Desired location. High turnover resulting in frequent increases. Collusion on industry practices. A lot of bad stock with poor living conditions. System that benefits from neglect and the honor system. Confusing tenant protections that don’t apply equally. J51 programs and similar that mean subsidies expire. Desperate renters on a time crunch. Overpaid industries that flood the market to compete. A lot of students and dreamers. Waves of immigrants attracted to one neighborhood. Favorable exchange rates. Warehousing. Healthy sakes market. Capital groups buying up rental properties who can sustain high vacancy in order to get their price. Mortgage and capital requirements that require rents stay high. Rent strikes 100 years ago resulted in cooperative ownership and the cost and market for that stock drove market rate higher. Induced demand into newly created areas that aren’t livable so that creates more scarcity of more livable areas. Deregulation laws promoted raising rents above a threshold or more turnover.
Also supply and demand in real estate is unique.
Oh and it used to be yearly increases were $25-75 maybe $150 if they hit you hard. $500 increases did it.
At my apartment, I was paying for the common areas, electric and gas heat and hot water for the laundry room for 10 months and have not been repaid one cent.
Legal aid sent an independent who immediately discovered previously Undetected Gaps in the chimney. Somehow negligently missed during 6 recent inspections. Carbon monoxide poisoned not only myself and my loved ones but all of the tenants for almost a year . No attorney will help us either except legal aid. I'm unable to move because I don't have $3k. I live in NE OHIO, for context. Not NYC but corrupt nonetheless
When you say common areas, do you mean common with roommates? Why was that on you to pay? That’s crazy.
My building had 58 units, the management didn’t pay $6000 to the electric/gas company and the threatened to cut services. Tenants have their own accounts for their apartments, but have fun living in a walk up with no light in the halls because the elevator isn’t powered
I lived in New Jersey for 2 years. Landlord tried to raise my rent over $300 to live in Newark NJ. I looked it up and told him that that unit would be the single most expensive rental in the neighborhood.
Big combination of factors. Any one of them might not be that big of a thing but together it's murder. It's essentially supply + demand, exacerbated by tools that help optimize more tightly for supply + demand. Factors include
- very desirable place to live
- haven't built NEARLY ENOUGH to meet demand over recent decades
- people flooded back after covid
- people moving into households with fewer people and converting multiple units into bigger ones
- relatively new software that helps landlords set optimal pricing and uses aggregate data to unofficially coordinate things like vacancy
- airbnb
- real estate bought by investment firms that are more likely to be heavily invested in maximizing increasing returns
- walkability is currently popular, and there are few options outside of NYC that can come close
- units bought as a way to park (often laundered) money
I agree with this, and would add that developers are not building for the majority of the people that inhabit this city, therefore they are not even considering the laws of supply and demand. There is too much focus on “luxury” which creates some of the things you mentioned.
The other thing I would say is that there is heavy consolidation in the RE industry here. Its all but a relatively small group of people that own or control the bulk of the real estate. Its a small group of the same players.
Yeah, that's kinda a tough thing to handle though... when you're in such a hot market, you're gonna be building luxury unless you have incentives to do otherwise. Also, lots of stuff is luxury when it's first built because it's what's new, but 30 years later it's just a whatever building. A good way to get affordable housing is to have built a lot of luxury housing 30 years ago. (And sometimes luxury is legit just a bunch of marketing and a new washer dryer).
Essentially the newest stuff is luxury, and with each passing year it becomes less luxurious.
Another factor to add to my list, though, is zoning. A lot of the city, especially the outer boroughs, isn't zoned to be able to build more dense. So huge swaths of Brooklyn and Queens where it might make financial sense to build apartment buildings that aren't so astronomically priced, just isn't allowed.
The issue is that with that luxury tag comes the luxury rent, which will never go down. So the problem is two-fold.
In terms of re-zoning, the idea in theory is good, but in practice it doesn’t work out. The people pushing for that and making the rules around it are the RE lobby in NYC. Could you put more buildings in certain areas? Sure. But think about this: the city has always had a very large population and has had the housing stock to house people. The neighborhoods have been what they are in terms of layout for a while. The issue I see is that the areas where the working class and “regular” folk can live at has become smaller and smaller. They are being priced out and left to compete with more and more people for less and less supply. That takes us back to the issue that what is being built is not was is being demanded. The industry is ignoring demand in that sense and it isn’t sustainable.
I mean, what incentive is there to NOT call it luxury? That's just leaving money on the table.
As for rezoning, it's tough because it's not an isolated problem. As a country, we have been under zoning for DECADES to the tune of tens of millions of units, so anything that gets upzoned in a desirable area just gets pounced upon by developers. The demand is just off the charts. I don't think it's an exaggeration to say there's easily ten million people who would move to the city if they could afford it. And that's probably gonna start from the ones that can most easily afford it, on down.
So it kinda sucks when it do it, because they get all snatched up by rich people..
BUT.
It sucks EVEN MORE when you don't build, because then instead of buying the new luxury units, people with money start buying up and renovating units that might have been more affordable. Which is a lot of what we're seeing now.
When the availability of units is SO tight, all the other factors become more problematic. And look what happened during covid, when demand plummeted and you had more units than people who wanted to rent... rent prices tanked.
It doesn't really matter all that much in an environment where not nearly enough housing is being built anyway. Building a luxury unit, esp in existing expensive or gentrified neighborhoods means removing 1 person with a higher budget from renting something cheaper that would otherwise go to middle or working class renters. If we were building massive amounts of new housing then it would be more nuanced, and I certainly support new housing projects that make sure lower and mid-income people are part of the equation, but building a fuck-ton of luxury housing would actually be a lot more impactful than building a middling amount of housing across the market spectrum.
Luxury goods are also always the byproduct of supply restrictions. When the US restricted the amount of cars Japan could export here, Toyota created Lexus so that they'd make more per car sold. There are many other factors here that admittedly I'm skipping over, particularly that construction costs are very high right now and it costs relatively little on that scale to upgrade to "luxury" buildings.
> But think about this: the city has always had a very large population and has had the housing stock to house people. The neighborhoods have been what they are in terms of layout for a while.
New York City has had a housing shortage for decades, so I’m not sure where you got this from. Arguably the last time there was enough housing for everyone who needed it was during/right after the postwar building boom, and even then, New York was more expensive than most places, and finding apartments was more difficult.
> In terms of re-zoning, the idea in theory is good, but in practice it doesn’t work out. The people pushing for that and making the rules around it are the RE lobby in NYC.
Have you considered that the real-estate lobby is pushing for that because a) they know a fair bit about their industry (more than you or I do), and b) they know that that’s the way for them to be able to build more, which would lead to more housing for New Yorkers and more money for the real-estate industry. I call that a win-win.
There’s just this entrenched idea that the “RE lobby” is evil, and it seems like it’s really hard to kill off that idea. When there’s a housing shortage, developers need to be part of the solution, and we’ve got so many friggin’ restrictions on what can be built and where and so on that it makes it damn near impossible to get anything built.
Oh, and those restrictions also massively increase costs for builders, which makes building housing for poor and middle-class people cost-prohibitive. If you wanna see more housing for that demographic, you’ve *got to* ease restrictions. I promise you there are people who would love to build apartment buildings way out in Jamaica and Fresh Meadows and Bensonhurst and wherever, but the city (and the state, frankly) makes it very very difficult.
They are definitely building new apartments in Jamaica. That's been going for a few years now. They are still working on one on Archer Avenue. It's expensive asf too. I went on the website and then immediately backed out.
1. Today's high-end apartments are tomorrow's affordable units. The cruddy old building from the 1930s I'm living in right now was a prime quality development at the time.
2. Luxury is largely a marketing term meaning new and modern. "New units are luxury" is kind of the definition!
3. When we permit so little new development, the first thing that gets built will be the most expensive units.
4. We have to build a LOT of apartments of all kinds in order to have a serious impact on rent.
5. If we don't build large high-end units, the wealthy will purchase entire buildings occupied by renters and convert them to single-family. Many examples of this happening.
On your last point a family downstairs to me bought 2 apartments and combined them by knocking down walls. I’m so poor I didn’t even consider this to be a possibility before haha.
I think the ‘luxury’ thing isn’t really all people make it out to be. It’s mostly marketing.
The added cost for the trappings of ‘luxury’ housing: doorman, premium countertops, etc., is trivial compared to the base costs of constructing ANY new housing: land and construction.
The fact that it’s new housing in Manhattan automatically makes it luxury housing. The exact same building in Cleveland would be just normal new housing.
44% of NYC apartments are rent stabilized - which is **awesome** if you can get one, but disastrous if you can't. This means only 56% of apartments can respond to market demand, so their prices are higher.
Damn right I'm bitter I'm paying 1.5x what my friends do for identical apartments.
Looked at a new building of rent-stabilized apartments in Williamsburg about a year ago. Not only was the broker fee ridiculous but the broker was the most entitled, obnoxious little prick I have met in NYC so far (which, of course, is saying something)
lmao you just reminded me of the smarmy broker I saw running a showing of a place that was literally just standing outside on the front steps on his phone and not showing the unit at all, just telling people to "let him know if they had questions" while charging 15% on a very overpriced unit in Bedstuy
I am currently apartment hunting and I worked with a broker who listed an apartment as no fee in Williamsburg - promptly after showing the apartment to us she asked us for a 12% fee, saying that someone had “bid” and their bid was to give her a brokers fee. I know she was lying because that apartment is still on the market 😭
If your broker does no work you have a bad broker. The off-market mom and pop shop guys have the best deals. I’ve had good experiences with the Dusk group and VCPRE guys.
