Every three years, the U.S. Census Bureau, working at the behest of the city’s Department of Housing Preservation and Development, conducts research and develops reports and datasets under the umbrella of the Housing and Vacancy Survey (HVS). The objective is self-explanatory: to document the stock of available housing in New York City in order to comply with the city’s rent regulation laws, but more broadly as just useful research.
The latest survey was conducted between January and July of last year, and preliminary results are now out. One of the top-line takeaways, which has caused some collective gasps around the city, can be found on page 28, where a little bar graph shows the citywide net rental vacancy rate as 1.41 %. That is nothing. It is less than a third of the 4.54 % that was considered an eye-popping figure just three years ago. For every net asking rate below $2,400 a month, the rate is under 1%.
What this means in practice is that, as of last year, there were almost no affordable apartments available for rent almost anywhere in the city. Even Manhattan, whose pricier apartments have long yielded higher vacancy rates, was at 2.33 % vacancy for all asking rents. The Bronx was at 0.82.
Why are 26,000 rent-stabilized apartments empty?
It’s worth noting that the survey is counting apartments that are habitable and on the market, meaning that it’s not taking into account apartments that are vacant but unavailable. On that front, it pegged the number of vacant but unavailable rent-stabilized apartments alone at around 26,000, once again raising the prospect of landlords simply warehousing empty apartments either out of inability to get them fixed up, or greed in hoping that stabilization laws themselves will get loosened.
Still, the problem is clearly not one predominantly of warehousing. It’s about development and the fact that while demand remains incredibly strong, we’re just not building anywhere near what we have to increase stock, and consequently lower rents and increasing mobility and, ideally, stop the exodus of the middle class. The report notes a net increase of 61,000 housing units between 2021 and 2023, which would be a respectable number almost anywhere else but falls well below what NYC needs. What’s to be done?
Policy stagnation has kneecapped the market
Sometimes we talk about programs to build affordable housing as if there was just one program that we could enact that would clear the one big obstacle to development and get affordable homes flowing as if out of a spigot. The reality is unsurprisingly much messier; what we really have is a series of interlocking issues, competing political interests, and the compounding effects of policy stagnation that have in tandem and over time kneecapped the market.
Constructing housing, after all, isn’t just about erecting a building. First, you need space to build, which means either knocking down something existing or finding what is precious little free space, especially in a dense urban area like New York City. Let’s say you own a lot and are hoping to build housing, but the area is zoned as commercial. Out of luck. Or maybe it is zoned as residential, but not for the density that would make sense. Out of luck, at least until you’re able to push through a politically fraught rezoning in either case, which will likely have to go through a lengthy land use review process and be voted on by the City Council, where the local members can often effectively kill a proposal single-handedly.
Perhaps you could build in theory, but the state’s restrictions around total floor area or the city’s rules around parking would constrain the volume of potential housing. To get the project off the ground, you’d need financing at a time of rising interest rates and increasing material and labor costs, and then contend with a property tax system that for decades has been measurably weighted against rental buildings with lots of units. This is only scratching the surface of the totality of circumstances standing in the way, some of them perfectly valid and instituted for clear public benefits, others less so.
Tax breaks as a bandaid for a poorly designed system
All in all, it’s a system in which a typical developer, even a nonprofit or fully civic-minded one — and this is a minority, with most trying to turn a profit — faces zoning, code, environmental, political, tributary, financial, and other pitfalls. It’s a small miracle that any housing gets built at all, largely due to the enduring demand (see aforementioned vacancy rate) and cobbled-together workarounds, such as the 421a tax abatement program. That program, which started in 1971, has a lot of stipulations but boils down to a tax break for developers to build affordable housing. In that way, it has long been a band-aid to paper over a poorly designed tax system.
Yet even the band-aid was the subject of immense controversy, with progressive advocates and policymakers calling it out as an effective giveaway to wealthy developers. This back-and-forth culminated in the provision lapsing in 2022, after which housing construction appears to have plunged. It’s become a focus of renewed interest, now featuring as a key plank once again in negotiations between Gov. Kathy Hochul and various factions in the legislature.
Where this leaves us is that “building more affordable housing” doesn’t have a silver bullet, not without fundamentally restructuring how our market economy works. Things like 421a don’t fit neatly on a poster, and good luck getting the public writ large to grasp and civically engage with such a granular policy. Yet that’s what’s needed: a series of complicated tweaks, bureaucratic reformulations, and incentives along several axes, from tax to residential codes, for us to move forward with the creation of new housing. This is only really achievable via concerted efforts by policymakers at the state and local levels- they need to really dive into the weeds.
That’s part of the impetus behind efforts like Brooklyn Borough President Antonio Reynoso and Manhattan Council Member Erik Bottcher’s new “housing league,” which this week sent invitations to every elected official in the City Council and those representing NYC in the State Legislature with the hopes of convening to jointly pursue pro-housing solutions. This might end up being more of a gimmick, but it does recognize that it’s not really enough to nibble around one or two fixes.
The state has to, for example, get rid of the outdated floor area ratio requirement, which severely constrains the total square footage that a building is allowed to have as dictated by the lot it’s on, while the city does away with onerous parking requirements, and a hundred other things. Only if these things happen more or less in tandem could demand conceivably be met. This is to some extent already happening, with Mayor Eric Adams’ City of Yes proposal consisting largely of procedural fixes that can cumulatively make it a little easier to build.
The other side of the coin here is that it’s not enough for processes to exist, they must be actually acted on, and that’s easier said than done. Let’s remember that Albany lawmakers, including many in Hochul’s own party, torpedoed her ambitious housing plan last year in large part due to its mandate aspects; put another way, they were OK with the tools existing, but they didn’t want to use those tools, and certainly didn’t want to be forced to use those tools. After that knockout, Hochul’s plan this year drops the mandates and focuses more closely on NYC itself.
Some state lawmakers have gone so far as to propose an entirely new housing authority that would use public financing and bonds to build public housing directly itself — something that hasn’t really been done in decades and would in theory leapfrog the whole cat-and-mouse game of trying to get developers to build affordable housing. It’s an interesting idea, though some skeptics quickly pointed out that the city already has a housing authority that’s over $70 billion in the hole. Still, it’s going to take more than pulling a lever here or there to create the housing the city needs, and the consequences of not doing so are practically existential.
There no such thing as affordable housing in New York City. $3.400 is not affordable for most people living in this city in that just for a studio apartment. What if you have kids were would that sleep. You have to buy food , pay for Internet, telephone in carfare going to work. They need to come down on the rent.🤔🤔🤔
Solid analysis. The consequences are indeed practically existential.