Rent Stabilized Apartments Slowly Disappear

would i be able to take over a family members apt in the city and keep the same rent?

Correction: home purchases should read: low income home purchase programs.

100% yuppified is a good thing in my view? How did you come to that conclusion?

In my first post I said we need more affordable housing but the current way was not the way to achieve this.

If you read what I actually said within the context of the other posts you will see that I was providing some real world eveidence of economic theory at work for the benefit of Jo who believed that very little economic theory could ever hold up in real life.

My point to you (which I thought was extremely obvious) was that when you categorically state that "Landlords will let buildings go unrented before taking lower rents" was that LLs did reduce rents quite dramatically. Wither your theory now?

BTW, although Corcoran does do rentals, it is a tiny part of their business. Plus they have a floor when it comes to what they will rent of around 1400 per month. You can find studios in Manhattan below 100th st for 1000 per month. You will not see corcoran ever touching these. You need to go to places citi-habitats and rent-direct to find trends but unfortunately they do not provide stats like corcoran do.

Consider this though, corcoran's rental numbers are based on around 10,000 units per year (not much) and a search of open rentals below 100th st yields 303 listings. Go to citi-habitats and search for rentals under 100th st and you get over 4000 listings. As I said you cannot rely on corcoran to give you market wide numbers for rentals.

This article from April 2004

http://www.timeoutny.com/features/446/446.manhattan.html has interviews other firms and the consensus is that rents bottomed out this winter which agrees with what I said.

I never said rent regulation should be ended - I merely gave real workd examples of what happens to rent prices when supply exceeds demand - but I still say current rent regulation laws can be dramatically improved. How about income based qualifaction the type that is successfully adminsitered in home purchases in NYC? The fact that luxury decontrol is permitted when houshold income exceeds $175K (and rent goes above $2000 pm) for two years proves how ludricrous the rules are. How about keeping that apt within the rent regulated stock, kicking out the high earner and letting a middle class family in?

My point about Boston is that you cannot compare what happened in Boston to what could happen here and that rents went down in Boston too. Simple as that.

http://www.corcoran.com/guides/pdf/2001_YE_Rental_NYC.pdf

http://www.corcoran.com/guides/pdf/2002_MY_Rental_NYC.pdf

http://www.corcoran.com/guides/pdf/2002_YE_Rental_NYC.pdf

http://www.corcoran.com/guides/pdf/2003_MY_corcoran_report_NYC.pdf (page 8)

http://www.corcoran.com/guides/pdf/2003_YE_corcoran_report_NYC.pdf (page 8)

Martket wide, rents decreased in 2001 & first half of 2002, flat Q3 & Q4, and have been increasing since. You can scroll through those pdfs to see the breakdown by areas of Manhattan.

I never contended deregulation completely destroyed the rental market in Boston, so I'm not sure what you're point is. What is undeniable is the neighborhoods where rent control was abolished (such as Cambridge) are now 100% yuppified. Which is probably a good thing in your view.

Only one problem with your theory Steve: LL's did reduce rents. Dramatically and year on year from 2001 to end of 2003. Only now are we seeing the prices bounce along the bottom and possibly going up. Incentives are indeed ending but prices have yet to climb.

The other thing that is not wrong but is not a valid example is that of Boston where a tiny minority of apts were under rent regulation. Very different from NYC where the majority of rental units are under rent regulation. Oh, and rents in Boston have been going down:

http://www.roommateconnection.com/2000TRC/headers/highrents.html

http://www.dwellings.com/dw/pages/news.html see the news item dated 9/21/03

I actually covered New York Real Estate and understand the issues fairly well. First of all, New York is space limited. New York City has a defined space and cannot grow. So there will always be a premuim to live within the city's boundaries.

Second, rent control isn't for the poor. New York City has a large and well-mainted public housing stock, as well as housing for the poor. Not enough, but rent regulations do not largely concern the truly poor. Rent regulation provides for the stabilization of working and middle class neighborhoods. What is does is keep the middle class in the city.

New York's rent regulations cover rent control, which is an absolute minority of apartments, and rent stablizitation, which covers nearly 1m apartments. Stablization exists because there is a vacancy rate of less than 5 percent. All builders have to do is biuld enough buildings and the law ends. They don't do that because of the tax advantages. They get a significant tax break for running a stablilized building. There is a political choice here, one which encourages long-term residence over market rates. Many New York neighborhoods have grown, indifferent to rent regulations.