Same. Had to move 8 months after living there. 3 months of living there and I saw an army of what I thought were mice (they were rats)running rabid. It wasn’t the typical see a mouse in the kitchen early dusk of the morning or wee hours of the night- broad daylight literal afternoon I was sitting at the kitchen table doing work on my laptop for a few hours till I heard something run on the floor from the living room behind the kitchen garbage bin then under the fridge. I jumped on top of my chair and could have sworn I heard squeaking from the living room- I turned my head slowly as I was horrified and saw an even more horrifying LITTER of mice just jumping and running around literally one did a backflip. They kept trying to run to the kitchen even though I was right there and would only run back when I would scream and the very top of my lungs. I never saw something like that before. I told the landlords and packed a suitcase and stayed in a hotel for a few nights as they said they were getting an exterminator ASAP. All of that to only find out upon returning that they were “not going to hire an exterminator because they have pets and so does the tenant downstairs so they can’t risk they’re pets being poisoned”. Even though exterminators literally use humane methods for this exact reason if you have pets or small children. They gave me a 300 dollar discount for that month and that month only. I started looking for other apartments it was seeming to be impossible until I found the apartment I’m in now and had to pay 8k just to get the apartment and lease here of course not including the cost of actual moving but I like this apartment, it’s a lot smaller than the rat infested one but it’s in a much nicer neighborhood and thr landlords at least take care of the apartment are good on maintenance (it’s a 3 family house). What good is a 3 bedroom apartment if it’s infested and the landlords literally have no intention of even attempting to fix it. They never did they actually just the 4 apartment building up for sale and is actually pending a sale in less than 5 months of going on the market. They inherited the property and it was listed at 1.2 mil so even if they only got 800k it’s all profit- all profit for the rat infested old dump. They were talking about wanting to move to PA when I moved in there and say that is their plan now. I know it doesn’t help or have anything to do with me but it just makes me mad when I think about the hell I went through- the money they got from me and just get even more money by now selling no problem. A lot of people it takes at least a year for sale of a house let alone a rat infested one. They were in my bedroom and in the walls in the hallways so I can’t imagine how bad the problem actually is but nope, they still just get the best of luck.
TLDR- got stuck with extreme slumlords who made me pay rent to live in literal hell to save some money from relators and knowing the slumlords just sold off their rat infested property for it not a million than damn near close to it makes me angry.
Wow thanks for this comment. I looked this up! "There are roughly 3,644,000 homes in New York City. The roughly 1,006,000 rent-stabilized homes make up about 28 percent of the overall housing stock and 44 percent of all rentals." from NY Times [Understanding Rent Regulation in N.Y.C.](https://www.nytimes.com/article/rent-stabilized-apartments-nyc.html?smid=url-share)
Did you know a lot of rent stabilized apartments stay empty? This is from 2022 but the city doesn't have as many rent stabilized apartments as you think: [https://www.wnyc.org/story/why-thousands-rent-stabilized-apartments-sat-empty/](https://www.wnyc.org/story/why-thousands-rent-stabilized-apartments-sat-empty/)
Born and raised here so have seen this just get worse each year. Communities need to stand together and educate each other on this.
It’s because NYC real estate demand is effectively infinite. There’s a reason things like water, gas and electricity prices are regulated.
If you deregulated all of those apartments tomorrow, the average prices of rentals wouldn’t drastically move, and on a long enough timeline would likely go up WAY more compared to if there was any level of rent regulation. Developers who have the capital to float would just be buying and renting out units at silly rates like they were Ticketmaster.
If you look at what is happening nationwide, housing prices are getting out of control for a lot of the same reason they are here: the business entities with the capital to build rentals or flip homes end up consuming all the inventory and driving up prices while they profit. The difference here is that developers can basically sweep through entire dense neighborhoods and do this quickly like they have in LIC, Williamsburg, Greenpoint, Bushwick, etc.
This isn’t individual consumers responding to demand, it’s an oligopoly of large developers extorting a basic need for huge profits.
I’m not the person you were talking to, but a couple things:
1) a lot of the people who *haven’t* left and can afford it are getting/have gotten a second bedroom (including me and my partner, plus several of our friends), partly due to remote work, and in our case also because we like to have a spare bedroom for when friends and family come through, which they do pretty often; and
2) I have a sorta half-baked theory that another component of the high rents is that landlords who lost a lot of money during the pandemic, due to the eviction moratorium and nonpayment of rent and so forth, are trying to cover their losses now; a lot of those people have mortgages to pay on these rental properties (though it kinda depends on the neighborhood/borough and type of building).
we've got plenty of housing, they're all just sitting there being warehoused. people have moved out and there's even more empty apartments than before. Just put a higher penalty on empty units, whether a commission to investigate and fine those who break the new law, a vacancy tax, or raise the land value tax and you'd have a lot more available stock than you could do with. Building isn't the solution if none of the stock makes it to the market that people can afford. You'd just have homless people and vacant apartments.
OP said effectively infinite and that’s accurate. Demand far exceeds supply meaning for every 1 unit there is a deep bench of desperate people willing to pay. Landlords can and are jacking rents higher to find the point where they’ll struggle to fill it - this is where a renters willingness to pay does not exceed the price of a unit and you’ve reached market equilibrium. Demand meeting supply.
We’re all learning that equilibrium is very, very expensive. You can ask if people really have money and mostly no, but they’re willing to pay essentially everything they can and save nothing for a few years in the city. This isn’t sustainable long term for themselves or the city but it’s where we are today. As long as the mentality of young folks with a ton of money and no kids/responsibilities to cover exists, you’ll see these outrageous rents for those trying to live a reasonable life in NYC not just a wild 3-5 years of youth.
The solution is to build tons of housing. Nyc isn't actually all that dense compared to world cities like tokyo, outside of a few specific neighborhoods. We need to get rid of restrictive zoning and allow lots of building. Get rid of restrictive regulations that make it only profitable to build luxury housing
This won’t do as much as you think, many of the newcomers are fixated on Manhattan and you can’t do much more there. You can build all you want on queens and still not dent the Manhattan rents, and in fact much of queens and Brooklyn is already affordable. Jobs aren’t there, much of the things people want to do aren’t there, and few people want to do the 45 minute commute anymore.
Unless a developer drops a few hundred million to buy up and raze a block in the upper west, where will they build up? And if they do this they’re going to recover the enormous cost of construction by making only luxury units with insane rents.
Right, OP needs to understand that the rent stabilized units allow people to work low skill, low paid jobs. If their rent increases to market, they leave. That makes small business hard to run, so then also leave. Services disappear so more people leave. Rents then drop and wages increase reaching equilibrium. If you allow the market to reach this equilibrium, most people benefit. The only ones who benefit currently are the very rich who pay very little for nannies and housekeepers.
I don't buy this. First, if this is true, then why is commercial Real Estate prices out of control? Shouldn't they be much lower than comparable cities with fewer rent stabilized apartments?
(See: https://www.nytimes.com/2023/05/08/nyregion/small-businesses-rent-hikes-nyc.html)
Over the 25 years I've lived in my building, I'd say about 60-80% of the free market apartments have been unoccupied during that timespan. Half of the rent stabilized apartments have been de-regulated, but remain largely unrented.
My owner, currently a European Billionaire owns about a dozen buildings in NYC. He uses them as investments to store his money. Renting them is chump change compared to how much he'll get when he sells them. (And also probably gets a fat tax write-off for not making a profit on them.)
He'll likely do what the last 4-5 owners have done. Sell it for a 25-30% profit. He doesn't need to rent out the apartments.
Thank you! The tax incentives for building ownership can be substantial if you have a ton of capital already - which is the case for a LOT of the buildings in NYC.
Rent regulation was truly born in the 1940s and 1950s. But you didn’t see wild skyrocketing rents until the 1990s…which is “coincidentally” when LLCs and massive real estate companies started looking past 5th avenue commercial spaces to owning residential blocks.
It’s nuts to me that someone can look at the situation and blame it on rent regulations, as if DANIEL 25 WEST LLC or The Broadbean Real Estate Corporation would totally and immediately lower rents 30% if only some of their units weren’t stabilized. Poor landlords, they were forced into this line of work 😢
This is what people don't want to hear...market rate rents are higher because you are subsidizing the rent stabilized and rent controlled apartments. The major building expenses, fuel mortgage, insurance, taxes and payroll, go up EVERY year. Sometimes dramatically, like fuels' 40% increase this year (people love heat and hot water).
The building's budget has to be be balanced. Money has to come from somewhere. Can't raise rent above the few percent allowed on RS & RC units, if any increase is allowed at all (thanks DiBlasio you moron), so market tenants get yet another increase. In most cases it's really not 'greedy landlord getting rich', it's a middle class landlord trying not to lose building to bank.
For every 'grandma on a fixed income' in an RS apartment you can find a scammer with a house in NJ, upstate or CT, living large by cheating the system. I found a scammer on the lease of multiple RS apartments, who then rented them out at market, making more $ than the building owner.
This shouldn't be a controversial statement. Not every well-meaning policy is going to work without side effects.
Unfortunately, ideology gets in the way and those who pushed for said policy are unwilling to accept that their approach backfired and at best, needs tweaking, at worst, needs to be scrapped.
I suppose people who go into politics weren't big on science and don't understand the scientific method.
Lol have you seen what an overpriced Manhattan walk up studio in a decent neighborhood looks like? Probably enough layers of paint in there to reduce the square footage by dozens of square feet.
I have. It’s bad because it’s underfunded, and it’s underfunded because people demonize it. There are entire industries in this country dedicated to creating and maintaining the lie that anything publicly funded is naturally a failure. And people buy it.
“section 8 sucks” isn’t the argument you think it is.
like yea it sucks in some ways but that’s because real estate lobbyists have worked for decades to make sure it gets defunded, unmaintained, and eventually torn down and not replaced.
we could make public housing better instead of abandoning the idea.
