Buying a house or apartment in New York can be a very exciting experience, but many people aren’t aware that it can also be very expensive. This is especially true in New York City, where the average price of an apartment is nearly double the national average. It is also very difficult to find affordable apartments, but with a little research, you can find a good deal.
Longtime residents have been “pushed out”
One of the most vexing problems facing New York City is the lack of affordable housing. A recent study of 4000 city apartments found that half were rent stabilized, and more than one in three city-wide households spend over forty percent of their income on housing. Many are forced to live in homeless shelters and motels, which are expensive and disenfranchising.
Yet another study found that 60,000 rent-stabilized apartments were vaccant, being held “hostage” by landlords seeking to raise rent.
One of the most interesting and challenging questions in the housing debate is whether gentrification is a good thing for longtime residents. Gentrification is a process by which wealthy newcomers move into previously working class neighborhoods, displacing longtime residents in the process. This is not a new phenomena. It began in earnest in the late 1950s, but was accelerated by real estate speculation and the rise of the internet.
Although the long term impact of gentrification is uncertain, the influx of newcomers has undoubtedly changed the face of the city. For example, the famous Bedford-Stuyvesant neighborhood of central Brooklyn was transformed by a wave of new developments. The biggest question remains: Will the movers and shakers heed the call and actually improve the conditions for the current crop of displaced residents?
New leases expand month over month for the fifth consecutive month
The New York City housing crisis continues to ravage the rental market. High mortgage rates, lack of new development and a housing shortage are driving the rents up. It also puts a strain on the affordability of low-income New Yorkers.
Luxury rentals in Manhattan continued to surge. In the past two months, they reached their highest levels on record. But they still remained below the pre-pandemic level. There are still more people searching for rental homes than there are available units. Vacancies are low and prices continue to rise, and landlords are hoping to recoup some of the income they lost during the pandemic.
Meanwhile, the market share of landlord concessions has remained at its lowest level in more than a year. This may be a sign that landlords are confident in demand.
On the other hand, rents in Manhattan and Brooklyn continue to rise. These areas are experiencing a rebalancing of the market. For the first time in a year, the vacancy rate in the central business district of Manhattan slipped below 2 percent. However, the overall vacancy rate for the city as a whole remained near 2 percent.
Rent control artificially lowers the supply of apartments
In a city such as New York, where rents are often more than double the national average, rent control can be a bad idea. But it’s not just those who need housing who are harmed. Rent control can also cause gentrification.
Rent control takes a large portion of the housing stock off the market, driving up prices in the non-controlled segment. That means fewer options for people who need a lower price. It also means that people who need a cheaper apartment can’t leave the area.
Rent control can also lead to more people living in small studios and other low-rent units. People who live in these units aren’t able to upgrade to larger, better-paying apartments because of capped payments. And since landlords can’t recoup their maintenance costs by raising prices, they aren’t investing in their buildings.
Almost every economist agrees that rent controls are a bad idea. They point out that they can reduce the value of private assets, and they can also increase the cost of insurance.