
New York's Low Apartment Turnover Hinders Affordability - jseliger
https://www.citylab.com/perspective/2018/12/affordable-housing-rent-regulation-turnover/578227/
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gdgtfiend
Howard Husock, who wrote this article, is a VP for policy research at the
Manhattan Institute. The Manhattan Institute is a conservative think tank with
an agenda, so please take this column with a grain of salt. Howard stated his
opinion but did not provide any evidence that reducing rent stabilization in
New York would effect housing prices positively. Please keep this context in
mind while reading this article, and stay informed.

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PLenz
My family has had the same apartment in Queens since 1916. It'll go to my
brother at some point in the future. An outlier for sure but plenty of the
people I grew up with were in multi generational apartments and expected to be
the next generation to take it over.

~~~
koolba
How much is the rent/size vs a market rate?

~~~
asnyder
I can answer this based on my parents example. They've lived in the same
building since I was born and the same now rent-stabilized (previously rent-
controlled) apartment in Brooklyn for the last 26 or so years. They live in a
3 large bedroom, one gigantic living room, kitchen, dining area and front
lobby. Over the years the rent has increased to the now $1050.00, if however
they were to move out (not passing the apartment to any children) it's likely
that apartment would rent for around $3000+ considering the neighborhood and
area.

~~~
alistairSH
Wow. That's less than half the rate for a 500sqft one-bed in a nice part of
DC. I hadn't realize the stabilized rent units were so out of whack with the
market.

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troxwalt
Is it a case of chicken vs egg? Is it unaffordable for others because tenants
do not move out of their affordable housing? Or is it unaffordable for others
because tenants can't afford to move out of their affordable housing?

~~~
stuxnet79
Artificially set prices make the market more inefficient. The _reality_ is
that _a lot_ of people want to live in NYC and there just isn't enough supply
of housing for it be "affordable". By setting the price of a rental apartment
too low in a hot real estate market like NYC, you are incentivizing people who
would otherwise move out of the city or seek more efficient living
arrangements (smaller apartment, rent a room) to stay put. Rent control
constricts the supply in two ways:

1) It makes prices that much higher for units that aren't rent controlled and
whose prices are set by the market. If the rent for these rent control units
was allowed to fluctuate based on the market, the turnover would be higher and
there would be more apartments available in total.

2) It incentivizes less units being put on the market because (a) A potential
landlord (e.g. someone who wants to rent a room out in their 2 bedroom
apartment or an owner of a townhome / brownstone who wants to rent their
basement out) won't be able to make a profit or maintain their unit at the
artificially low price set by regulation. (b) Real estate developers also
won't want to build new apartments / condos if they know that they won't be
able to get their money back by renting (because the govt is forcing them to
rent at a super low price).

~~~
busterarm
a) "Rent-controlled" apartments account for less than 24,000 units across all
of NYC.

b) "Rent-stabilized" apartments account for a significantly larger percentage
but the majority of stabilized apartments in the more desirable areas (all of
Manhattan, Astoria/LIC, Sunnyside, close parts of Brooklyn) are within 20%
distance of market rate and lose their classification once they cross
~$2700/mo.

c) On the whole, owners of buildings renting to rent-stabilized tenants are
not losing money and can afford to make capital improvements (which increase
rents) and hire management companies just like with any other building.

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Aloha
This is the nasty side effect of rent stabilization/control. If you're outside
the system, you're kinda screwed.

~~~
jrcii
You're screwed because of the application process. To get a place you need:

1\. To have never had your name on a housing court case, even if it was found
in your favor or you had a legitimate reason to be in housing court

2\. A completed application including the contact information for your last
two landlords who have to say nice things about you even if they were
crazy/bad

3\. Annual income at 40-45x the monthly rent, as reflected in your last two
tax returns (hope you were making more money than you actually need to be able
to afford the rent 3 years ago!)

4\. Letters of reference

5\. Months of bank statements

6\. Pay stubs

7\. Tax transcripts

8\. Perfect credit (or 6 months of deposit-- you have $15,000 in cash for
this, right? Oh it's okay, do you have a guarantor who makes 100x the rent
(hundreds of thousands of dollars) that wants to put their SSN on your rent
payment? Oh no?)