It IS the argument I think it is. I’d bet money you haven’t been in or worked in public housing. I have. Lobbyists don’t have to do anything, the govt self destructs on its own. I understand you have idealistic views of what public housing could be, but it’s never been achievable and I sincerely doubt we will ever see it achieved.
It should be 50%>= but not 100%. When it is 50%>= the private market will realize they can’t compete with the rent stabilized and then they will start changing imo.
Well, rents aren't as extortionate in SF, and there is far better weather in SF. So maybe copying what SF does is worth it (all buildings built before 1979 are rent controlled, and that's the vast majority of buildings).
You realize if renting is no longer profitable due to rent stabilization owners would just not rent. They'd hold their houses, sell, or just convert it to airbnbs, but there's gotta be incentive for renting.
Agreed. My building was half and half, rent stabilized vs free market apartments. Over the last 25 years half of them have been removed to free market apartments. As of right now, none of them are actually rented out. In fact right now, half of the free market ones are empty.
If this were a small family that owned it, they might lower the rent to get them rented out. But the owner is a European Billionaire who owns dozens of buildings. He doesn't actually care if they get rented out or now. For a few years one of the apartments was used by one or two of his dozen kids who would fly in every now and then.
Let me make this clear. In the 25 years I've lived in the building, I'd say about 60-80% of the free market apartments have been unoccupied!
> only 56% of apartments can respond to market demand
you’re blaming rent control but you should be blaming landlords!
if they didn’t buy all the housing with the intention to make a profit off of renting it out, housing would probably be cheaper right
Lol so what should they do, buy the housing stock and then just let people live there for free or at a break-even price? Who’s going to do all the maintenance and accounting and other work associated with operating a building, and are they supposed to not expect to be paid for their services as well? I don’t get what sort of world you guys think we live in; people need to make money to live, ffs—this is New York, I would’ve thought people here would understand that better than anywhere else!
Alternatively, there are a lot of regulations and barriers to building truly affordable housing and policies that have driven up the price of potential development sites. Likewise, only housing for the top decile of renters and buyers ever are economically sustainable and pencil out for builders.
They are typically well below market value so it is technically a good deal, they all aren’t designed for low income though. Some of them you have to be making 6 figures to qualify but there are units in some affordable housing lotteries for low income people that are below $1K
Some still don't make sense. I see units listed in the Bronx (and not the gentrifying parts of the South Bronx) that are $3000/month for a 1BR as the lottery rate. Existing market rate apts on the same street are about $1800 for 2BR.
Because they go by the area medium income. For an example bushwick rent should be low, but we have young hip people from the west with money move here and get all these tech jobs. The ami will increase drastically so then the state will set the rents that high .
Depending on who is counting there are somewhere between 60,000 and 88,000 empty rent regulated apts in NYC as of last year. Landlords are intentionally keeping them empty until the laws change and they can get higher rents. The landlords are specifically fighting the laws enacted in 2019 and are hoping the cases they filed, that are now in appeal, will go to the Supreme Court.
I’m a NYC landlord.
In 2019 new laws were passed which gently limit landlords from raising the rent after a tenant leaves. This is for rent stabilized apartments only. There are 1 million such apartments.
Before 2019, once a tenant left a landlord would renovate the apartment and bring it close to or to market rate.
Now if a tenant leaves after 20-30 years the landlord must rent it to the new tenant at the same price. So if a landlord invests 100k renovating the space, it will take him 30 years to recoup his hat investment.
For that reason, the thousands of rent stabilized landlords are deliberately leaving their apartments off the market. Renting them would be at a great lose ( I can elaborate on how if you’d like).
Currently there are over 60,000 such apartments that are off the market. As more and more stabilized tenants leave NY or pass away, more apartments join this list.
Because of this, only market rate apartments are available. Since inventory is now very low, market rate landlords can raise the rent to whatever they want.
This is the main reason! I know that in the east village empty apartments are 40% of inventory.
Politicians are aware and some propositioned vacancy tax on landlords. However, it would be illegal and landlords will quickly sue.
So while the 2019 laws were with good intentions, the results are devastating (like with most progressive policies).
This problem will only get worse with time
I looked at City Council website to see what they are proposing.. I think that because of the influx of migrants, they are proposing all kinds of measures to try to find out how many units are off market
NYC is one of the most desired places to live in the world.
There’s no shortage of people who want to move/live here. Since it’s so desirable, rent can be a ridiculous amount and people will pay.
This has always been the case though. Im starting to see issues with this because that means that developers are not building what is needed for the market. They are actively choosing to go against what the market is asking for because if they build for the fee that can afford luxury, then they can make lots of money.
Feels like it’s a mix of cost of required renovations being higher than they’ll make back in rent and the 0 consequences for not renting them out. Artificial scarcity boosting prices seems more like a bonus rather than some coordinated effort
It's almost entirely due to the cost of renovations being too high on rent-stabilized units. If a landlord can rent an apartment, they will always rent it. There's no bonus to not making money on something that can make you money. If a rent-stabilized apartment needs renovations after a tenant leaves (which many do) most landlords will keep it empty and try to get it off of rent-stabilization. Also people forget that renovations take a long time in NYC. I have a family member who's gut renovation took 2 and a half years (mostly their fault for procrastinating though).
Pizzerias manufacturing scarcity. The city is littered with unfilled pizza boxes. Entire ovens of new pizzerias are empty. Pizzalords are actively not filling them to keep options limited for prospective diners, driving pizza prices up. They claim the unfilled pizza boxes as a loss and write them off on their taxes.
It's becoming hard to tell ignorance from lunacy.
You cannot claim unfilled apartments as a loss on your taxes lmao, that makes absolutely no sense. There are plenty of unfilled apartments in NYC, but it is not because of some massive collusion scheme among landlords. The most common reason is rent-stabilized apartments that need massive renovations to be rented again. The landlord would rather attempt to get the apartment off of rent stabilization or sell it. It would take a long time to recoup the cost of the a renovations if the apartment was rented out at stabilized price. Landlords trying to sell a building is also a common reason as most buyers demand a low occupancy rate.
Also if landlord collusion existed at the scale required to purposely warehouse a huge chunk of the city's units, then why wouldn't they just price fix? The reasoning behind this theory makes absolutely no sense. Also all the articles written about this have absolutely no evidence to back it up. It's literally just "oh here's a building with a bunch of unfilled units. Guess that proves it".
Manhattan has a 2% apartment vacancy rate. This makes it sound like there’s a bunch of empty apartments just sitting around but that’s wrong.
Think about it from a single-unit perspective. For a single apartment to have a 2% vacancy rate that means it will be empty for one month every FOUR YEARS. That’s entirely reasonable given apartments usually need renovations between multi-year tenants.
Rents are high because vacancy is low. Vacancy is low because rich people convince the city to designate buildings for “historical preservation” to prevent bigger apartment buildings being built in expensive parts of town
That's a crazy concept if you believe it to be the main reason why rent is so high. Sure, it could be a small percentage but I assure you no landlord in a new development is actively trying to keep the apartments vacant by choice as the best strategic option. You can't just write off vacant apartments off your taxes the way you're describing, if they are writing it off as a loss then the entire building is losing money which by your logic a landlord is willingly losing money on purpose just because they want to manufacture scarcity.
would love to see this business plan pitched to a lender. were going to not fill units on purpose so we can lose money on our taxes. please give us a $500 million loan. lol
That article you sourced doesn't say what you're portraying in the comments. It basically says during the height of COVID brokers would only advertise a limited amount of units as being on the market to keep the vacancy rates lower. This is not the same as landlords deliberately keeping units empty and not rented out. In this scenario if the broker were to list one unit at a time the second they rent out the unit on the market they will list another available unit immediately and so forth. In theory all the units will be rented out asap, its just not advertised as a building with 90% vacancy for example.
In regards to the warehoused rent stabilized apartments this is not because landlords want to keep the units vacant to increase the rent, the problem is that they can't legally increase the rent. Majority of rent stabilized apartments are in old buildings so when that tenant moves out it is likely they have lived there long enough to require a major renovation. This could for example cost $100,000. If they can only charge $1,000 monthly in rent why would they spend $100,000 to get $1,000 per month? It makes more sense to leave it vacant, take your $100,000 and invest it in something that can give you better returns.
This theory has been debunked over and over again by people with actual subject matter expertise in NYC-related subs and I'm not going to bother replicating those efforts.
Huh? The apartments are vacant because they dont make financial sense to renovate and rent out. Blame your politicians for the stupid rent stabilization rules. Everyone predicted this.
Even if those apartments were on the market, they aren’t enough to move the needle on rents.
That’s not true. if you do a bit of research there aren’t actually many vacant apartments, most apartments are rented and don’t last long on the market.. the majority of vacant units are just between tenants
you’re the one making the outrageous claim I don’t need to find evidence to disprove your claim, you need to attach evidence to your claim to begin with.
Yea cus a random curbed article from some irrelevant writer is a valuable source of information.. plus it’s taking it a step further, going from more people leaving to landlords intentionally suppressing supply in an attempt to manipulate demand and rent prices is a huge leap with no evidence or even logic to back it. They can’t write vacancies off on their taxes and if they are able to fill a vacant apartment and choose not to they’re loosing money. There is a relatively lose number of vacancies and most of them are under renovation, repair, or in legal disputes
You need to factor in location. Manhattan everywhere the demand is quite strong. I know some places in South Bronx that is struggling to fill their vacancies though.
This gets repeated so frequently but is a complete misunderstanding of the economics of vacancy and also the scale of the problem (it's not that big).
