Furman Center Furman Center for Real Estate and Urban Policy, “The political forces that would get rid of rent regulation would not be the forces looking for optimal legislation.” Exactly.
Some mainstream economists are beginning to change their tune on rent regulation, looking at it as a necessary evil, while I keep scratching my head over claims that deregulation will bring rents down. Look what deregulation wrought in in the banking industry. Better yet, look what it did to NY energy rates. The first thing Pataki did after first getting elected was deregulate electricity, promising that rates would go down. Instead they doubled overnight and have stayed there, far higher than in states that kept their power industries regulated.
And a quick note: even the NY Times is changing its tune, formerly being one of the most persistent and vocal critics of rent regs in NY. But maybe after seeing how powerful American business interests have captured gov't, state and federal, and seeing the misery that has resulted, it probably shouldn't be all that surprising.
As to why NYC institute rent regs in the first place. It was to keep renters around in a largely rental city. To provide stability, to the renter and thus to neighborhoods.
That's because the economic lure of the suburbs would otherwise loom large to families without that stability. Why hang around NYC in a rental apt that leaves you at the mercy of your landlord, or the market, or whatever when it comes to your monthly housing expenses? A safe, affordable middle class alternative is to move to NJ and buy a house with a fixed mortgage and avoid the possibility of a new lease with suddenly unaffordable rents and the hassle of moving expenses, new schools for the kids, etc? That's if the landlord decides to issue a new lease. Renters don't have the right to a new lease in an unregulated market.
There is a MONOPOLY going on here. Because of the fixed amount of stock the real estate industry is pushing to price fix the whole market. Pushing out stabalization allows thier fixed prices to be the only 'buying price.'
EVG you just can't get enough of that view looking up 1st Ave huh?
In the mid 70s I made a deal with my landlady that I'd move to a then quite undesirable and rather dangerous neighborhood, the East village. In exchange, I'd get a rent-stabilized apartment at an affordable rate. The first 6-7 years I spent much time preventing junkies and winos from shooting up and or defecating in the hallway. When they managed to get in anyway, I would get rid of the leftovers using a broom or a mop. I'm now getting to reap the benefits for those efforts by being able to still afford to live here. The landlady has honorably been committed to our agreement. With the bi-annual increases, I'm now paying about 3 1/2 times what I did then, but still less than half what her new tenants pay for an equivalent apartment. We both feel that we have mutually benefited and have a very amicable relationship.
i'm no economist but i'd be very interested to learn why more effort isn't being pushed on different kinds of regulation. it seems to me that with corporate used condoms like bloomberg and quinn (and weiner, heh) the realtors have the last say, so rent controlled and rent stabilised apartments will eventually go the way of the dinosaurs. but that doesn't mean all regulations are created equal.
we should work for smarter types of regulation that don't result in all types of negative externalities that persist with traditional control/stabilisation. why not focus on tighter controls on when, why and by how much a landlord can raise the rent year-on-year? my landlord raised by rent by $50/month but my salary sure didn't go up by 2%, nor were there any substantive improvements to my unit. tying rent increases to the median wage increase or some sort of consumer bundle price index would be one smart alternative.
and while i am no fan of deregulation, the NYC real estate market is a complex one. personally i believe expanding the share of market-priced rents but adding in subsidies for lower income folks. if you couple that kind of intervention with tighter controls on rent increases and vacancy control, it seems to me like a smarter way to go about it.
of course, all of this is moot if we keep electing city councilors and mayors who are beholden to the real estate scumbags in this city.
ps - Anonymous @11:32 ("Even if a couple has a normal amount of children - and who in NYCHA really does") that's a fairly disgusting statement.
Re: anon 11:56 AM. It is not a God given right to live in one of the most expensive places on earth - with my tax money. If thats' the case then sign me up for a 10BR mansion in Beverly Hills, free of charge of course.
How about instead of deregulating, we remove the ability for NYU students to have mommy and daddy bankroll their terrorization of the EV. Perhaps prohibiting guarantors would free up some "affordable by NYC standards" apartments. I have a good-paying job, and went to graduate school, and I STILL can't find a decent EV apartment that costs less than half my salary. Makes my blood boil when I see a bed-headed 19 year old key into their Muffy-funded EV apartment.
Is 10:09, 11:32, and 1:36 the same racist, evil person? I'm disgusted to live on the same planet with such a closed-minded, devoid, entitled jerk.
