Unaffordable affordable housing
What’s happening in New York City is happening everywhere in the US to varying degrees and even internationally. Believe it or not, San Francisco is worse off than we are currently. The image below is from an article in The Guardian published a year ago.
The steady rent increase is the result of various economic trends that have carried us here, to this spot in time: the Housing Crisis.
In a Politico article released this month, Sam Khater, Deputy Chief Economist for CoreLogic (a housing data provider) stated, “If we want housing to be more affordable, we need more houses.”
Deputy Mayor Alicia Glen made a comment on NPR last year which echoed Khater’s sentiment. “Well, we are in an official housing crisis period in New York City. Our population is growing much more rapidly than our housing stock, and so we have a really imbalanced housing market.”
In fact, with millennials coming of age, according to the Census Bureau, New York City’s population is projected to grow from 8.2 million persons in 2010 to 9 million in 2040.
That’s a whole lot of extra housing which does not exist! With only 2.4% vacancy rate, which is down from 3.10% in 2011, things are only getting tighter.
Additionally, according the “Law of Supply and Demand” when you have a product (in the case apartments), scarcity prices rise.
Ingrid Ellen, who teaches Urban Policy and Planning at NYU, says after controlling for inflation, median rents have increased 12% in eight years at a time when incomes are up just 2%.
Instead of falling down the rabbit hole of economics, there are a limited number of things which can feasibly be done to help.
From the nuggets of information I’ve dug up these last few months there are a variety of ideas: deregulate zoning laws so developers can mass produce housing, higher wages so people could afford the asking rates from landlords, and rent stabilization are a few of the most common ones.
At this point, I think we need to look at all possibilities to see what can be done. It’s unlikely one holds all of the answers and like anything else, when there is a number of educated, opinionated individuals grappling with the same problem, they’ll come up with different answers.
As long as we are all headed in the same direction and we mitigate damage, we’ll get there. What we can’t do is ignore it. The city's population IS growing, we need to plan for it.
Rent stabilization was put in place in the 1940’s and the city is still relying on the same policies as the path of least resistance for policy makers.
It is hard to argue against rent stabilization being beneficial for those who have it, but it also contributes to the affordability problem by restricting prices in over a million apartments in the rental market.
Making prices in the non-regulated sector higher than they would be otherwise, offsetting the cost of the regulated apartments. Higher prices in the non-regulated sector makes a rent stabilized unit that much more of a better deal.
Today’s zoning regulations were enacted in 1961 and were a major rewrite of the first set of zoning rules enacted 45 years previously, in 1916. The rules don’t limit building height per se, but rather limit a building’s bulk; each neighborhood is effectively placed under a kind of “bubble” that restricts how much housing could be provided in that neighborhood.
As many know first Bloomberg and now de Blasio are rezoning large neighborhoods. The concept: upzone so developers can build taller buildings so a certain fraction of those units could be reserved as Affordable Housing.
One problem with this is the affordable rental rates are not affordable for the working class. Take the image above, an actual "affordable housing" metric used in a low to middle class neighborhood in Brooklyn.
A single mother working 40 hours a week all 52 weeks per year will have to make $28.31 an hour to meet the low end of the income rates necessary for a two bedroom, which are going for $1,642 in this example - an amazingly low rate for Brooklyn - but still not “affordable” to this mother looking for a decent home for herself and her child.
As long as New York City’s population keeps rising, it is hard to imagine that our affordable housing issue will ever be solved in a real way. There will always be a struggle against development, preserving our neighborhoods and the culture that makes New York great. We need that struggle to keep development grounded.
All the while remembering people need homes they can really afford without hijacking the rest of their lives.