Part of the problem is that landlords tend to be bad businessmen in that they choose short term, immiedate profit, over long-term, stable profit. The last time rent control laws were threatened, landlords were planning to raise rents by hundreds of dollars. What happens then is simple: the middle class moves away. Social stability is not a small goal in urban areas, without it, comes crime.

There are rent controls all around New York City for the same reasons, to stablize neighborhoods. New York City's ethnic balance exists largely because of these laws. Instead of abandoning the city for the suburbs, neighborhoods have been revived, liked Central Harlem.

Anyone who thinks lifting rent controls will help the poor need only look to Boston, where the removals of rent controls have exploded rents and harmed the poor and especially the middle class. People were faced with moving farther away from downtown, the handicapped were finding it impossible to rent places. While landlords made money, they didn't really gain a new pool of tenants and drove away those who might have rented at stablized rates. The idea that rents will go down if there is no rent control is a comical. Landlords will let buildings go unrented before taking lower rents.

Also, let's not forget we're not talking about Detroit. New York will always demand a premium rent for some people. But the idea that rent laws limit space don't really affect the real situation in New York. In my experience, landlords lie about their numbers, and tenants violate their leases. But overall, without rent stabilization, you'd create Rio, a beautiful downtown Manhattan and miles of slums as the middle class fled.

I am impressed by the number of economics experts on here. I mistakenly thought that the Gothamist was mostly read by graphic design and political experts.

BTW, similar drops in rent happened across the board (1BR, 2BR etc).

Jo, I'll call you simple minded.

Obviously I should have given more than just numbers. Trying again:

There are over 1 million rent regulated apts in NYC and just less than 1 million that are not regulated. Rents hit a demand driven peak in the 1st half of 2001 when a typical (unregulated) studio in Manhattan below 100th street was going for around $1800 per month. Today you can find many studios for $1200 per month. Why? Lots of supply due to a lot of new rental buildings coming on stream at around the same time post 9/11 and also lack of demand as companies stopped hiring at the rates that they did and thousands of jobs were lost on Wall St (banking industry was a great source of eager twenty somethings willing to spend 2/3 of their take home pay on a studio in Manhattan) whereas a lot of renters who still had jobs took advantage of 45 year mortgage rate lows and purchased their first apt.

Just look at what over supply and lack of demand did in the 900,000 unit unregulated market and just imagine what effect releasing another 1 million apts would have on the same market. As others have said this would drive down market rents. we have aleady seen this happen in real life over the last 3 years as evidenced by much lower rents than in 2000/2001. No need for economic theory there. It already happened.

This is not to say that rent regulated apts won't get more epxensive. They will but we will also have a million more affordable apts that hopefully significant numbers of ppl currently under rent regulation can still afford. If not, as others have said, they will have to do what a lot of my (well paid) peers have done and move to a more affordable area. Millions of ppl do it. Poor and well off.

Why wasn't there ever a discussion like this on The Apprentice? We all might've learned something.

And while I'm at it: I know a guy who lives on 8th just above 23rd who pays $300 p/mo for a 1 br./1 bath walkup on the second floor. Same units are going for $1,500-2,000 in the rest of the building.

(We needed at least one of those anecdotes on here.)

Jo,

Here's how it works: Rent control: apartments are kept at below market prices. Unregulated apartments are in shorter supply, thus higher prices. Supply and demand. Unregulated apartments are at artificially high levels.

Decontrol apartments. Market stabilizes. Controlled apartments stabilize up to market price, all those unregulated apartments GO DOWN to stabilize. Supply and demand.

Also, without having to partition up an apartment building for stabilized apartments, there is more incentive for builders to build, greater supply, lower prices. Supply and demand.

Get it now?

"Point being cheap rents allow greater access to affordable housing for working class poor like myself. I don't understand how that is a bad thing."

It's a bad thing anytime you expect someone else to pick up the check for you. Get another job, or just get outta town if you can't make it here. This is New York, one of the most expensive cities on the planet. You have other choices. You don't show up at the Plaza demanding a discount when you're a Howard Johnson kinda guy, do you?

"my eyes also glaze over when I see people writing their tax dollars are subsidizing rent stablization. I was under the impression the city budget shows we're much more heavily on dependent on income and corporate taxes."

