Rental Stabilization Increases
So what are you thoughts on the proposed increase?
"The city’s Rent Guidelines Board recommended increases of 3.5 percent to 7 percent for one-year leases and 5.5 percent to 9.5 percent for two-year leases. "
http://www.nytimes.com/2008/05/06/ny...l?ref=nyregion
The usual
I can see the reactions now:
Landlords: The increase is ridiculously low. It doesn't cover the much higher maintenance costs or the high fuel prices. We think the increase should be doubled.
Renters: This is an outrage. We are in a depressed economic environment, and rents should not be rising. We recommend a rent decrease.
^An appallingly ignorant or malicious misstatement of the law and facts.
See http://www.housingnyc.com/html/resources/decontrol.html
That's ONLY if they make $175,000 two years in a row which seems like a fairly high income to still need an artificially low rent to me.Originally Posted by Peteynyc1
Then again I know of people who game their income. Earning much higher incomes one year and incomes under $175k the next. Easier to do in a freelance world, obviously.
But then again, do people making $175,000 per year AND living in a rs apartment at $400/month deserve the protection? Should it only be for those whose rent reaches the $2,000 mark?
In general, artificial caps tend to distort a market. It can be argued that free market rents are higher due to the supply constraint of rent stabilization. Of course, rent vouchers and the other assistance should be in place.
I do, however, wonder how many "undeserving" people live in RS apartments. I know of people who have them and own houses in the Hamptons or Florida.
It is a political third rail in NYC but it still a sham for so many. Anyone want to guess what % of those one million apartments are occupied: illegally or by people making more than $175k/year or by people who own a home in another state?
RS has its heart in the right place. But for too many people, it has become a way to game a system. Pity.
Stabilized rents should be allowed to float based on indexes tied to certain costs (fuel, water and sewer, taxes, and insurance). The LL have no control over these. Many are set be they government, so you can have the government raising the costs for the buildings, and then not letting the LL recover them. In a free market, the LLs could pad the rents to deal with increases, but under stabilization, they can't do this.
Stabilization rewards old people, many of whom put in their time living through years of a not-so-nice New York so that the city could improve into the wonderland we live in now. I know it has its distortions but I think overall it's good policy.
That said, fuel costs are totally through the roof -- I think the board did a nice job of trying to be attuned to that without killing the existing RS tenants.
ali r.
{downtown broker}
In theory.
I would bet more than 50% of the 1 million RS apartments are occupied solely by people younger than 45. Which means they were 10 years old in 1974.
Nothing wrong with the theory of RS. After so long though, it becomes a game and an entitlement.
^
Everything is wrong with the theory of RS. It's probably the prime cause of the housing shortage in NYC.
That's much more recent.
The Federal Rent Controls during WWII -- 1943-- were necessary as inflation was out of control due to the war effort. Also, as soldiers returned home and there was a massive demand spike. Hard to replicate that in history.
There were also massive public/private work projects like Stuy Town that required large changes to the area including the destruction of public schools for a "private" project. Robert Moses jumped through hoops.
The EPCA was not a bad idea. It was needed and considering what those young soldiers did for our country, adequate housing free of price gouging was the least that could be done. It expired in 1947. Its job was done.
Even the state controls put in 1950 weren't that terrible. The 1962 State/City RS is a whole another matter.
Permanent artificial ceilings are bad. Any economist can tell you that.
Housing assistance is something I am in favor of but not for the middle class and certainly not for the many people who game the system.
The original Emergency Price Control Act was done at a very unique time in our history. The theory was sound. It migrated to State controls then, ultimately to the 1984 current version. A disaster.
Haven't seen many studies on Boston since it eliminated the controls. Anyone seen one?
Last edited by stache; May 7th, 2008 at 07:28 PM. Reason: Quoted directly preceding post.
It is so tiring to hear these absolutely ignorant theories of how Rent Stabilization keeps rental prices higher. After years of reading it here and being repeatedly treated to this argument, I have little respect for the intelligence of people who still espouse it. There is absoutely nothing - N-O-T-H-I-N-G - that supports this theory. We have been through an incredible building boom in NYC and the additional units added to this market have done absoutely nothing - N-O-T-H-I-N-G - to bring down rental prices. It seems that the argument goes along the lines that everyone should live miserable in tiny shoeboxes at exhorbitant prices, including those in decent rent stabilized apartments. It would make more sense to be arguing that everyone should be getting decent homes at rent stabilized prices.
We live in an age where our education system and society are producing numbskulls who actually believe that there is a fair free market system. Far from it. Fair market is all about letting the people with the product gouge the consumer. The fact that people are still making this ridiculous argument since I got to this sight back in 2001 just astounds me. Put down the silly economy books and look at the economy and market. There's some education to be gained from the real world. Something not often addressed in the halls of higher education.
Amen brother.
Especially when you consider that there are no price regulations on commercial rents, yet prices often triple on storefronts when their leases expire. There seems to be no 'shortage' of retail space in Manhattan.
Even if supply is increased, if demand increases more then the effect would be difficult to see.
How much has the population of NYC expanded in the past decade? How many more larger families now live here?
http://www.cato.org/pubs/pas/pa-274.html
http://www.encyclopedia.com/doc/1G1-19281231.html
http://goliath.ecnext.com/coms2/gi_0...study-who.html
http://econpapers.repec.org/paper/wpawuwpur/0109001.htm
But there is also:
http://www.housingnyc.com/downloads/...nrentstudy.pdf
and many more
To say there is nothing to support it is to not have looked. To say you don't agree, well, then you would be yet another junior economist in the room and get more than one in a room and a decent argument will ensue.
To say that you haven't seen rent declines in a building boom is like me saying I've never seen a murder but seen a bunch of guns, who says guns kill people? Demand has and continues to outstrip supply. Even with new supply. Demand increased more. You can partially thank a very weak dollar.
We also artificially -- rightly or wrongly -- limit supply through rs.
It's an interesting debate. To dismiss it and the intelligence of those who partake in it is your loss.
There are way too many economist who dissagree with you for that argument to have any validity whatsoever.
But the best counter argument is this. We've had rent regulation for a half century (among the other regulatory fiascos in NYC), and whe have the most screwed up housing market it the country. You can tap dance around this all you want, but it's the truth. No where else is there less vacancies or higher rents.
The only people who support regulation are the regulated renters who want to keep their sweet deals, and the class warriors.
I for one don't think rent stabilisation matters one bit, there is a great demand for housing in ny and if the rent stabilised apt's were set at market rent it wouldn't change a single thing. Except maybe make people who pay less now pay more and shift more tax dollars into the NYC
bureaucracy.
I think rent stabilisation should only be there for people over 65 with income AND savings that are less than the city median.
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