I know how painful it is to watch the EV go upscale, but don't complain too much. Having grown up in a place that instead went "downscale" ( the Ravenswood Housing Projects thru the 60's ), I can tell you that UP is way better than DOWN. I am torn between kicking these rich NYU brats and kissing them.
re anon 1:49. "entitled" Are you freaking kidding me ? It's those in our community that sponge off the system that is the problem. Let me guess.
NYU should be moved out or pay a luxury tax.
The false economy it is promoting on our neighborhoods by charging its students 2k to sleep in a dorm room with 6 others- is forcing the local rents up to match.
NYU should be relocated out to a place where it can do its expanding without canabalizing on the cultural engine of the city and provide affordable housing for its young students.
I will help them pack.
1:57, your assumption about me is WRONG (and I know what you're inferring which is right in line with what seems to be your fckd philosophy anyway).
This will benefit the landlords much more than renters.
I can't imagine the stock of rent stabilized apartments in the east village having a noticeable effect on rents. If it is suddenly cheaper to live in the east village then people will move there from other neighborhoods and drive the rents back up.
What it will do though is increase property value immensely and spur development. Rental real estate values are mostly based on a multiple of the net yearly rental income, usually 15-20 times. If you have 10 apartments going from 500/month to 2,000/month, the value of the building has quadrupled. an extra 15k a month is great, but going from 1 mil to 4 mil will turn heads.
That happens, you'll have tons of landlords that had long term rent controlled tenants looking to cash out. With richer tenants, you'll see retail rents rise and with that more developers will move in. Nothing we haven't seen already.
Mr./Ms. Anonymous 1:57PM,
You're late for the "Young Republicans' Newt Gingrich Lovers Association" meeting!
Another EVGrieve barn burner! Number of references to 11.32, but don't see a comment at this time. Has this been deleted or edited?
Hey, anon 1:36 PM: So sorry SO MUCH of your tax money goes to support those "lazy breeders" in NYCHA... Please explain how your TAXES support me in my rent-stabilized apartment though? Because clearly you have no idea how this works. And comparing NYCHA to a McMansion really drives home the point of how clueless you are.
You know what I don't like MY tax money being spent on? Bombing brown people abroad and corporate welfare for douchebag bankers. I'd like MY tax money to stop being used to support the military-industrial complex and be spent instead on affordable housing and healthcare access. As you sign up for your Beverly Hills mansion, tell me where to sign up to for my tax refund for bombs and drones, since that's what I disagree with.
@ anon 2:24
I did remove the comment. I shouldn't have approved it in the first place...
what is the total number of public housing and rent regulated units currently in manhattan as against the number of rentable units not subject to state or federal subsidization.
that should tell you everything.
Everything would be fine if that one taxpayer did move to Bev. Hills...'cept that there are poor people in LA, too. And everywhere in between...
Like the rest of us aren't paying taxes. We just have different moral standards, it seems.
The bottom line is that rent regulation is in fact rooted in communism. The fact that the government can dictate what a private landowner can charge is stands against everything this country ws built on. As a landlord I can attest to the fact that there are wealthy individuals in the EV paying $250 for a 3 bedroom apartment because one lives in my building. To add insult to injury, the city then raises my property taxes and water and sewer charges annually. No to mention the teams of inspectors they dispatch to issue fines. If the city and state wants to use tax dollars to build affordable housing I'm all for it. But they want to have their cake and eat it too all on the backs of landlords.
Renters today are paying double the rents from 10 years earlier before vacancy decontrol. How is that not proof enough about how rents would rise if the other half of the rental stock was deregulated?
@ 11:15am -- Krugman was referring to a model of rent regulation that does not hold in New York -- here, new units are *not* required to be regulated.
Meyers' assumptions are embarrassingly false. When the deregulated renters vacate, they don't suddenly disappear from the housing market -- they have jobs and family in the city. They move to cheaper neighborhoods where this onslaught of displaced thousands of apartment-seekers create a much tighter market in those lower-income neighborhoods, raising rents there, displacing thousands there who move down the ladder creating a tighter market down the line.
Deregulation, in other words, would raise rents disastrously especially for the middle class and everyone below them. The only sector that might get a break would be the highest payers. So deregulation is a win for landlords and the wealthiest renters, a lose for everyone else.
