By Felipe De La Hoz
Mention that you live in New York to someone almost anywhere outside of the city and there is one standard assumption they’re likely to make: you pay way too much in rent.
There’s no escaping high rents
This city has long been a renters’ city, with more than half of the population renting rather than owning their homes, and enormous shares of that renter population are rent burdened, meaning that the renters pay more than 30 percent of their income in rent. The cause for this, boiled down to its most basic form, is that there is never ending demand for housing and relatively limited supply, a problem that compounds every year that supply growth fails to keep up with demand.
The slightly more complicated explanation is that it’s very difficult and expensive to build housing in New York, between complicated zoning policies and tangled public utility infrastructure, high land prices, an overly convoluted and regressive tax code, and other systemic challenges. Pair that with market incentives geared toward profit, and most developers are enticed toward building apartments that can fetch high market rate prices that they know they can get from wealthier newcomers and the city’s large sector of well-paid white-collar workers, while leaving most everyone else in the dust.
Political leaders have tried to contend with this by offering tax incentives to maintain affordable rentals and direct limits on rent increases, such as through the city’s large rent stabilization program, to varying degrees of success. However, during the first year-and-a-half or so of the pandemic, the unthinkable happened: the market itself couldn’t sustain the typical rent increases, and rent actually went down as landlords scrambled to provide incentives to stop tenants from leaving and keep attracting newcomers to the city.
That brief shining moment was, unfortunately, short-lived. Rents are back up, rising an average of about a third year-over-year in market-rate apartments around the city. Much of it has to do with the economic bounceback from the worst of Covid-19. Additional explanations range from the return of those who’d stuck out the pandemic outside of the city, to a real estate market increasingly dominated by private equity, to the more esoteric, like the theory that pandemic breakups have split up scores of former couples now looking for two apartments instead of one. The impact ultimately builds on itself, as renters are driven out of units with huge increases only to join the ballooning numbers of others also looking for affordable rentals.
Even stabilized units haven’t been completely saved from a jarring upturn. The city’s Rent Guidelines Board — a nine-member board of mayoral appointees in charge of regulating the city’s substantial stock of stabilized units, which despite consistent losses still number at nearly a million — conducted a preliminary vote to allow landlords to raise stabilized rents by 2 to 4 percent for one-year leases and 4 to 6 percent for two-year ones in the next fiscal year. The vote isn’t final, but historically the ultimate number hews very closely to the preliminary vote.
This comes after an average of just one percent increases under former Mayor Bill de Blasio, whose board even froze rents for three years that he was in office. For many low-income tenants, this will be a significant blow, though the landlords aren’t happy either: they wanted higher increases. It’s a complicated balance, as the board must work to ensure affordability while maintaining the viability of rent stabilized properties, allowing landlords a high enough operating income to make repairs and improvements. In any case, both stabilized and non-stabilized rents are going up this year, sometimes dramatically, in what will no doubt become an acute political issue going into primaries.