Getting approved for a tiny 100 sq ft studio is the same process as getting
approved for a 10 million dollar loan. Normal people have no chance. Don't
have your financial life in perfect order? You're garbage that doesn't have a
right to live somewhere.

~~~
lotsofpulp
>You're garbage that doesn't have a right to live somewhere.

I would amend this to state "you're garbage that doesn't have a right to live
in desirable New York City dwellings where more desirable tenants are
available for the landlord to choose from".

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omegaworks
>Stable communities and households with deep roots in communities are, in many
ways, desirable.

One sentence ascribed to the intangible quality of life benefits of a stable
community. A single sentence, with not even an attempt to quantify the
positive effects of stability on living standards, even life expectancy.

[https://nypost.com/2017/06/04/new-yorkers-are-living-
longer-...](https://nypost.com/2017/06/04/new-yorkers-are-living-longer-
happier-and-healthier-lives/)

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jlarocco
I'm surprised rent control doesn't take into account a person's dependents.
It's not fair for an "empty nester" to keep living in a large apartment when
their dependents leave, though I guess evicting them doesn't seem right
either.

That said, I'm not convinced there's such a big connection between churn and
affordability. Moving is really inconvenient, and there are a lot of good
reasons to stay put.

~~~
a_c_s
Agreed: if we supplemented & replaced some aspects of rent control with
mechanisms like long leases (eg. 5 year lease with only inflationary price
increases) and long notification periods for lease renewal denial (eg. 1 year
notice that your lease won't be renewed for the next year) would allow for
physical & financial stability without locking apartments up semi-permanently.

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parrot_11
What I've seen in many big cities happening with regularity:

1\. City has a good mojo, not too big, not too small.

2\. Not too unequal neighborhoods.

3\. #1 and #2 attract startups, big companies.

4\. Rents rise in the city.

5\. Slowly there will be calls to increase housing density.

6\. More houses get built, housing density increases, rents go down by
$100-$200/month for maybe 1-2 years.

7\. Rents bounce back in about 1-2 years and then continue on.

8\. Calls to increase density further, eventually the city loses its desirable
properties and poor people are still relatvely just as worse off as they were
before.

9\. The rich tech worker is still in the same position, relatively.

Important thing being, even after doing all these things, the median poor
person in the name of which all this densification happened is still stuck in
the same relative bad standing as he/she was before, only difference being the
city lost its charm in the process as well.

Obviously, this doesn't apply in the case of NYC since it's been a big city
for a long long time but the above story is worth keeping in mind for small
cities in many states.

It might be a better idea to have companies distributed more uniformly than
pushing for high densification of few cities. It spreads economic benefits
around as well.

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busterarm
Yet another post on HN about NYC rent-control. Just sit back while HNers make
wild unsubstantiated claims about everyone paying 1/3 the market rate for
apartments and how they're they primary reason why rent is so high in NYC.
I'll make the popcorn.

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njn
An interesting article, but I don't agree with the author's conclusion that
rent control is worse than the California-style alternative. Is San Francisco
currently better off than New York? No rent control there, and prices are even
higher than NYC. I wouldn't find my 1br NYC apt for $1500 in SF. Maybe 6 years
ago, but not now.

Rent stabilization alone isn't a solution the housing affordability, and maybe
there's more to it than meets the eye. But New York's solution shouldn't just
be to get rid of it. What model city would they be following?

Rather, changes in zoning laws could be really great, following Tokyo's model.
The author hints at this. [https://www.vox.com/2016/8/8/12390048/san-
francisco-housing-...](https://www.vox.com/2016/8/8/12390048/san-francisco-
housing-costs-tokyo)

~~~
jordonwii
> An interesting article, but I don't agree with the author's conclusion that
> rent control is worse than the California-style alternative. Is San
> Francisco currently better off than New York? No rent control there, and
> prices are even higher than NYC.

We have rent control on units occupied before Costa-Hawkins went into effect
(1995 I believe). SF builds very very few units per year, so this covers a
very high percentage of the units in the city.

~~~
bsimpson
It also depends on the ownership model of the property. If the landlord only
owns a single unit (e.g. an individual condo in a building, or a single-family
home), the financial aspect of rent control doesn't apply.

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Apocryphon
So how are Amazon and Google going to deal with this with their corporate
expansions?

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megaman8
It's not their problem because way too many people want to work for those
companies.

