City Journal Summer 2014

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Summer 2014
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Howard Husock
The Frozen City « Back to Story

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This column is helpful in trying to understand the affordable housing / high cost of living problem facing major US cities.

So, if what you describe is (one of) the primary reasons that housing is expensive in a city, then what about Boston? It doesn't have rent control / stabilization but its prices are in the top 5 in the nation.
The price for housing in all markets - rental and single family - is interconnected. When the price of single family homes increases, the price of rental housing increases along with it. Our government is currently spending insane amounts of money to INCREASE the pricing on the single family market (see bailout of Freddie/Fannie and now FHA lending), while simultaneously spending to DECREASE the pricing of rental housing (see, e.g. HUD budget). It's like trying to keep a pot of water at room temperature by simultaneously (a) warming it under a gas burner and (b) adding ice. The government should exit this market immediately.
Also, please note that all market based or non-subsidized rentals are essentially "affordable housing." They might not be affordable to you or me, but they are affordable to that person who rents at that price. What is commonly called "affordable housing" is more accurately described as "government subsidized housing."
I don't see how transitioning to more vouchers does anything but create a different type of problem. The price of a good will fall either through increased supply or reduced demand. Vouchers do not increase the housing stock - they only add to the demand side. In macro-economic terms, how do vouchers decrease the cost of housing for non-voucher holders?
In general agreement with this, but I would offset the removal of rent controls with higher taxes on properties valued in the top 20% and shift the money to vouchers for people based on income level. Slows (but doesn't kill) the demand for construction of luxury apartments and increases demand for smaller and much more numerous apartments for the middle, working, and creative classes.
Charlie Rangel!
This article is dead on and is based on solid economic fact. Kudos Howard Husock! I've been renting in NYC for over twenty years and I know first hand how this destructive game is played. There are basically two types of housing stock in NYC. The first is subsidize and controlled so jackass politicians can buy votes with free goodies. These units typically have below market rents and they are occupied by tenants who NEVER MOVE. Most of these tenants are wealthy enough to afford a market based rent and often have second homes somewhere else. As if that isn't bad enough, these units can be passed on to family members for years taking these units and the buildings they occupy off the market forever. This is not only creates a shortage of inventory, but forces the landlord to take a financial loss. This loss is inevitability made up by the other half of the housing market. The left over free market units (the second type of stock) are not only in high demand because of the perpetual shortage of inventory, but they're the only place the landlord can recoup his loss and make a profit. (Yes, I said profit!) These free market rents are thus, very logically always sky high. All of this is compounded by the ridiculous zoning laws in this town which make building impossible, unless you have the right political connection. Rent regulations are nothing more than a redistribution of wealth for political gain, anyone who thinks otherwise is not only a moron, but is a communist too. Private property,is private property, is private property! It's not your building, it's the landlords. You DO NOT have a right to a place to live and you don't have to live in NYC. If you can't afford it get the hell out!
I'll tell you where a great source of developable land lies in NYC: beneath the decrepit, economically obsolete, outmoded , ancient tenements. Knock those disgusting old poor houses down and build modern efficient homes in their place. The laws allowing this are actually on the books but the bureaucracy (DHCR and the courts)will not allow it. Of course the iron-fisted tenant lobby will not permit it either. In light of the Supreme Court's decision not to hear the recent case the situation is hopeless - for many wanna be New Yorkers and for many , many people needing better housing.
Been in the business of owning and managing rent controlled and rent stabilized housing for 33 years. It is a centrally controlled system like Soviet style Communism. It is a Fascist system, an um-American one, but then a lot of so called Americans love their centrally planned wealth transferring programs, their American socialism. A lot of so-called "Landlords" , "owners" of regulated housing are living a lie. So many of their rights as property owners have been stripped away by the NYS legislature that they are just caretakers of the public's housing. They cannot end leases, they cannot raise rent to market rates, they cannot demolish and rebuild "their property". They cannot even speak to their "tenants" in a rude way or they will be prosecuted. Socialism is alive and well in NYC.
As Ringo Starr put it: Everything the government touches turns to CRAP!
Ha Fat Chance
Sue Susman is both correct and in favor of the seizure of property without compensation. She thinks that people are entitled to live where they want even if they are not able or prepared to pay as much or more than others.

The cry of "affordable housing" is merely a cry for affordable housing right where the crier wants to be. Why not ask for a room at Buckingham Palace or the White House? Why not demand that every third lot in Beverly Hills be sold for 20% of what Brad Pitt would pay?

Perhaps Ms. Susman should be forced to give up some of her property rights to make life more affordable for those with less money than Susman. We need laws requiring her to rent her car to a poor person for, say, twenty bucks a week.

I cry out for "affordable transportation", and Susman must suffer.