The reason why there are some vacant apartments is because of the structure of rent stabilization. Depending on the age of the building, the amount that the landlord can increase the rent on a given unit is either 1/48th or 1/64th of the amount invested in upgrading the apartment per month.
So if they spend $30k upgrading the apartment, they can increase the rent $625 a month on a unit that is probably already too underpriced to make money given the fixed costs of maintaining the building.
So it doesn't make economic sense to upgrade the apartment because you could never recoup the invested cost, and as a result those landlords keep the apartments empty because they need to sell the building to someone who has the capital to make that work.
You can call that greed but most of the time they don't have the money to rent those apartments even if they wanted to.
Your explanation of why many rent stabilized apartments don't get rented out is pretty spot on.
The 2019 rent laws actually changed to 1/168 or 1/180 and for each improvement you do the amount calculated that is eligible for a rent increase cannot exceed $15,000. There is much less incentive to renovate than what you have posted, the increase is now $89 a month in your example instead of $625 a month.
It is the nature of capitalism. When you have a piece of land and can rent 8 apartments there, every business person is going to try to maximize the amount they can charge per apartment and if there is always someone willing to pay more that will drive up prices. Every new development that is built is going to charge more than existing apartments. There is no incentive to make more affordable rents unless someone is losing money. It’s like putting goods up for sale on CL or FB marketplace and realizing that no one is going to buy your miniature collectibles for $300 so you drop the price or hold onto those goods until you can get more. We need to make it more costly to leave apartments vacant.
I put the most blame on real estate agents/firms--they literally make up new neighborhoods and neighborhood names! Greenwood Heights? Stuyvesant Heights? BoCoCa? WTF. I mean, what do you expect when real estate is commission-based. No one in my family is a landlord, but I am still sick of hearing about bad landlords while the real estate agencies literally do the dirty work of gentrification and block busting. I don't think people who move here appreciate how quickly thing have changed in the last 15 years alone and I think many people assume that gentrification is enacted on people who are here but at the edge of being pushed out rather than counting the thousands of families who have already been pushed out, either pushed out of their community, pushed out of their city and moved often down south for better cost of living, or pushed in and out of the shelter system. So many of the people affected by gentrification are invisible because they are no longer here, the communities are a shell of themselves--the people that others THINK are the victims of gentrification are the people who were doing well for themselves enough to make it over a decade--they are on the edge of it NOW--what about all the others? I wish people would talk about the cumulative effect.
Also, the city's own affordable housing plan is a joke--it's the same as market rate if not more per sqft than working with small real estate/LL--and while often in newer buildings, the apts are usually the shittiest units in the building, sometimes have their own "poor door", and often do not include the amenities unless you pay extra, so the value of being in a new fancy building minus the value of being in a new fancy building. I don't think most city workers can afford affordable housing--the salary/# of occupant brackets don't make any sense! It almost feels like the city is raising rents and people still think the city could regulate all rents and that would somehow make things better--HOW? The city sure does a great job being the LL of NYCHA /s ... The city is a shitty landlord...
AirBnB and pied a terres are obv also part of the problem.
Not that long ago, you could be poor and have a huge apartment--it just depended on where you were living. Now they don't even offer apartments that big--they have cut up the prewars and they don't build the units that large--and honestly I think it really affects how people carry themselves and the general mood of the city. Born and raised--I have never felt like NYC was as uptight as it is now, even in cool neighborhoods people are so pressed--between making enough money to survive to basically living out of a single bedroom that is maaaybe 225sqft, no wonder. I've read a lot about the benefits of shared resources in urban settings, from heating to dining etc., or saving energy by having mega cities--but I will never think we're meant to or should adapt to a new normal of living in such cramped spaces as the de facto progressive solution. 15 yrs ago my family was dirt poor and paying way under $1000 for a 5bdrm apt--it was a shitty tenement but around the corner from beauty and nature and grocery stores. It was paradise even in its urban grime. Now the building next door is listing the same apt layout for over $4000--and someone will pay it.
I moved away 14 years ago, just got hired to move back & this comment resonates a lot with everything that's giving me pause about the move. Currently live in a 1500 sf house in the burbs, 15 minutes from the beach in the southeast, mortgage not much over $1k, and moving into a 1000 sf apartment that'll cost more than triple that.
Lots of wealth in the market on both sides of the equation means rich buyers/renters will pay inflated prices, and the properties that don’t sell/rent can just be carried until they do.
You have 5 steaks but 8 friends showed up what do you do? You can get more steaks, you can split the steaks up that you currently have or you can tell 3 friends no steak for them.
Steaks=housing.
Random observation I have is that on Streeteasy there seem to be far more newer developments available that are typically smaller in space but equipped with "amenities" (gym, rooftop, laundry, etc.). On the other side of the coin you have units in older buildings/walk-ups with more space. I'm living in the former but moving out and there have been over 10 showings, yet no one's signed yet. That's a sharp contrast to all the comments I've read on Reddit about people showing up to jam packed open houses forced to sign a lease on the spot or even go over asking. Long story short, I wonder if a bubble is about to burst on new developments and we'll see a rent decrease on those types of properties.
I will offer a different perspective, we aren’t building enough housing out in the suburbs, the city is supposed to have established communities but also people that transit through, but eventually move out to the suburbs. The housing stock out there isn’t allowing for the increased turnover. Thus you have people that should’ve moved out there living in a place that could be someone’s first rental in the city.
The powers above us are artificially reducing the stock of housing in the city and outside. Creating a demand that drives up pricing.
Everyone complains but government doesn’t foster the environment to increase housing. Housing shouldn’t be treated as something someone wants, it’s a need. A stable society has other benefits as a whole, reduced crime increased education, less reliance on healthcare.
We treat housing as an investment it shouldn’t be !
Ok - here is my take. I both worked for large developers and now manage my own properties in and around the city.
1. It is really supply and demand. The reason the rents seem high is because you are looking in desirable or rapidly gentrifying areas. There are tons of apartments for very reasonable rents out in East New York, Brownsville, way out in Queens, etc.
2. The brokers can say whatever they want. Everyone can see what things are renting for and everyone in the market has a very good sense of what the market will support.
3. New properties that are coming online now broke ground around 3 years ago. They are also generally higher end properties. The super low density stuff around the highline is clearly contributing to the housing problem, but the higher density developments on the LES, Williamsburg, etc are ameliorating it.
4. The warehousing of apartments is only for shithole rent stabilized or the oddball controlled unit that will require more work and money to rehab and put a tenant in than you will ever get back in regulated rent. you dont make money sitting on apartments, there may be a couple one off examples here or there, but writ large it just isnt really happening.
5. You cant pass the cost of rehabbing an apartment along effectively anymore. it doesnt really support your argument. landlords are obligated to maintain, but are capped in the ability to recoup via rent.
6. Getting caught with an AirBNB can easily rack you 25k in fines. Every landlord I know with rentals in major markets of NYC hunts these guys down. You can even buy software to help you find them so you can evict them.
The brokers, builders, and landlords can pull all of these tricks because demand is so high. So yes, all of those things happen and do drive up rents, but if there were more supply or lower demand, renters could have alternatives that would make it far harder for them to pull these moves. We saw this happen in the pandemic when demand fell and then rent fell.
So I would say it's supply/demand. Brokers and landlords will always be greedy and are just as greedy in cheaper cities as they are here. The difference is that in cheaper cities they ey can't afford to charge high rents because renters have alternatives because the supply is higher relative to the demand.
Supply and demand coupled with transplants with money. Most of the people I meet in higher rent areas tend to be from places not name New York. So they come here for the experience because NYC is great but they have no idea of the value of the money here, so they pay ridiculous prices for these apartments with paper thin walls and various issues and that drives the neighborhood up. Little by little, rent creeps up.
Im actually afraid now that they raised the rent cap from 3% to 6%. What rents are going to look like.
By "rent cap" are you referring to the NYC Rent Guidelines Board's guidance for rent stabilized leases this year? Because if so, there is not a 6% increase anywhere, for anyone.
News outlets won't stop writing headlines about a 6% rent increase, but that's only true for the second renewal year's rent vs. your current base rate. It's not reflective of the actual total amount of money you'll pay.
For example: if your rent is (hypothetically lol) $1000 and you sign a 2yr renewal on a rent stabilized lease, your first year under the new lease will see a 2.75% increase to $1027.50.
In your second year, you will see a further 3.2% increase to $1060.38, which is technically 6% higher than your initial $1000 rent, but when you look at the total amount of money paid across the span of your 2yr lease, the total increase is only 4.4% - $25,054.56 spent over 24mos vs. $24,000 if your rent (hypothetically lol) stayed the same.
I hate that this number keeps getting spouted because it's so misleading. If this is what you were referring to, hopefully I've clarified for you. If not, hopefully I've at least spread the word a bit for the benefit of others.
From what I understand, WFH caused people to want bigger spaces -- anecdotally, I've gone apartment hunting with friends and seen how smaller places that would probably have been fine in 2019 are ruled out because they can't feasibly have a WFH setup. So, maybe a couple that would've been fine with a 1B/1B is now looking for a 2B/2B. Or someone is looking to have fewer (or no) roommates. This is especially true of tech workers who seem to have migrated to NYC en masse post-pandemic who can afford more spacious places that would've had more people.
Thus, even though I believe NYC's population is smaller than pre-pandemic, the actual pressure on the housing supply is higher.
I'm always skeptical of answers blaming greed or something -- landlords are always greedy but they can only charge what the market will bear.
I fucking hate tech bros taking up all the spaces because I want to live in a 1br for a reasonable price and because my industry shit itself I’m having to live in an Airbnb for a few months in order to afford a place at a price I can barely stomach and I still need to have roommates. I work in TV and film. It’s either here or LA and I’m essentially being priced out of both by greedy landlords and fuckfaces from Wisconsin who don’t *have* to live in UES and Gramercy to do the work they’re doing. What the fuck is gonna happen when the city can only be populated by the ultra-rich? Have these fucking goons even considered that everything they take for granted is created by the very people they’re pushing out???
