Here’s Why Your Rent Is So Ridiculously High (Rent Control)

With the average asking rent rising over $3,000, New Yorkers continue to wonder “Why is the rent so high?”. Business Insider Writer Josh Barro detailed several key reasons in an article titled “The 8 Reasons WHY New York Rents Are So Ridiculously High” to offer insight into the rising cost.  He attributes factors such as limited space, high property taxes,  and high constructions costs. Interestingly enough, #3 on his list is “Rent Control”.  Here is an excerpt:

 

 

3. Rent stabilisation raises your rent if you’re not rent stabilised. While the average rent for available apartments in New York City is now over $3,000, the U.S. Census Bureau says renters in New York City were only paying a median of $1,125 in 2011. What gives?

The answer is, there are lots of cheap apartments in New York. You just can’t get one of them, because they’re rent stabilised, and tenants with great rent stabilised deals cling to their apartments until they die.

The Cato Institute produced some great charts on this back in 1997, but the same dynamics still hold in the market today. In cities without rent control, rents for available apartments form a normal distribution around the Census median rent. Here’s a chart of Philadelphia rents in 1997:

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Why Downtown’s Cool to Rent Control

Here’s an interesting piece by the Post’s Steve Cuozzo commenting on an issue raised in a recent Wall Street Journal article regarding rent stabilization coverage in the Financial District.

It seems that old-line tenant advocates, steadily losing their traditional constituency, are looking for new constituencies to support rent stabilization. The advocates are failing to find support in FiDi for the same reason they are losing support in the outer boroughs– in most of the City there is little difference between market rents and regulated rents.

                                            – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

Why downtown’s cool to rent control

By Steve Cuozzo, October 12, 2012

It’s great news to most New Yorkers that the Wall Street area has become one of the city’s best places to live — evidenced by a Financial District population that’s nearly doubled to 57,000 since 1999 and will soon hit 60,000.

Just about every apartment that comes to market is swiftly snatched up. People love the new FiDi — anchored by the country’s healthiest office market, now also throbbing with families, shops and amenities.

It’s so popular that the rental apartment vacancy rate is below 1 percent.

But to “tenant advocate” reactionaries, the picture is bleak.

Now a family-friendly ’hood: Crossing the street near Battery Park.

Why? Well, tenants there won’t fight to have their market-priced apartments rent-stabilized.

Paul Newell, a Democratic district leader who is trying to inflict rent-stabilization on thousands more apartments downtown, whined to The Wall Street Journal last week that a mere 10 residents responded to his campaign.

Stabilization, the ruinous residue of World War II-era “emergency” rent-control law, to this day warps the city’s housing scene by keeping 1 million apartments effectively off the market — sometimes for decades.

A 2010 court ruling left some 5,000 more downtown units potentially subject to stabilization (on technical grounds involving landlord receipt of a tax benefit). But to win stabilized status, tenants must prove an “overcharge” to the state Department of Homes and Community Renewal or sue their landlord.

Newell, a leftist activist who sued the NYPD over “illegal” arrests (including his own) involving Occupy Wall Street’s Zuccotti Park takeover, is dismayed that FiDi residents haven’t taken up the rent cause in droves.

To explain it away, he absurdly claims the area is full of short-term residents who just have no interest in trying to reduce rents long term. Community Board 1 member Tom Goodkind echoed him, “Our area has always been quite transient,” and lamented, “We don’t want 15 college kids crashing in an apartment. We want people to hunker down and stay.”

Newell and Goodkind claim that people don’t stay long because it’s a lousy place to live lacking “basic trappings” like grocery stores.

Huh? What neighborhood are these guys talking about?

A 2009 poll by the Downtown Alliance found two-thirds of respondents had lived in the district for five years, and most intended to stay. More recent data from the Alliance show a median FiDi household income of $143,000 and average household income of $188,000. Some bunch of student drifters.

If FiDi were a transients’ camping ground, would Rose Associates spend a half-billion dollars to convert 70 Pine St. into a luxury address with 750 apartments at the highest rents in the area’s history?

Food shortage? The area’s proliferating choices range from huge new 55 Fulton Market to supermarkets to scores of gourmet shops.

Well, then — if it’s laughably false that residents want to bolt as soon as they can, why are they failing to fight for rent stabilization?

For one thing, the gap between market-rate and stabilized rents in the area is so small as to make the time and legal fees to seek stabilization not worth the struggle.

But there might well be a deeper explanation — anathema to activists who’d turn the clock back:

Maybe young, affluent residents dwelling amidst capitalism’s nerve center don’t buy into the culture of housing dependency and subsidy that animates “make our landlord beg” activists.