One way to increase the housing supply and ease market rates is to build new units. Since new units are not required to be regulated in New York, our rent regulations are actually one of the few incentives to build new units (that's why Krugman's complaint doesn't apply here). Deregulation would end that incentive: raising rents and evicting tenants are cheaper than building new housing. Deregulation is a gift to landlords at everyone else's expense.
This was empirically studied in Boston. When rents were deregulated, all rents rose.
In every way NYC's rent regulations are healthy for the housing market, *except* that it's deeply unfair for new arrivals. The state should really get back into housing of all kinds -- upscale, moderate, and low-income -- using its upscale housing to finance the moderate and low-income housing.
5:56 PM Bullshit. Total bullshit. There is no such thing as a middle class in an unregulated free market -- what you get is rich and poor. What was carefully crafted to create a vibrant middle class post-WWII has been dismantled in the post Reagan years and the result is income inequality has literally gone off the charts. So take you're "commie" crap and try to peddle it to the rubes in Kansas, it's not gonna fly here.
The real estate industry has been busy sucking the life out of this city and EVERYBODY has noticed and your bullshit no longer flies. Pretty soon your boy Bloomberg will just be a bad memory and I gotta say it's been a blast watching the Democrats fall all over themselves trying to be the antiest-Bloomberg.
Phew.
Well, I agree NYU is out of control. Not sure why their tax exempt status should allow them to take downtown over.
I can see good arguments on both sides. Personally, I live in an apartment building where a nice old couple lives in the penthouse in a 1500 square foot two bedroom they pay 1400 dollars for. Nice people. Not exactly sure why they ought to have such an amazing sweet deal.
9:56 gets right at the heart of it. It *is* unfair. We should all have such a sweet deal. But taking it away from the nice old couple won't give any renter a better deal, just make everyone worse (except the landlord) since without regulations there's much less incentive to develop new units that might ease the market. That unfairness draws landlords' victims -- the market rate renters -- to side against those who are protected from landords' predation. It's a completely understandable response, yet crazy too (-: -- two wrongs to make a right.
perhaps economics 101 is a good indicator. Increase in supply causes a downard trend in demand and price.
@ 11:47am -- Deregulation doesn't increase the supply. Please read previous comments like 9:59pm and Jill's 8:41pm.
So ken doesn't believe that the taking of ones personal property for the common good is communism. I suggest he dust off his webster dictionary. Landords, love them or hate them, are rhe owners of the regulated apartments. It is their personal pr operty and in America nobody is entitled to someone else's property.
2:56 -- Slaves were property too.
Also monopolies. I guess you think taxes are communism and landmarking is communism and zoning and every license. Just because some jerk owns a gun doesn't give him the right to use it to harm society, and restricting his use of his property for the benefit of the common good is not communism. Living in any society entails obligations, and figuring out those obligations is more about common sense than any ideological bias.
@moe July 23 1:54. When I was forced out of my rent-stabilized, east village apartment 4 years ago, I moved a few blocks away from Ravenswood (LIC/Astoria border). A mostly residential working/middle class neighborhood, at least a 15 minute walk to the train, little commercial space except for some charmless strip malls. A lot of people wrinkled their noses at the mention of Queens. Now looming on Broadway,across from LIC high school on a desolate street even farther from the train, is an out of scale "luxury" apartment building. Another developer just bought 3 parcels of land on the next block for over 11 million dollars. Long Island City in the other direction has become unaffordable to those who can't pay $500,000 to buy or $2000 to rent a studio apartment. Anyone would agree that a safe neighborhood is preferable to one with a high crime rate, but there is no longer a middle ground between "drugs and crime" and "luxury". The people who had to endure the "bad old days" because it was what they could afford, are pushed to another undesirable neighborhood until the real estate industry decides it's "hot", which is happening at an accelerated pace. I kept hearing about how "no one deserved to live in Manhattan, move to the boroughs if you can't afford it". That's becoming the attitude about the boroughs now.
Leave it to the NY Times to shill for the Real Estate industry. How about the fact that most units are luxury units and condos- many of which sit empty. This is a false argument paid for by the RE industry who can't wait to get thier grubby hands on all the RR/ RC apartments.
When in history have the haves ever been interested in any kind of bargain with the have nots eliminating rent control would be the final blow to.nyc as we know it. Theres always a way to justify cruelty if cruel is what you want to be.
Unregulated capitalism is sinful. The wages.of sin are death.
Maybe we should also let thieves write.the larceny laws, and trust them to arrest and jail themselves . Maybe dow.chemical should run the EPA. You must either be in on the scam or stupid to expect self of capitalism.