Yes, income taxes. What sort of taxes did you think I was referring to?

"anyone who thinks $800 gets a suburban 3 bedroom obviously hasn't looked into that option."

Where have you looked? Hoboken? Jersey City? You'll have to look a bit farther than that. FYI, the average Manhattan studio rent will rent you a HOUSE in the west Jersey suburbs. Of course, then you'll have an hour-long commute. But you wouldn't have that, now would you? You'd rather live in the city and have someone else pay your way.

Derr I don't think I get economics....guess the part that confuses me is when there's such a low correlation between economic theory and reality. Call me cynical or just plain simple minded but when data needs a truckload of caveats before it makes sense then I become skeptical.

For example, ask any economist if cutting taxes increases federal receipts and you'll get an enthusiastic yes. Ah yes, lots of nodding heads out there. Now go to whitehouse.org and read their notes on the history of tax cuts and tax increases. Compare those events with the data on receipts for X number of years (pick your favorite between 1-5). Oops. But like sheep people keep believing the economists. I dunno, maybe folks confuse obfuscation with sophistication.

Point being cheap rents allow greater access to affordable housing for working class poor like myself. I don't understand how that is a bad thing. Then again, my eyes also glaze over when I see people writing their tax dollars are subsidizing rent stablization. I was under the impression the city budget shows we're much more heavily on dependent on income and corporate taxes.

BTW, HELLO CLUELESS, anyone who thinks $800 gets a suburban 3 bedroom obviously hasn't looked into that option.

Nice link to a political pdf Jen, too bad it had no economic content, and to back up the other poster, right in the abstract: "But because the laws in both states were designed to be gradually

phased-in, it is impossible to make definitive statements about their consequences, either for

sitting tenants or for the availability of affordable housing."

Anyway, literate tenants here in the city are happy every time apartments are deregulated. It's not a democratic thing, it's not a republican thing, it's a "Derr I think I get economics" thing.

Here's a pdf from some real economists (specifically about tenency rent control but you can figure out the main points): http://people.cornell.edu/pages/kb40/rentcontrol.pdf ...to paraphrase, eliminating rent controls will lead to an the board lowering of rents.

and if memory serves me right, Stiglitz (the nobel prize winning economist), wrote a nice piece not too long ago on why rent control sucks.

Hmm Joseph Stiglitz or Jen of Gothamist?

Maybe if the perception was right our politicians would start doing the right thing, "tenants rights" sounds great until you discover you're horribly misinformed.

to continue... these mini-deregulations are kind of half-assed. There's no way that you could negotiate your rent to under $2000. That could be a reason why rents aren't going down.

As I see it, one reason why rents aren't going down is because an artificial floor has been set at $2000/month (for deregulation). The building I used to live in was rent stabilized, and as each tenant moved out, the landlord would fix each apartment up so they could then rent it out for the $2000 minimum in order to take it out of stabilization. My next door neighbors were paying around $800.

"The poor and lower-middle class will get priced out of the market. If my local bodega owner, drycleaner, waitress, and supermarket cashier can't afford to live within commuting distance to work, who will take their places?"

What about all the lawyers and money managers and surgeons with 60-90 minute commutes from, say, Greenwich, or Westchester, or Somerset County, New Jersey? People who can afford Manhattan's multimillion-dollar shoeboxes but choose instead, umm, something actually worth such grand sums. The commute's good enough for them, right? Perhaps those who can't fit their families in what they can afford here should head to the suburbs, where $800 a month rents a 3-bedroom. Or put in 12 hours instead of 8, as many of the aforementioned white-collar New Yorkers do.

Point is, living in New York City is not a god-given, inalienable right. Nor is it a choice I should be forced to subsidize with my hard-earned tax dollars. I'd support expanding inexpensive mass transit farther into the suburbs far sooner than I would a return to the failed socialist experiments of the city's past.

how does cheaper rent not help people who cant afford higher prices? that makes no sense at all.

Just to add some other numbers to the mix in case anyone does want to compare Boston and NYC:

# of apts that were under rent control in Boston = 22,000 (before decontrol)

# apts in Boston that were not under rent control = 130,000 (before decontrol)

# apts under rent control and rent stabilization in NYC = 1,125,000 (2002 figure)

# apts NOT under rent control and rent stabilization in NYC (i.e. free market) = 960,000 (2002 figure)

Apart from the numbers being so much larger for NYC, the majority of rental apts are under rent stabilization or rent control. Just imagine what would happen to market rents if they had more competition in the form of 1 Million extra apts coming onto the market.