Very possibly, unlike 1960s rent-strike leaders, they recognize greater value in a building priced by the law of supply and demand.

Just as possibly, they understand that lower rents compromise a landlord’s inclination to provide the best service and maintain properties in the best condition.

And they love Downtown the way it is — striving and growing with no need for help from “advocates” whose day is long over.

Source: New York Post

Why There is an Affordable Housing Problem In NYC

A recent analysis by the City’s Independent Budget Office found that 35 percent of City tax filers (or 1.3 million households) paid no income tax in 2010. Filers who did not pay income taxes reported an average income of $9,108.

With an average income of $9,108 annually, this one-third of City  households can afford a monthly rent of only $228 per month based on the Federal affordability standard of paying only 30% of income for rent. Clearly, there are no apartments available, other than subsidized housing and a few rent regulated at less than subsidence level, that rent at less than $228 per month.

So, is this a problem of lack of affordable housing, or a problem of lack of income adequate to afford even a moderately priced rental in New York City?

 

                                                    – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

 

 

The 47 Percent Here? Far Fewer Escape City’s Income Tax

By SAM ROBERTS and PATRICK MCGEEHAN

 

In New York City, the “47 percent” is only 35 percent.

That’s the share of city tax filers who, according to an analysis by the city’s Independent Budget Office released Thursday, paid no city income tax in 2010 — as opposed to the 47 percent of Americans that Mitt Romney, the Republican presidential nominee, said depend on government handouts, pay no federal income taxes and will vote for President Obama.

Most of the 1.3 million New York households that filed returns but paid no tax — 67 percent of them — reported income below the threshold for owing city income tax. Another 28 percent of them would have owed taxes if they had not received tax credits. The remaining 5 percent reported negative income as a result of investment or business losses (their income, before losses, averaged $43,100).

Over all, the 35 percent of filers who did not pay city income tax reported an average income of $9,108.

Filers who owed taxes reported average income of about $100,000 (and paid an average of $2,925 in city tax).

Among those who did not pay, fully half said they had earned wages from full or part-time jobs, but not enough to make them liable for income tax.

“A significant share of these people are in the labor force and working, but they are not paying taxes because even though they are working, they didn’t have a lot of income,” said George Sweeting, deputy director of the Independent Budget Office.

 

Source: City Room

High rents hitting middle-class New Yorkers

“Here’s a new twist on the affordability scale: middle-income renters have greater affordable housing issues than low-income renters! Tell that to the low-income housing advocates. I guess the affordability issue doesn’t die until everyone gets a subsidy. “ 

              – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

High rents hitting middle-class New Yorkers

Families in the middle squeezed the most over the last decade, according to a new study.

By Tania Karas

Skyrocketing rents are increasingly squeezing middle-class New Yorkers, according to a report released Wednesday by City Comptroller John Liu.

The report shows that almost half of city households spend more than 30% of their income on rent, compared with 26% of households nationally. Federal benchmarks deem rent unaffordable when it exceeds 30% of household income.

Middle-income renters, defined as those earning between $35,000 and $75,000 annually, face the most pressure in Manhattan, where 45% pay rent that is officially “unaffordable.” But even those living in less expensive Staten Island and Queens aren’t much better off. There, 44% of middle-class residents in both boroughs shoulder unaffordable housing costs.

According to the study, 30% of New Yorkers devote more than half their income to rent alone. The high cost of living here is threatening to drive the middle class out of the city, Mr. Liu said.

“Working families should not be forced to leave town or live in inferior housing,” he said. “We need to invest more in affordable housing for middle-income renters so that our city is not only home to the very wealthy and the very poor but also to the vast majority of New Yorkers who fall in between.”

Some 70% of New Yorkers rent their homes, compared with 30% nationally. The vacancy rate of rental housing is 3% in New York City, compared with 10% nationally, and falls to less than 1% at peak times of the year.

The comptroller’s study, titled “Rents through the Roof,” cited census data showing that the high cost of living in the city disproportionately affects middle-income households. Low-income and high-income families don’t face the same pressures. Those earning less than $35,000 can turn to affordable-housing programs, while those in high-income brackets spend a similar percentage of their income on rent as the rest of the U.S.

And relief for the middle class is nowhere on the horizon, the study points out, as New Yorkers continue to face rising rents and record-low vacancy rates. In 2000, 23 of the city’s rental units were unaffordable to middle-income households, but that figure had jumped to 38% in 2010.

Source: Crain’s New York