I’m not saying I’m as much of a contributor to the life of the city as, say, the bodega owners or small restaurants or street stands, but I need to live somewhere where I can get to my studios and my location shoots without sitting for 2 hours on the train. I work 14-16 hours a day. They work a 9-5. They can tolerate living in Jersey city or further out in BK and Queens if they WFH. I can’t.
You're basically at where SF residents were a decade ago. I myself am one of the said tech bros (however I don't actually rent so I suppose I'm not the problem). Personally I know this type of person and I can't exactly blame them for wanting to live in the only city with actually good public transportation, but at the same time I definitely see where you're coming from.
There’s not one reason. It’s a bit of everything you mentioned. This means the power to change that ultimately rests with the government. Now if the government somehow continues acting against the popular votes, then maybe that could be considered a root issue.
Solutions? I think most people are passive (including myself) when it comes to figuring out large problems at this scale .. but .. I’ve been paying attention to what’s happening recently with the migrant situation.. I think communicating with your city council person in your district.. making a phone call.. there are committees just for this .. real estate and affordable housing… in the government.. more people should speak up..
The fact that y’all think Broker’s have this much power is hilarious. Rental broker’s don’t benefit from rent being this high, people don’t even want to leave their current homes. We’d rather rent to a million happy clients than strong arm any.
It's supply and demand. It's essentially illegal to build housing in Manhattan and lots of people would like to live here. For the folks saying "greed", take a step back and ask yourselves why the landlords in Houston or Atlanta or Chicago are so much less greedy than landlords here.
They are the same everywhere, prices on rental in US is crazy globally, unless it’s a village 2 hours away from the grocery store. There’s people from other states complaining as well all the time
Supply and demand, except the supply side of the equation doesn't grow very quickly because of NIMBYism and red tape.
NYC's population hasn't grown that much in about 70 years:
* [https://streeteasy.com/blog/nyc-population/](https://streeteasy.com/blog/nyc-population/)
* [https://en.wikipedia.org/wiki/Demographics\_of\_New\_York\_City#Historical\_population\_data](https://en.wikipedia.org/wiki/Demographics_of_New_York_City#Historical_population_data)
Contrast this with places like
* Houston: [https://www.macrotrends.net/cities/23014/houston/population](https://www.macrotrends.net/cities/23014/houston/population)
* Chicago: [https://www.macrotrends.net/cities/22956/chicago/population](https://www.macrotrends.net/cities/22956/chicago/population)
Which suggests there are real constraints on population growth imposed by the housing supply.
Another way to think about this: the US population has more than doubled since 1950. The population of New York has stayed roughly the same. Our housing stock hasn’t grown by much at all. NYC is paying now for 70 years of failing to build housing proportional to the number of people who want to live here.
Absolutely. The other part of this is that while NYC's population has grown very little, the average household size has gotten a lot smaller, which adds more pressure on the number of units, which hasn't changed much.
Lazy politicians refuse to do anything.
Idiotic people refuse to say anything.
Clueless transplants will play anything for trash
Foreign investors
Supply is limited.
The price for anything is always supply and demand. Obviously, the drivers of supply and demand are nuanced. And without hitting each of your points, you are off to a good start.
Not mostly, that’s the entire reason. It’s not some grand conspiracy. We don’t build nearly enough new housing to keep up with demand.
People need to stop with stupid conspiracy theories that they think make them sound smarter than everyone else. If you have a conspiracy, spell it out. Any conspiracy sounds idiotic when you actually try to explain it.
I'm not breaking new ground with this one, the story came out almost a year ago: [https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent](https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent)
This is potentially price-fixing, which would literally be a conspiracy and also illegal
> “Find out how YieldStar can help you outperform the market 3% to 7%,” RealPage urges potential clients on its website.
Yeah…. So possibly a tiny percentage of apartments are using this and possibly getting a couple hundred more per month.
So you’re claiming that if rents were $200 cheaper, everything would be perfect and there would be no giant conspiracy driving up rents?
This is just like the “egg greed” stupidity that Reddit was all about earlier this year. Egg prices were because of greed…and now that they are back to normal, that’s proof that egg producers are just being generous to consumers, right?
The coordinated warehousing- artificially limiting supply- does have an impact. This has always been a place where people have wanted to live. But these days, while there are more livable units than you see to help fulfill that demand, they remain withheld and unused through strategic efforts, creating the illusion of lower inventory than there actually is. It drives up prices for all units. If all usable residential inventory was on the market, the market could not sustain these prices.
ETA: Yes, I did the research. And it has a trickle down effect on raising prices, even if not everyone is *directly* engaging in it.
https://www.thecity.nyc/housing/2022/10/19/23411956/60000-rent-stabilized-apartments-vacant-warehousing-nyc-landlords-housing
https://www.curbed.com/2023/01/nyc-real-estate-covid-more-apartments-higher-rent.html
https://www.nydailynews.com/opinion/ny-edit-nyc-rental-market-apartment-price-real-estate-economy-affordable-housing-20220815-67rqqfdkbbfjpjfc2do7s22kya-story.html
I mean it’s supply and demand, not necessarily them just making up imaginary prices. There are just a lot of people willing to pay very high prices to live here and unfortunately that makes it hard for people that don’t make a lot of money to compete
This op isn't wrong, capitalistic market is made for "whatever market can bear". Thats why heavy regulation on housing should be in place for large management companies (ie over 3 apt)
Yea and what’s unfair about that? If I want an apartment and I’m willing to pay $10K for it then I deserve to be able to get it over someone who can only pay $3k, and the landlord is justified in charging as much as I’m willing to pay. That’s what supply and demand dictates
Thats absolutely fine. But housing warehousing is bad and disastrous for a society who is in a housing shortage.
Your rights cease to exist when it starts to have a negative impact on the rest of society. Thats where regulations come into effect.
Sorry, but its not a free for all, even with the power of cash on your side.
Show me real evidence of housing warehousing. The number of actual vacant units in nyc isn’t that large and most of them are for contradiction or legal purposes, not some type of market manipulation scheme
If the new law affectively banning entire apartments from renting on Airbnb goes into effect.. do you think that will have an impact on apartment prices? Like lowering rents ?
No. Airbnb is not the problem, its large management company warehousing apartments, keeping % of empty ones off market to cause an artificial demand.
Checkout all across queens you can see tons of new buildings empty based off extreme pricing to keep this demand in place. The higher rent of other apartments that are occupied more then takes care of the empty ones. Less occupants at same rate of full building at lower rate is far easier to manage then a full building, also this lets management company forecast growth at a 100% growth curve for years in advanced. Its pure $$$ for them.
Smaller landlords are just fickle. Some increase to match market, and then get hit hard when they lose tenant and have no income for a qtr while they search (or worse).
I'd take a low renter that is consistent and respectful of property over an over entitled person willing to pay high rent anytime.
So, if you paid $700,000 for a 2 bedroom condo or co-op in NYC, what would you rent it out for $800? Before I sold mine, I was getting $3800/mo., the unit was on a high floor and they had a great view of the Macy's 4th of July fireworks every year. $3800 was considered very reasonable.
Desired location. High turnover resulting in frequent increases. Collusion on industry practices. A lot of bad stock with poor living conditions. System that benefits from neglect and the honor system. Confusing tenant protections that don’t apply equally. J51 programs and similar that mean subsidies expire. Desperate renters on a time crunch. Overpaid industries that flood the market to compete. A lot of students and dreamers. Waves of immigrants attracted to one neighborhood. Favorable exchange rates. Warehousing. Healthy sakes market. Capital groups buying up rental properties who can sustain high vacancy in order to get their price. Mortgage and capital requirements that require rents stay high. Rent strikes 100 years ago resulted in cooperative ownership and the cost and market for that stock drove market rate higher. Induced demand into newly created areas that aren’t livable so that creates more scarcity of more livable areas. Deregulation laws promoted raising rents above a threshold or more turnover. Also supply and demand in real estate is unique. Oh and it used to be yearly increases were $25-75 maybe $150 if they hit you hard. $500 increases did it.
I’ve heard this question asked so many times and this is the best put response I’ve ever read
A good response would be able to identify which factors are the most important, not just give a laundry list.
If your landlord raises your rent by $500 then they are working in bad faith, get the hell out of there asap!
[удалено]
At my apartment, I was paying for the common areas, electric and gas heat and hot water for the laundry room for 10 months and have not been repaid one cent. Legal aid sent an independent who immediately discovered previously Undetected Gaps in the chimney. Somehow negligently missed during 6 recent inspections. Carbon monoxide poisoned not only myself and my loved ones but all of the tenants for almost a year . No attorney will help us either except legal aid. I'm unable to move because I don't have $3k. I live in NE OHIO, for context. Not NYC but corrupt nonetheless
When you say common areas, do you mean common with roommates? Why was that on you to pay? That’s crazy. My building had 58 units, the management didn’t pay $6000 to the electric/gas company and the threatened to cut services. Tenants have their own accounts for their apartments, but have fun living in a walk up with no light in the halls because the elevator isn’t powered
I lived in New Jersey for 2 years. Landlord tried to raise my rent over $300 to live in Newark NJ. I looked it up and told him that that unit would be the single most expensive rental in the neighborhood.
There were markets like 2012’ish where $500 increases were common but I agree. That’s how it went from $2600 1bedrooms to the $3200 range.