We conservatives must become strong enough to say: "You're damn right rents will go up, and bloody time, you and your lot have been stealing rent from us for years. If you want to live here, it's going to cost you, and if you can't pay you've got to move. Tough. That's life."

Most conservatives are gutless weasels. Sorry, but we are. No wonder the left wins so often.
Rent regulation is the solution, not the cause of the lack of affordable housing. That's evidenced by such places as Boston & Cambridge, Mass.: when regulation ended, the rents skyrocketed, and the stock of affordable housing shriveled.

Owners take units out of rent regulation (by "improving" them to raise the rent) once they're vacant. If vacancy de-regulation were not possible, those apartments would remain regulated for other tenants and the next generation - and the availability of those apartments would facilitate tenants moving from one to another apartment. In affordable programs like Mitchell-Lama, tenants have often shifted from bigger to smaller apartments and vice versa as their needs changed - because affordable apartments were available.
Rent stabilized (RS)apartments STILL cost a lot more per square foot than apartments anywhere else in America.

RS rental rates are raised Every Year by the RS Guidelines Board, by about double the inflation rate. Not exactly a free ride: just keeping the landlords from shooting rents into the Stratosphere.

The unregulated commercial market reveals the fallacy about "no limits rents" being good for business or somehow, magically, driving the price Down. Think: would a sensible landlord support deregulation if it would drive his rents Down in the aggregate?

Landlords will gut a vacated RS apartment and declare it market rate anyway, and the rent for a 300-square-foot apartment with 2 rooms will shoot from $1500/month to $4500/month. And will be snapped up immediately.

New York isn't like most American cities: it's an international city, with an endless supply of internationals who are quite wealthy, in addition to the wealthy Americans, who have a yen to live here. That's the real reason why it's tough to find an apartment (took me a year when I moved here).

And for all the landlords' griping about the RS system, you never see them getting out of the business. Our landlord bought our 1875 Old Law tenement in 1972 for a measly $75,000, per the property records. He's made out quite well, thank you.
Bob the Builder wants our taxpayer money for HIS housing projects, and yet is puzzled how such wealth transfer from us to him makes us less free. He's the typical business "rent seeker," lobbying for government subsidies to provide profits that his firm can't earn in the free market.

Bob the builder July 22, 2013 at 7:59 AM
This has got to be one of the worst articles I've read in quite some time. As someone who considers themselves a conservative democrat who has gotten into the habit of voting republican for the last 15 years, one might think I might be sympathetic to this viewpoint. I am not. The difference?: I work in the housing construction sector and know what I'm talking about. This author clearly has no clue about what he's talking about and is making mostly political arguments. For that matter, he forgot another doozy: we are less "free" with subsidized housing. Haha

Most of what we do is in the private marketplace, but we have done a few senior buildings in nyc as well. Except for this articles mentioning of onerous building code regulations and pressure to hire unions that the article didnt mention (who are overpriced, but sometimes necessary anyway), this article makes sense only to those outside the city living in the rest of America where constrained space is not the case as in NYC. That simple point makes all the difference.
Good article, but don't count on change - even Rudy Giuliani didn't touch the third rail of "affordable" housing, at least I don't think so.

How rent control is legal is beyond me, but courts have found it to be so, and we are stuck with it. All this is part of the reason why New York is in big trouble - Rudy and Bloomberg, and immigration (over a third of the city is foreign born - imagine, sans immigration the population of the City would be just over 5,000,000) were able to stem the close to 10% population lost in the 1980's, but once we go back to business as usual, the City will start losing population again. That is,unless of course Democrats (and RINO Republicans) pass amnesty and get the 50% increase in legal immigration in the Senate bill.

Still, when Democrats finally succeed in driving out the financial industry, which is already being hollowed out as back operations move elsewhere, New York's slide will be precipitous.

In the meantime, wring your hands all you want - "afforadable" housing is hear to stay.
Stop subsidizing poverty! Government should not be involved in housing and rent control. Let the free market work its magic. Pass a new law that forbids the poor from having children. That makes as much sense as having rent controls.
It's actually "The Democracy of Regulated Housing."

In a town where Wall Street is the king, fighting off rent grabs takes on a special game quality. Moving in Manhattan, for example, is quite expensive. And time consuming.

This article imagines that renters should not try to defend themselves politically. Also that nieghborhood stability is a bad thing.

His one and only measure for good is getting more money for the apartment owners.
is this is only way; that is to clear the space by charging more to the current holders?
The Political Commentator July 22, 2013 at 1:38 AM
Good morning:

I linked to this article at The Political Commentator here: http://goo.gl/rhiLG

Mike
What a silly lop-sided piece: How about some discussion of "sales" of controlled/subsidized units from one tenant to the next? This whole system is so typical of NYC, ca. 1945, that it really isn't worth discussion; just abolition.