Also in a lot of poorer areas of NYC the rents that are being charged are actually less than the legal rent stablilized rent so it does not help the ppl most in need.

We need affordable housing but this is not the way to do it.

Thank goodness no immigrants, bodega owners, waiters and drycleaners can't afford to own a computer. Otherwise we may feel like some comments may condescend to us.

Yes, nyc immigrant, that's what I meant. ALL the surveys I've found are either vague on the specifics, or written by pro-landloard advocates and skewed towards the positive. There are too many variables to make a direct comparison. One can't just point to Boston and say "it worked for them, so it'll work for New York." Across-the-board rent deregulation in NYC might have a very different result. With over a million apartments, deregulation is quite a gamble.

One thing I can foresee: The poor and lower-middle class will get priced out of the market. If my local bodega owner, drycleaner, waitress, and supermarket cashier can't afford to live within commuting distance to work, who will take their places? Suddenly services we've taken for granted start going up in price, and only the truly wealthy could live in the metropolitan area (this is what is happening in ritzier areas, like the Hamptons, as well as in gentrified nabes overall).

Or maybe I'm wrong and rents will cheap and apartments plentiful.

Somehow I'm doubful. As Tom above has said, why haven't the de facto mini-deregulations worked to lower rents in New York?

I love rent stabilization, I couldnt afford living here if we didnt have it.

Actually, rent-regulated apartments are disappearing at a rate of 30,000 a year, according to Andrew Beveridge of Queens College, who analyzed Census Bureau data:

http://www.gothamgazette.com/article/demographics/20031209/5/799

Almost every apartment that becomes vacant in any neighborhood where the apartment can fetch $2,000 a month (or something close to that) is deregaulated. And even though rents for the top rung of apartments have levelled off, the number of $2,000 neighborhoods is growing all the time. This means that the rate of deregulation is accelerating.

And if it's rent regulation that makes rents high, how come the de facto deregulation of apartment south of Harlem, plus parts of Brooklyn and Queens, hasn't caused rents to go down there?

And if rent regulation is enriching landlords by keeping rents high, how come landlords are throwing money around trying to end it instead of fighting to preserve it?

Get real!

jen h, did you read that pdf you posted? The study is heavy on speculation and light on evidence. On p.25 the study notes, "Too little time has passed to thoroughly analyze the impact of these policy

changes on housing markets and on housing consumers... But there have been no

systematic studies of housing conditions in either the Boston metropolitan or Los Angeles

metropolitan areas, or in any of the submarkets in which rent deregulation took place. Even

if such studies existed, however, it would be difficult to separate the impact of rent

deregulation from other factors such as cuts in federal and state housing studies, state

welfare reform, immigration, population growth or decline, and other demographic forces.

I live in a rent stablized unit. I have to admit it is kind of wacky. In our 10 unit building, most of the tenants are artists, new grads or students, so I probably make more than anyone. I have the nicest place, a 600 sq ft 1 bedroom, with exclusive access to a 850 sq ft garden. I pay the cheapest rent.

Not exactly equitable but I'm not complaining.

The former owner grandfathered me into my aunt & uncle's lease - they retired to Vermont the same time I was looking 4 years ago - so I'm like 8-10 years behind the market.

I love brownstone Brooklyn but I've always wanted to live in Manhattan. I could know I could afford more, but everytime I look I realize I'm paying 40-50% of market now.

So it's sort of like when you hate your job but they keep putting the golden handcuffs on you.

Sandra and larry dvm, you might want to check out some analysis of Boston's experiment with rent deregulation.

Boston had relatively few rent controlled apartments and a very high student (i.e., temporary) population, compared to NYC. Do you really think NYC would be better if over a million people suddenly had to move to cheaper places?

http://www.housingnyc.com/research/pdf_reports/dreier.pdf

I agree with Sandra. Ironically, rent "regulation" is one of the forces that inflates across-the-board rental prices here. Let the market find its level! There are numerous subsidy programs to serve as a safety net, and the city is in the business of developing its own rental properties as well.

rent stabilization's not so great a deal for those of us paying market rents even as our taxes subsidize stabilization for those who have it. out the door with it already.