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CodeSheikh
Unlike San Francisco, New Yorker cannot lock in to a rent when they first
moved in. I wonder if this is something New Yorkers could have benefited from
or adding to the problem that the article has pointed out.

~~~
dwighttk
Wouldn't that lower turnover even more?

Is San Francisco known for its affordable rent?

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helen___keller
On one hand, it's kind of the point of rent control/stabilization that it's
supposed to protect residents (particularly ones that aren't rich) from the
risks of major changes in the overall market (like rent increases far
outpacing inflation / wages). Cities exist to serve their citizens, after all,
and citizens at risk of being displaced are part of this population. When you
see people paying a third the market rate on rent, that's the system working
as intended by any measure.

On the other hand, there are obvious inefficiencies in the system (like empty
nesters holding onto units larger than what they need because they can't
afford to lose them).

Regardless of issues with New York's rent controlled housing, there's a wider
national issue that there's an undeniable trend towards migration to a few top
"innovation hubs", and these hubs are all simultaneously failing to urbanize
as needed to satisfy the demand. What this country needs are federal subsidies
and incentives to encourage/assist top hubs in developing good urbanism (which
notably supports lower income people as well as just the wealthy).

What is good urbanism you ask?

1\. Density to support affordable commercial activity in or near hubs of
existing commercial activity (ie, building skyscrapers downtown, most cities
have this one down)

2\. Expansion of transit that goes to said commercial hubs, particularly any
transit that does not compete in traffic with private motor vehicles (subways,
light rail, BRT, commuter trains, etc). The goal is to maximize the amount of
land that can viably and reliably commute to the commercial hub within 1 hour
without use of a private motor vehicle.

3\. Densification of all land that can viably commute to the commercial hub
within 1 hour. In particular, any neighborhood covered by the transit
mentioned in (2) should (by some mechanism) be allowed to increase in density
naturally in accordance to supply and demand (You can't let existing
homeowners veto that new apartment building just because it's ugly).

These three rules were pretty much common sense prior to the spread of the
private motor vehicle, but with cars we kind of just decided you can commute
from anywhere now so it's a free for all. Hence the dispersal in our housing
patterns this past half a century. Problem is, the free market has shown that
top 21st century companies have no interest in placing well-paying jobs
dispersed throughout many cities and many suburbs, but rather concentrated in
a small number of innovation hubs, so we need to adapt our housing patterns
accordingly.

~~~
hnaccy
These "innovation hubs" are already capturing large slice of economic growth
and talent, why should the federal government subsidize them?

If they're failing to urbanize it's due to their own myopic local politics.

~~~
helen___keller
There are multiple answers, the simplest one is that the federal government
has an interest in economic growth, and the more our innovation hubs strain
under unaffordable housing the more it will impact american economic growth.

> their own myopic local politics

Well yes, but when every locality simultaneously experiences the same issues
with local politics it hints to a systemic issue. The federal government can
help overcome systemic issues by lining up incentives for local communities to
act in a way that's beneficial to the economy, rather than beneficial to their
home prices.

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timr
It doesn't hinder affordability for the people living in the apartment. Do
they not count?

It's pretty sad that the HN thought police have downvoted this into the dirt.
Why don't you try answering the question, instead?

~~~
wan23
It does hinder affordability for the people living in the apartment as well.
It makes it look unreasonably expensive to move to anywhere else and
incentivizes them to stay put, even if their heat doesn't work or if they are
too old for their fifth floor walkup or any of the other reasons people move.

~~~
timr
_" It does hinder affordability for the people living in the apartment as
well."_

You're arguing that people staying in affordable apartments makes _their own
apartment_ less affordable. Really. I love the logical backflips people will
do to justify an ideological belief.

Do I really need to state the obvious? If someone is living in an undesirable
situation solely because the rent is low, it's likely because _they can 't
afford something better_.

~~~
Kalium
You're right! It's blatantly farcical to suggest that people being able to
afford to stay in their home is to their detriment.

Might there be something more subtle here, though? Is it possible that we
could be looking at a scenario where people being unable to find another
affordable home is linked to lots of other people having affordable homes that
they can't afford to leave? Perhaps people might be considered harmed if they
do not have the option available to change their living situation in a way
that fits with their needs?

Again, you're completely right. It's plainly obvious that people who put up
with shitty situations do so because they don't think they have a choice that
fits their needs. It just might be worth considering that this behavior
pattern might have a greater impact when a large number of people behave this
way.

~~~
timr
_" Is it possible that we could be looking at a scenario where people being
unable to find another affordable home is linked to lots of other people
having affordable homes that they can't afford to leave?"_

You can certainly argue that rent-regulation (fun fact: virtually no NYC
apartments are rent _controlled_ , but ~50% are _rent-regulated_ , which is
very different) disfavors newcomers. This is what the article actually argues,
and I don't really dispute the premise (though the magnitude of the impact is
certainly up for debate).

Here's the thing: if you're going to argue that this is bad for _everyone_ ,
you've got to do better than make some hand-wavy assertion that new people can
benefit more from slightly cheaper units than the old people benefit from
their existing, below-market rents.

Basically, this argument always boils down to new people complaining about old
people.

~~~
Kalium
Could it be worth considering that those benefiting from rent-regulation
(control or stabilization) might also benefit from being able to find a new
place at a similar price? I can see it being useful leverage to get a landlord
to fix something, or to move closer to an aging family member, or find
additional space at a reasonable rate for a new baby.

It seems to me that having the option to move might benefit a wide variety of
people in diverse life situations. I would love to hear if I've overlooked
something!

~~~
kevin_b_er
And you assume it will be similar? No, it will be higher. The goal of the
think tank like that one is to increase profit for the landlords.