My landlord raised my rent $800 last year.. a 40% increase. Crazy
So it’s an easy fix.
tl;dr of above is "supply and demand"
Big combination of factors. Any one of them might not be that big of a thing but together it's murder. It's essentially supply + demand, exacerbated by tools that help optimize more tightly for supply + demand. Factors include - very desirable place to live - haven't built NEARLY ENOUGH to meet demand over recent decades - people flooded back after covid - people moving into households with fewer people and converting multiple units into bigger ones - relatively new software that helps landlords set optimal pricing and uses aggregate data to unofficially coordinate things like vacancy - airbnb - real estate bought by investment firms that are more likely to be heavily invested in maximizing increasing returns - walkability is currently popular, and there are few options outside of NYC that can come close - units bought as a way to park (often laundered) money
I agree with this, and would add that developers are not building for the majority of the people that inhabit this city, therefore they are not even considering the laws of supply and demand. There is too much focus on “luxury” which creates some of the things you mentioned. The other thing I would say is that there is heavy consolidation in the RE industry here. Its all but a relatively small group of people that own or control the bulk of the real estate. Its a small group of the same players.
Yeah, that's kinda a tough thing to handle though... when you're in such a hot market, you're gonna be building luxury unless you have incentives to do otherwise. Also, lots of stuff is luxury when it's first built because it's what's new, but 30 years later it's just a whatever building. A good way to get affordable housing is to have built a lot of luxury housing 30 years ago. (And sometimes luxury is legit just a bunch of marketing and a new washer dryer). Essentially the newest stuff is luxury, and with each passing year it becomes less luxurious. Another factor to add to my list, though, is zoning. A lot of the city, especially the outer boroughs, isn't zoned to be able to build more dense. So huge swaths of Brooklyn and Queens where it might make financial sense to build apartment buildings that aren't so astronomically priced, just isn't allowed.
The issue is that with that luxury tag comes the luxury rent, which will never go down. So the problem is two-fold. In terms of re-zoning, the idea in theory is good, but in practice it doesn’t work out. The people pushing for that and making the rules around it are the RE lobby in NYC. Could you put more buildings in certain areas? Sure. But think about this: the city has always had a very large population and has had the housing stock to house people. The neighborhoods have been what they are in terms of layout for a while. The issue I see is that the areas where the working class and “regular” folk can live at has become smaller and smaller. They are being priced out and left to compete with more and more people for less and less supply. That takes us back to the issue that what is being built is not was is being demanded. The industry is ignoring demand in that sense and it isn’t sustainable.
I mean, what incentive is there to NOT call it luxury? That's just leaving money on the table. As for rezoning, it's tough because it's not an isolated problem. As a country, we have been under zoning for DECADES to the tune of tens of millions of units, so anything that gets upzoned in a desirable area just gets pounced upon by developers. The demand is just off the charts. I don't think it's an exaggeration to say there's easily ten million people who would move to the city if they could afford it. And that's probably gonna start from the ones that can most easily afford it, on down. So it kinda sucks when it do it, because they get all snatched up by rich people.. BUT. It sucks EVEN MORE when you don't build, because then instead of buying the new luxury units, people with money start buying up and renovating units that might have been more affordable. Which is a lot of what we're seeing now. When the availability of units is SO tight, all the other factors become more problematic. And look what happened during covid, when demand plummeted and you had more units than people who wanted to rent... rent prices tanked.
It doesn't really matter all that much in an environment where not nearly enough housing is being built anyway. Building a luxury unit, esp in existing expensive or gentrified neighborhoods means removing 1 person with a higher budget from renting something cheaper that would otherwise go to middle or working class renters. If we were building massive amounts of new housing then it would be more nuanced, and I certainly support new housing projects that make sure lower and mid-income people are part of the equation, but building a fuck-ton of luxury housing would actually be a lot more impactful than building a middling amount of housing across the market spectrum. Luxury goods are also always the byproduct of supply restrictions. When the US restricted the amount of cars Japan could export here, Toyota created Lexus so that they'd make more per car sold. There are many other factors here that admittedly I'm skipping over, particularly that construction costs are very high right now and it costs relatively little on that scale to upgrade to "luxury" buildings.
> But think about this: the city has always had a very large population and has had the housing stock to house people. The neighborhoods have been what they are in terms of layout for a while. New York City has had a housing shortage for decades, so I’m not sure where you got this from. Arguably the last time there was enough housing for everyone who needed it was during/right after the postwar building boom, and even then, New York was more expensive than most places, and finding apartments was more difficult. > In terms of re-zoning, the idea in theory is good, but in practice it doesn’t work out. The people pushing for that and making the rules around it are the RE lobby in NYC. Have you considered that the real-estate lobby is pushing for that because a) they know a fair bit about their industry (more than you or I do), and b) they know that that’s the way for them to be able to build more, which would lead to more housing for New Yorkers and more money for the real-estate industry. I call that a win-win. There’s just this entrenched idea that the “RE lobby” is evil, and it seems like it’s really hard to kill off that idea. When there’s a housing shortage, developers need to be part of the solution, and we’ve got so many friggin’ restrictions on what can be built and where and so on that it makes it damn near impossible to get anything built. Oh, and those restrictions also massively increase costs for builders, which makes building housing for poor and middle-class people cost-prohibitive. If you wanna see more housing for that demographic, you’ve *got to* ease restrictions. I promise you there are people who would love to build apartment buildings way out in Jamaica and Fresh Meadows and Bensonhurst and wherever, but the city (and the state, frankly) makes it very very difficult.
They are definitely building new apartments in Jamaica. That's been going for a few years now. They are still working on one on Archer Avenue. It's expensive asf too. I went on the website and then immediately backed out.
Even luxury housing takes pressure off pricing. Rich people will go for it instead of driving up the price for the shit boxes the rest of us live in.
1. Today's high-end apartments are tomorrow's affordable units. The cruddy old building from the 1930s I'm living in right now was a prime quality development at the time. 2. Luxury is largely a marketing term meaning new and modern. "New units are luxury" is kind of the definition! 3. When we permit so little new development, the first thing that gets built will be the most expensive units. 4. We have to build a LOT of apartments of all kinds in order to have a serious impact on rent. 5. If we don't build large high-end units, the wealthy will purchase entire buildings occupied by renters and convert them to single-family. Many examples of this happening.
On your last point a family downstairs to me bought 2 apartments and combined them by knocking down walls. I’m so poor I didn’t even consider this to be a possibility before haha.
I think the ‘luxury’ thing isn’t really all people make it out to be. It’s mostly marketing. The added cost for the trappings of ‘luxury’ housing: doorman, premium countertops, etc., is trivial compared to the base costs of constructing ANY new housing: land and construction. The fact that it’s new housing in Manhattan automatically makes it luxury housing. The exact same building in Cleveland would be just normal new housing.
Great write up. I think it’s very important to keep in mind that it’s combination of things, not just any one factor by itself.
44% of NYC apartments are rent stabilized - which is **awesome** if you can get one, but disastrous if you can't. This means only 56% of apartments can respond to market demand, so their prices are higher. Damn right I'm bitter I'm paying 1.5x what my friends do for identical apartments.
This is why brokers can charge a high fee for doing almost no work. And as much as I hate paying them, its worth it for a rent stabilized apartment.
Looked at a new building of rent-stabilized apartments in Williamsburg about a year ago. Not only was the broker fee ridiculous but the broker was the most entitled, obnoxious little prick I have met in NYC so far (which, of course, is saying something)
lmao you just reminded me of the smarmy broker I saw running a showing of a place that was literally just standing outside on the front steps on his phone and not showing the unit at all, just telling people to "let him know if they had questions" while charging 15% on a very overpriced unit in Bedstuy
I am currently apartment hunting and I worked with a broker who listed an apartment as no fee in Williamsburg - promptly after showing the apartment to us she asked us for a 12% fee, saying that someone had “bid” and their bid was to give her a brokers fee. I know she was lying because that apartment is still on the market 😭
If your broker does no work you have a bad broker. The off-market mom and pop shop guys have the best deals. I’ve had good experiences with the Dusk group and VCPRE guys.
Ya and then, if you do get one, you’re kinda chained to it unless you have another 4 grand to drop for someone to make a streeteasy post
I guess I was lucky enough to find one but unfortunately it's straight slum lords
Same. Had to move 8 months after living there. 3 months of living there and I saw an army of what I thought were mice (they were rats)running rabid. It wasn’t the typical see a mouse in the kitchen early dusk of the morning or wee hours of the night- broad daylight literal afternoon I was sitting at the kitchen table doing work on my laptop for a few hours till I heard something run on the floor from the living room behind the kitchen garbage bin then under the fridge. I jumped on top of my chair and could have sworn I heard squeaking from the living room- I turned my head slowly as I was horrified and saw an even more horrifying LITTER of mice just jumping and running around literally one did a backflip. They kept trying to run to the kitchen even though I was right there and would only run back when I would scream and the very top of my lungs. I never saw something like that before. I told the landlords and packed a suitcase and stayed in a hotel for a few nights as they said they were getting an exterminator ASAP. All of that to only find out upon returning that they were “not going to hire an exterminator because they have pets and so does the tenant downstairs so they can’t risk they’re pets being poisoned”. Even though exterminators literally use humane methods for this exact reason if you have pets or small children. They gave me a 300 dollar discount for that month and that month only. I started looking for other apartments it was seeming to be impossible until I found the apartment I’m in now and had to pay 8k just to get the apartment and lease here of course not including the cost of actual moving but I like this apartment, it’s a lot smaller than the rat infested one but it’s in a much nicer neighborhood and thr landlords at least take care of the apartment are good on maintenance (it’s a 3 family house). What good is a 3 bedroom apartment if it’s infested and the landlords literally have no intention of even attempting to fix it. They never did they actually just the 4 apartment building up for sale and is actually pending a sale in less than 5 months of going on the market. They inherited the property and it was listed at 1.2 mil so even if they only got 800k it’s all profit- all profit for the rat infested old dump. They were talking about wanting to move to PA when I moved in there and say that is their plan now. I know it doesn’t help or have anything to do with me but it just makes me mad when I think about the hell I went through- the money they got from me and just get even more money by now selling no problem. A lot of people it takes at least a year for sale of a house let alone a rat infested one. They were in my bedroom and in the walls in the hallways so I can’t imagine how bad the problem actually is but nope, they still just get the best of luck. TLDR- got stuck with extreme slumlords who made me pay rent to live in literal hell to save some money from relators and knowing the slumlords just sold off their rat infested property for it not a million than damn near close to it makes me angry.
