Don’t Believe the Hype! OUR Rents Are Not Going Down

Don’t Believe the Hype!
OUR Rents Are Not Going Down

The need for stronger rent laws is as important as ever in this economic crisis. The recession has not caused rents to go down in most New York neighborhoods, and rent burdens on families are certainly not being eased. Reports of price-drops in certain elite areas have been well publi- cized, but in the majority of communities, rents have held steady. With declining wages and rising unemployment, housing is actually becoming less affordable for many New Yorkers.

Rent regulation provides much needed stability for renter households and for neighborhoods. It prevents the speculative boom and bust cycle that plagues the unregulated housing market in New York City. Rent-regulation provides for reliable profits for landlords, while giving essential protections for tenants and neighborhoods. We must repeal vacancy decon- trol and strengthen our rent laws now!

Rents Are Decreasing Only for NYC’s Wealthiest
Only in the upper end of the housing market, concentrated primarily in Manhattan, have there been notable price drops, and such housing remains unaffordable to all but the wealthiest individuals. For many years, new construction and conversions have been almost exclusively focused on the luxury market, and the abundance of high-end develop- ments accounts for declining prices for those units during this recession. But while the number of luxury rentals was expanding year after year, options for low and middle income families were rapidly shrinking, and the recession has provided no relief for the average New York family struggling to pay the rent.

Housing Shortage Equals High Rent Despite Downturn
Significant shifts in rental prices have not occurred because the downstate New York region has a chronic shortage of housing.The continued shortage of rental options – which are more and more limited as you go down the economic ladder – keeps rents at inflated levels despite larger trends in the economy. As the Rent Guidelines Board website states,“except in high rent sectors where market rents prevail, New York's housing shortage largely suppresses or masks these consequences. Housing options in middle and low-income markets are limited. Owners are commonly in a position to say "take it or leave it" and tenants have little choice but to accept what is offered. The benefit to low and moderate income tenants of a recession-induced deflation of rents is largely lost.”

Rents Were Already Too High
The economic crisis has actually put unusual strains on the rental market, and low to middle income families are suffering the most. For instance, the foreclosure crisis and tight credit market have pushed some higher income households who would otherwise be homeowners to the rental market, driving up rental demand. Meanwhile, unemployment and underemployment have caused many household incomes to decline, making rents all the more unaffordable for lower income families. Already more than a quarter of New York City’s renter households pay 50% of their incomes to rent. Landlords, however, are as focused as ever on deregulating apartments. During the housing bubble, many buildings were purchased at over-inflated prices, based on projected huge increases in rental income. With the luxury market lackluster, owners are even more reliant on schemes of pushing out long time tenants to increase their rent rolls – in rent- regulated housing by using vacancy decontrol, or in Mitchell-Lama and Section 8 programs by opting out of the programs – moving rents to market rates.

Deregulation Leaves Tenants Without Future Protection
Any rental opportunities that might be created by the recession would be short lived if tenants in these units lack the protections of rent-regulation. Once the economy and real estate market rises, tenants in unregulated apartments can be priced out of their homes, again causing disruption to families and whole neighbor- hoods. Landlords are continuing to deregulate apartments and planning buyouts from affordable housing programs so that they will be able to reap enormous profits by raising rents when the economy picks up.

Sources: 2008 Income and Affordability Study, published by the Rent Guidelines Board; and housingnyc.com, website of the NYC Rent Guidelines Board

 

First published by Met Council on Housing June 3, 2009