Either we are being trolled by a econo-sociopath Fox New watching, Ayn Rand loving nut job, or this guy is truly delusional. In the US and all other countries real estate is highly regulated, taxed and controlled. It is never your own personal property to do with as you wish. That would be chewing gum. Real estate has many laws designed to protect us from people like you who think that being a slumlord is fun, heat and hot water are optional, and throwing people out in the street is ok because it's your own personal property. No it is not. Real estate is unique in that the way it is used affects everyone around it. Owning it comes with unique responsibilities to benefit the public good. This is why we have zoning laws, city planning, and housing court to protect tenants from landlords who treat them like chewing gum, spitting them out when they get tired of chewing, and from people like you.
Now enough with the real estate trolling, there's a Pogo Stick event in Tompkins Square from 1-5 today called Pogopalooza 10. They are trying to set a world pogostick record, so bring your pogo stick and see you there. The big event wraps up Sunday in Union Square.
What many people don't realize is that there are many costs involved in having the current rent stabilization (RS) system in place.
1) The state has to pay for the agencies (e.g. DHCR, etc...) involved in overseeing the system. So the state has to pay for rent, salaries, etc... This cost is borne by all NYS taxpayers.
2) The current system pretty much forces landlords and tenants to litigate various matters. Again the state picks up the tag (e.g. maintaining courts, paying for court workers, etc...).
3) Apartment buildings are taxed based upon the income they bring in. Hence if rents increased then the city would derive more from property taxes for the same property.
4) One of the reasons why land costs are so expensive is because an owner of a RS building can't empty a building and sell to a developer. Hence the old housing stock in the city. In theory, without RS, builders could build newer and larger buildings. Which would increase the supply of housing (a positive)and again increase the taxes received by the city.
Wow, you real este shills must be getting paid overtime, because New York was rated the #1 real estate investment market in the US by Forbes this year. And guess what? We have rent stabilization, and rent control. I will bet you your next overtime/weekend spam-posting bonus from Goldman Sachs that you can't name one landlord who is going broke because of Nycs rent laws. In fact, almost all landlords in NYC are longtime owners who are trying to buy even more buildings. The reason they can't is that the prices are so high! So now you can go back to sipping your three olive dirty chocolate martini by the pool in Amangansett and try to figure out a better argument, because the one you have now holds less water than Anthony Weiners balls!
Some interesting points. I think 3 and 4 are a wash. Without RS, owners have no incentive to develop new units -- raising rents and evictions are cheaper than developing new units that would lower rents. 3 -- curtailed tax revenue -- is another incentive to develop, but really you're assuming that the deregulated will be paying more rent somewhere, rather than moving to another neighborhood and paying the same (increased rents rather than musical chairs w/apts).
I can't imagine that oversight costs more than a penny or two per tax payer, and eliminating housing court so that landlords could deny heat and hot water or evicting at will sounds to me in the tradition of "A Modest Proposal."
I'm glad you're so sympathetic to developers, 1:16. Unfortunately this is a false argument- housing court for example has little to do with Rent Reg's- do you think market rate tenants and ll's don't have disputes? Regulating bodies generate cash to pay for operations- for example, Building departments collect money from permits and fines for violations.
Before making rash and permanent decisions, we should study other areas where deregulation took place. The answer is usually against the consumer in favor of the corporate.
Also, who is fighting for and against this?- developers want to end reg's not for the good of the people or even to stabilize the "market"- it is totally profit driven.
Most ll's know the building's stats- they choose to purchase these proprties hoping to convert to market rate- it is a risk and a gamble they choose to take, so no I can't feel sorry for most of them in this case.
If only those RS tenants that endured the 'bad old days' had the foresight to buy their apartments instead of rent then this would not be an issue. The current 500k plus apartments would have cost you only $100k 25 years ago. I guess they'd rather just complain for the rest of their lives about how everyone is evil.
12:34 -- The only complainers (aside from the libertarians who complain and whine constantly) are the newcomers who can't find regulated apts.
Really 12:34- you should have bought your apartment 25 years before? Because we all are flush with cash. 25 years ago 100K was like 300-400K now= a lot of money for regular folks. Or do you mean we should go back in time with the old Delorean and then buy the place with today's dollars at 1980's prices?
"You should just be rich and, like, buy things" Thanks for the sage advice, Paris Hilton.
Or is this Alex P. Keaton trolling us?
Post a Comment