NYC housing keeps getting worse
The 2023 New York City Housing and Vacancy Survey is out and it confirms what we all can see: Housing in New York City is getting worse. The report, conducted by the U.S. Census Bureau every three years, found that the vacancy rate is below 1.4%, a significant reduction from the last review in 2021. Apartments at all rent levels are being rented as quickly as they become available. Renters are trapped in housing that doesn’t meet their needs because of the lack of options. Hundreds of thousands of people who work in New York City and want to live in New York City are being priced out.
Housing is getting worse because of failed policies. Many of these policies have been in place for more than 60 years and can best be described as scarcity by design. Let’s run through the main issues that can be fixed by city and state lawmakers.
New York City zoning restrictions, implemented in 1961, block the building of apartment buildings in much of the city. The City Council can amend the zoning, but that process is costly, time consuming, and rarely ends well as local Council members are more inclined to delay or outright block development when constituents raise concerns, instead of thinking about the citywide benefit of building as much housing as possible.
The Adams administration should be commended for their City of Yes proposal, but it’s not going to be enough on its own to fix our structural problems with zoning.
The current property tax system, in place since the 1980s, benefits single-family and two-family homeowners, and disincentivizes the building of larger apartment buildings even when it’s legal. Among the highest taxed properties are rent-stabilized buildings built before 1974, which receive no government subsidy and have some of the lowest rents. The system has become so bad, that even the NAACP has joined a lawsuit challenging the current property tax system on grounds that it is systematically racist.
Finally, there is the impact of rent control and rent stabilization laws, which are designed to exacerbate scarcity. The whole reason New York City conducts regular housing and vacancy surveys is so they can declare a housing emergency and trigger the rent stabilization law. In order for rent stabilization to exist, the vacancy rate must remain below 5%.
For the past 50 years, protecting rent stabilization has been directly at odds with creating the amount of housing the city needs. It doesn’t have to be this way. New York is the only place in the country where a rent control scheme is tied to the promotion of housing scarcity. Reforming rent stabilization so that it promotes the creation of housing would benefit everyone.
The policy distortions implemented to protect the low vacancy rate have driven hundreds of thousands of apartments off the market entirely. This includes 26,310 rent-stabilized apartments, of which the majority need significant renovations. The declining value of rent-stabilized housing has eliminated any access to capital for owners to make renovations so the number of permanently vacant units will continue to grow.
What all this means is that the amount of available apartments for renters is the lowest it’s been in most people’s lifetimes. In the past half century, generations of elected officials have failed to end New York City’s housing emergency. Instead they have focused on tenant protections or expanding voucher programs. These efforts are responses to effects caused by a lack of supply, but they do not address the supply issue itself.
You can make any home affordable with enough subsidy, and recent expansion of voucher access will help many New Yorkers, but a voucher is no good if there isn’t a home to match it. We have to build first.
Later this year, the New York City Council will declare a housing emergency for the 20th time. We should all hope that it is the last time they do, because that would mean that the city finally built enough housing for all New Yorkers, including thousands of newcomers eager to live in this great city.
Sadly, it’s a safe bet the City Council will be declaring a housing emergency again in 2027, and in 2030, and probably in 2033 as well. This problem can’t be fixed in a few years, but if elected officials take action now they could end the city’s housing emergency within the next decade. All it requires is the political will to implement better housing policies that will put us on a path to abundant housing.