New York Gets To Keep Its Broken Housing Market

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By  May 18, 2012, 8:00 AM

New York City has, without a doubt, the most dysfunctional housing market of any large city in America. A lot of New Yorkers like it that way – and it looks like they will be able to keep their broken system for the foreseeable future.

If you live someplace where normal forces of supply and demand govern housing, you may be surprised to learn that New York tenant advocates were quite pleased when Mayor Michael Bloomberg recently declared that his city is experiencing a housing emergency. This “emergency,” defined in this case as a vacancy rate in rental housing of less than 5 percent, has existed continuously since 1969.

In most other places, such a tight housing market would have long ago been brought into balance by some combination of rent increases and new construction. The two are related. Rent increases would prod some tenants to look for cheaper housing outside the five boroughs, and it would encourage more development of new housing stock by boosting economic returns for landlords.

But under New York’s 1969 Rent Stabilization Law, so long as the city continues to face a housing emergency, it can set maximum permissible rent increases for about 1 million apartments, according to The New York Times.

The Supreme Court recently declined to hear a case that challenged the constitutionality of the rent stabilization law. The court had, somewhat unexpectedly, asked for some additional information before ultimately deciding not to proceed with the case. This led to some brief speculation that the longstanding rent controls might be in danger. Continue reading

Rent-Control Consequences

 

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Rent-Control Consequences

This week Mayor Michael Bloomberg signed off on a three-year extension of New York’s rent-control laws. The irony is that these laws distort the housing market and thus create more problems than they solve.

“The rent regulation itself causes the shortage because landlords know they’re not going to get a good return for massively investing in upgrading their housing, so a lot of the existing housing deteriorates,” said Nicole Gelinas of the Manhattan Institute in an interview. Developers can build luxury housing that doesn’t come under rent control, she added, but that doesn’t help low- and moderate-income people who can’t afford to live in a Trump Tower. Without rent-control, there would be a greater incentive to build housing for people other than the wealthy.
And then there’s the irony of the left supporting the elites who take advantage of rent control even when they can afford to pay market rates for housing. Ed Koch kept a rent-controlled apartment the entire 12 years he was mayor of New York and lived somewhere else. Former New York Gov. David Paterson and Harlem Congressman Charlie Rangel also have maintained rent-controlled properties — Mr. Rangel was recently fined by the Federal Election Commission for misusing a rent-stabilized apartment as a campaign office. Celebrities like Mia Farrow, Faye Dunaway, Shelley Winters and others have occupied rent-regulated apartments, often while also owning mansions elsewhere.
Where are the “1%” bashers when you need them?