Stabilized but unstable
Yesterday, the U.S. Supreme Court declined to hear challenges against the city’s longtime rent stabilization scheme, leaving in place lower court rulings that did not find the constitutional arguments convincing. While we have many problems with this hodgepodge system, having suddenly declared illegal the undergirding framework of the city’s housing market would toss us into chaos and exacerbate the problem of trying to find affordable homes in the city.
This shouldn’t mean it’s case closed with no need to take a look at our regulation programs that began during a WWII housing shortage and have continued for more than 80 years. Many people have benefited over the decades, but for each person or family getting a break on rent, someone else was paying for it. And there’s also no argument that in its current iteration, the program is, to put it mildly, very far from its original objectives.
As things stand, the stabilization program effectively encourages stasis — New Yorkers don’t move to account for changing life circumstances like having families, effectively because they can’t. There’s zero incentive to leave the diminishing stock of rent stabilized apartments, regardless of either situation or income, because the designation is tied to the physical space and not its occupant. Some analyses have shown that the renters who get the most shaved off in comparison to market rents are older, richer tenants in wealthier parts of the city.
So while the proper approach is certainly not to upend the structure overnight and send the market into a chaotic free-for-all, as Justice Clarence Thomas seems interested in doing, we must be open to envisioning a better regulated market that doesn’t artificially strangle the market rate supply and drive prices up.
This won’t be easy, nor will it be particularly popular; regardless of policymakers’ ultimate designs, there will be a lot of people very, very angry at them. What’s important is that they take care to balance the interests of multiple constituencies. It should go without saying that addressing the interests of landlords — yes, even small ones, though these are a minority of the property owners in NYC — is not a way to win votes from the public. It’s also the case that there’s no way to make rent stabilization fairer without hurting some tenants.
Even in a system somewhere between the extremes of tight control and full free market, there will be people currently in rent stabilized apartments who will have to move out. There will be pockets of affordability in otherwise white-hot markets in several boroughs that will suddenly find themselves going head-to-head with surrounding areas. There will be pain, and no one should be glib about that. But the alternative is not protecting who it should be protecting, and driving the middle class out of the city.
Legislators must find a path forward between competing interests via targeted measures like income checks on stabilized tenants. And above all, they must focus on the root problem here of a lack of proper housing stock citywide; this is, at the end of the day, a market problem, and the only thing that can meaningfully counteract incredible demand is commensurate supply. Without that, we’re just rearranging the deck chairs on that big ship about to hit that big iceberg.