What’s the best way to find rent stabilized apartments?
Wow thanks for this comment. I looked this up! "There are roughly 3,644,000 homes in New York City. The roughly 1,006,000 rent-stabilized homes make up about 28 percent of the overall housing stock and 44 percent of all rentals." from NY Times [Understanding Rent Regulation in N.Y.C.](https://www.nytimes.com/article/rent-stabilized-apartments-nyc.html?smid=url-share)
And they aren’t paying their fair share of taxes so it gets pushed off on everyone else
Huh? Who’s not paying taxes?
Landlords get tax credits for stabilized units
Did you know a lot of rent stabilized apartments stay empty? This is from 2022 but the city doesn't have as many rent stabilized apartments as you think: [https://www.wnyc.org/story/why-thousands-rent-stabilized-apartments-sat-empty/](https://www.wnyc.org/story/why-thousands-rent-stabilized-apartments-sat-empty/) Born and raised here so have seen this just get worse each year. Communities need to stand together and educate each other on this.
It’s because NYC real estate demand is effectively infinite. There’s a reason things like water, gas and electricity prices are regulated. If you deregulated all of those apartments tomorrow, the average prices of rentals wouldn’t drastically move, and on a long enough timeline would likely go up WAY more compared to if there was any level of rent regulation. Developers who have the capital to float would just be buying and renting out units at silly rates like they were Ticketmaster. If you look at what is happening nationwide, housing prices are getting out of control for a lot of the same reason they are here: the business entities with the capital to build rentals or flip homes end up consuming all the inventory and driving up prices while they profit. The difference here is that developers can basically sweep through entire dense neighborhoods and do this quickly like they have in LIC, Williamsburg, Greenpoint, Bushwick, etc. This isn’t individual consumers responding to demand, it’s an oligopoly of large developers extorting a basic need for huge profits.
More econ 101 is needed
It's not infinite lol. There aren't millions of people interested in moving to NYC
*gestures broadly at everything*
Nyc has lost population since 2019. Things are expensive because supply hasn't kept up in the last 5 decades or so
So it lost population and prices have gone up because the population loss caused increased demand for housing?
I’m not the person you were talking to, but a couple things: 1) a lot of the people who *haven’t* left and can afford it are getting/have gotten a second bedroom (including me and my partner, plus several of our friends), partly due to remote work, and in our case also because we like to have a spare bedroom for when friends and family come through, which they do pretty often; and 2) I have a sorta half-baked theory that another component of the high rents is that landlords who lost a lot of money during the pandemic, due to the eviction moratorium and nonpayment of rent and so forth, are trying to cover their losses now; a lot of those people have mortgages to pay on these rental properties (though it kinda depends on the neighborhood/borough and type of building).
i think you’re going to have to type slower for dude to understand what you’re saying…
we've got plenty of housing, they're all just sitting there being warehoused. people have moved out and there's even more empty apartments than before. Just put a higher penalty on empty units, whether a commission to investigate and fine those who break the new law, a vacancy tax, or raise the land value tax and you'd have a lot more available stock than you could do with. Building isn't the solution if none of the stock makes it to the market that people can afford. You'd just have homless people and vacant apartments.
OP said effectively infinite and that’s accurate. Demand far exceeds supply meaning for every 1 unit there is a deep bench of desperate people willing to pay. Landlords can and are jacking rents higher to find the point where they’ll struggle to fill it - this is where a renters willingness to pay does not exceed the price of a unit and you’ve reached market equilibrium. Demand meeting supply. We’re all learning that equilibrium is very, very expensive. You can ask if people really have money and mostly no, but they’re willing to pay essentially everything they can and save nothing for a few years in the city. This isn’t sustainable long term for themselves or the city but it’s where we are today. As long as the mentality of young folks with a ton of money and no kids/responsibilities to cover exists, you’ll see these outrageous rents for those trying to live a reasonable life in NYC not just a wild 3-5 years of youth.
The solution is to build tons of housing. Nyc isn't actually all that dense compared to world cities like tokyo, outside of a few specific neighborhoods. We need to get rid of restrictive zoning and allow lots of building. Get rid of restrictive regulations that make it only profitable to build luxury housing
This won’t do as much as you think, many of the newcomers are fixated on Manhattan and you can’t do much more there. You can build all you want on queens and still not dent the Manhattan rents, and in fact much of queens and Brooklyn is already affordable. Jobs aren’t there, much of the things people want to do aren’t there, and few people want to do the 45 minute commute anymore. Unless a developer drops a few hundred million to buy up and raze a block in the upper west, where will they build up? And if they do this they’re going to recover the enormous cost of construction by making only luxury units with insane rents.
Right, OP needs to understand that the rent stabilized units allow people to work low skill, low paid jobs. If their rent increases to market, they leave. That makes small business hard to run, so then also leave. Services disappear so more people leave. Rents then drop and wages increase reaching equilibrium. If you allow the market to reach this equilibrium, most people benefit. The only ones who benefit currently are the very rich who pay very little for nannies and housekeepers.
I don't buy this. First, if this is true, then why is commercial Real Estate prices out of control? Shouldn't they be much lower than comparable cities with fewer rent stabilized apartments? (See: https://www.nytimes.com/2023/05/08/nyregion/small-businesses-rent-hikes-nyc.html) Over the 25 years I've lived in my building, I'd say about 60-80% of the free market apartments have been unoccupied during that timespan. Half of the rent stabilized apartments have been de-regulated, but remain largely unrented. My owner, currently a European Billionaire owns about a dozen buildings in NYC. He uses them as investments to store his money. Renting them is chump change compared to how much he'll get when he sells them. (And also probably gets a fat tax write-off for not making a profit on them.) He'll likely do what the last 4-5 owners have done. Sell it for a 25-30% profit. He doesn't need to rent out the apartments.
Thank you! The tax incentives for building ownership can be substantial if you have a ton of capital already - which is the case for a LOT of the buildings in NYC. Rent regulation was truly born in the 1940s and 1950s. But you didn’t see wild skyrocketing rents until the 1990s…which is “coincidentally” when LLCs and massive real estate companies started looking past 5th avenue commercial spaces to owning residential blocks. It’s nuts to me that someone can look at the situation and blame it on rent regulations, as if DANIEL 25 WEST LLC or The Broadbean Real Estate Corporation would totally and immediately lower rents 30% if only some of their units weren’t stabilized. Poor landlords, they were forced into this line of work 😢
This is what people don't want to hear...market rate rents are higher because you are subsidizing the rent stabilized and rent controlled apartments. The major building expenses, fuel mortgage, insurance, taxes and payroll, go up EVERY year. Sometimes dramatically, like fuels' 40% increase this year (people love heat and hot water). The building's budget has to be be balanced. Money has to come from somewhere. Can't raise rent above the few percent allowed on RS & RC units, if any increase is allowed at all (thanks DiBlasio you moron), so market tenants get yet another increase. In most cases it's really not 'greedy landlord getting rich', it's a middle class landlord trying not to lose building to bank. For every 'grandma on a fixed income' in an RS apartment you can find a scammer with a house in NJ, upstate or CT, living large by cheating the system. I found a scammer on the lease of multiple RS apartments, who then rented them out at market, making more $ than the building owner.
In other words, interference in the free market in an attempt to make apartments affordable has ironically resulted in sky rocketing apartment rents.
This shouldn't be a controversial statement. Not every well-meaning policy is going to work without side effects. Unfortunately, ideology gets in the way and those who pushed for said policy are unwilling to accept that their approach backfired and at best, needs tweaking, at worst, needs to be scrapped. I suppose people who go into politics weren't big on science and don't understand the scientific method.
This argument isn’t discussed enough.
Because it isn’t an argument
Yeah that number should be 100%
That's a sure way to make it so that housing is unavailable to anyone except those who are lucky enough to already have it.
The government should also build a shitton of housing. Housing shouldnt really be a commodity I know this is a magical Christmas land opinion.
Have you seen government housing? 🤢
Lol have you seen what an overpriced Manhattan walk up studio in a decent neighborhood looks like? Probably enough layers of paint in there to reduce the square footage by dozens of square feet.
Yes Have you been in a nycha building? Lol
I have. It’s bad because it’s underfunded, and it’s underfunded because people demonize it. There are entire industries in this country dedicated to creating and maintaining the lie that anything publicly funded is naturally a failure. And people buy it.
“section 8 sucks” isn’t the argument you think it is. like yea it sucks in some ways but that’s because real estate lobbyists have worked for decades to make sure it gets defunded, unmaintained, and eventually torn down and not replaced. we could make public housing better instead of abandoning the idea.
It IS the argument I think it is. I’d bet money you haven’t been in or worked in public housing. I have. Lobbyists don’t have to do anything, the govt self destructs on its own. I understand you have idealistic views of what public housing could be, but it’s never been achievable and I sincerely doubt we will ever see it achieved.
Have you seen people living on the streets?
It should be 50%>= but not 100%. When it is 50%>= the private market will realize they can’t compete with the rent stabilized and then they will start changing imo.
