Photo by Andrew Lichtenstein/Corbis via Getty Images
An agenda to fix New York City’s stabilized housing
The Rent Guidelines Board, on which I serve, has just voted to freeze rents on New York City’s roughly 1 million rent-stabilized apartments, fulfilling a key campaign promise by Mayor Zohran Mamdani. This settles what will happen to rents this October, but raises the question of whether the rent-stabilized stock is still going to be standing, habitable and occupied in 2046. On its current trajectory, a large share of it will not be — especially if Mamdani and his appointees on the Board follow through on the mayor’s pledge to freeze rents every year of his term.
One mistake we often make with rent-stabilized housing is to talk about it like it’s a single thing. This stock is at least two things headed in opposite directions.
The first part of the rent-stabilized stock is mixed buildings: units with regulated rents which sit alongside market-rate units. This happens when rent-stabilized units are deregulated over the decades, or in newer apartments built with tax incentives which mixed these two units from the beginning. There are roughly 200,000 such units. When operating costs rise for these buildings, as they have risen relentlessly in recent years due to the increasing price of insurance, taxes, energy and labor, the market units absorb the shock and cross-subsidize the regulated ones. A rent freeze on the owners of these buildings pinches the owners at the margin, but does not really threaten their existence. A recent Moody’s report affirmed the financial health of these buildings even with a rent freeze.
Continue reading the entire piece here at Vital City
______________________
Arpit Gupta is a senior fellow at the Manhattan Institute and an assistant professor of finance at the NYU Stern School of Business. You can follow him on Twitter here.