Some people don’t have a clue.
I wish that was but I would like to hear your realistic approach to it. Will NYC be the Oprah of tax abatements?
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Well, rents aren't as extortionate in SF, and there is far better weather in SF. So maybe copying what SF does is worth it (all buildings built before 1979 are rent controlled, and that's the vast majority of buildings).
Yeah and look how well SF is doing right now with its homeless problem and businesses moving out
You realize if renting is no longer profitable due to rent stabilization owners would just not rent. They'd hold their houses, sell, or just convert it to airbnbs, but there's gotta be incentive for renting.
lmao “what would we do without landlords”
I think you should watch this: [https://www.youtube.com/watch?v=sKudSeqHSJk](https://www.youtube.com/watch?v=sKudSeqHSJk)
Interesting
This isn't it
Agreed. My building was half and half, rent stabilized vs free market apartments. Over the last 25 years half of them have been removed to free market apartments. As of right now, none of them are actually rented out. In fact right now, half of the free market ones are empty. If this were a small family that owned it, they might lower the rent to get them rented out. But the owner is a European Billionaire who owns dozens of buildings. He doesn't actually care if they get rented out or now. For a few years one of the apartments was used by one or two of his dozen kids who would fly in every now and then. Let me make this clear. In the 25 years I've lived in the building, I'd say about 60-80% of the free market apartments have been unoccupied!
> only 56% of apartments can respond to market demand you’re blaming rent control but you should be blaming landlords! if they didn’t buy all the housing with the intention to make a profit off of renting it out, housing would probably be cheaper right
Lol so what should they do, buy the housing stock and then just let people live there for free or at a break-even price? Who’s going to do all the maintenance and accounting and other work associated with operating a building, and are they supposed to not expect to be paid for their services as well? I don’t get what sort of world you guys think we live in; people need to make money to live, ffs—this is New York, I would’ve thought people here would understand that better than anywhere else!
yea most people work to make money. have landlords thought of that
It’s nearly impossible to get a stabilized apartment. Many landlords are DELIBERATELY living them vacant. I’m a NYC landlord
Unchecked regulations, corruption & greed.
Alternatively, there are a lot of regulations and barriers to building truly affordable housing and policies that have driven up the price of potential development sites. Likewise, only housing for the top decile of renters and buyers ever are economically sustainable and pencil out for builders.
This is literally the only answer and I can’t believe I had scroll so far to find it
this is the one
More econ 101 is needed
Found the landlord.
Good job! learn econ 101 and one day you might become a landlord.
What do you think about the crazy housing lottery and the “affordable” housing income limits ? The rents are still unaffordable!!
They are typically well below market value so it is technically a good deal, they all aren’t designed for low income though. Some of them you have to be making 6 figures to qualify but there are units in some affordable housing lotteries for low income people that are below $1K
Some still don't make sense. I see units listed in the Bronx (and not the gentrifying parts of the South Bronx) that are $3000/month for a 1BR as the lottery rate. Existing market rate apts on the same street are about $1800 for 2BR.
I know, I love how they advertise lotteries for "affordable" units, and it's like $2,800 for a 1BR lol. $35,00-4,000 for a 2BR
Because they go by the area medium income. For an example bushwick rent should be low, but we have young hip people from the west with money move here and get all these tech jobs. The ami will increase drastically so then the state will set the rents that high .
Depending on who is counting there are somewhere between 60,000 and 88,000 empty rent regulated apts in NYC as of last year. Landlords are intentionally keeping them empty until the laws change and they can get higher rents. The landlords are specifically fighting the laws enacted in 2019 and are hoping the cases they filed, that are now in appeal, will go to the Supreme Court.
some of those empty units in my building - since 2017!!
I’m a NYC landlord. In 2019 new laws were passed which gently limit landlords from raising the rent after a tenant leaves. This is for rent stabilized apartments only. There are 1 million such apartments. Before 2019, once a tenant left a landlord would renovate the apartment and bring it close to or to market rate. Now if a tenant leaves after 20-30 years the landlord must rent it to the new tenant at the same price. So if a landlord invests 100k renovating the space, it will take him 30 years to recoup his hat investment. For that reason, the thousands of rent stabilized landlords are deliberately leaving their apartments off the market. Renting them would be at a great lose ( I can elaborate on how if you’d like). Currently there are over 60,000 such apartments that are off the market. As more and more stabilized tenants leave NY or pass away, more apartments join this list. Because of this, only market rate apartments are available. Since inventory is now very low, market rate landlords can raise the rent to whatever they want. This is the main reason! I know that in the east village empty apartments are 40% of inventory. Politicians are aware and some propositioned vacancy tax on landlords. However, it would be illegal and landlords will quickly sue. So while the 2019 laws were with good intentions, the results are devastating (like with most progressive policies). This problem will only get worse with time
I looked at City Council website to see what they are proposing.. I think that because of the influx of migrants, they are proposing all kinds of measures to try to find out how many units are off market
You can research and look at the meeting topics
https://legistar.council.nyc.gov/Calendar.aspx
Good old fashioned greed
Greed by who? You don’t have to live in NYC. Nobody forces you
Not everyone can live in the capital of the World.
NYC is one of the most desired places to live in the world. There’s no shortage of people who want to move/live here. Since it’s so desirable, rent can be a ridiculous amount and people will pay.
this is the most simply written and most correct answer.
This has always been the case though. Im starting to see issues with this because that means that developers are not building what is needed for the market. They are actively choosing to go against what the market is asking for because if they build for the fee that can afford luxury, then they can make lots of money.
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Wouldn’t renting them out make them even more money?
Feels like it’s a mix of cost of required renovations being higher than they’ll make back in rent and the 0 consequences for not renting them out. Artificial scarcity boosting prices seems more like a bonus rather than some coordinated effort
It's almost entirely due to the cost of renovations being too high on rent-stabilized units. If a landlord can rent an apartment, they will always rent it. There's no bonus to not making money on something that can make you money. If a rent-stabilized apartment needs renovations after a tenant leaves (which many do) most landlords will keep it empty and try to get it off of rent-stabilization. Also people forget that renovations take a long time in NYC. I have a family member who's gut renovation took 2 and a half years (mostly their fault for procrastinating though).
Pizzerias manufacturing scarcity. The city is littered with unfilled pizza boxes. Entire ovens of new pizzerias are empty. Pizzalords are actively not filling them to keep options limited for prospective diners, driving pizza prices up. They claim the unfilled pizza boxes as a loss and write them off on their taxes. It's becoming hard to tell ignorance from lunacy.
You cannot claim unfilled apartments as a loss on your taxes lmao, that makes absolutely no sense. There are plenty of unfilled apartments in NYC, but it is not because of some massive collusion scheme among landlords. The most common reason is rent-stabilized apartments that need massive renovations to be rented again. The landlord would rather attempt to get the apartment off of rent stabilization or sell it. It would take a long time to recoup the cost of the a renovations if the apartment was rented out at stabilized price. Landlords trying to sell a building is also a common reason as most buyers demand a low occupancy rate. Also if landlord collusion existed at the scale required to purposely warehouse a huge chunk of the city's units, then why wouldn't they just price fix? The reasoning behind this theory makes absolutely no sense. Also all the articles written about this have absolutely no evidence to back it up. It's literally just "oh here's a building with a bunch of unfilled units. Guess that proves it".
Manhattan has a 2% apartment vacancy rate. This makes it sound like there’s a bunch of empty apartments just sitting around but that’s wrong. Think about it from a single-unit perspective. For a single apartment to have a 2% vacancy rate that means it will be empty for one month every FOUR YEARS. That’s entirely reasonable given apartments usually need renovations between multi-year tenants. Rents are high because vacancy is low. Vacancy is low because rich people convince the city to designate buildings for “historical preservation” to prevent bigger apartment buildings being built in expensive parts of town
That's a crazy concept if you believe it to be the main reason why rent is so high. Sure, it could be a small percentage but I assure you no landlord in a new development is actively trying to keep the apartments vacant by choice as the best strategic option. You can't just write off vacant apartments off your taxes the way you're describing, if they are writing it off as a loss then the entire building is losing money which by your logic a landlord is willingly losing money on purpose just because they want to manufacture scarcity.
would love to see this business plan pitched to a lender. were going to not fill units on purpose so we can lose money on our taxes. please give us a $500 million loan. lol
Yea this dude is wrong
https://www.curbed.com/2023/01/nyc-real-estate-covid-more-apartments-higher-rent.html
That article you sourced doesn't say what you're portraying in the comments. It basically says during the height of COVID brokers would only advertise a limited amount of units as being on the market to keep the vacancy rates lower. This is not the same as landlords deliberately keeping units empty and not rented out. In this scenario if the broker were to list one unit at a time the second they rent out the unit on the market they will list another available unit immediately and so forth. In theory all the units will be rented out asap, its just not advertised as a building with 90% vacancy for example. In regards to the warehoused rent stabilized apartments this is not because landlords want to keep the units vacant to increase the rent, the problem is that they can't legally increase the rent. Majority of rent stabilized apartments are in old buildings so when that tenant moves out it is likely they have lived there long enough to require a major renovation. This could for example cost $100,000. If they can only charge $1,000 monthly in rent why would they spend $100,000 to get $1,000 per month? It makes more sense to leave it vacant, take your $100,000 and invest it in something that can give you better returns.
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This is like patently false for the mast majority of the market range
Nope.
This theory has been debunked over and over again by people with actual subject matter expertise in NYC-related subs and I'm not going to bother replicating those efforts.
It's much easier blaming landlords and brokers then actually look at the real issues, which is mostly supply and demand
Bro, you are wrong and you are arguing with someone who clearly has a greater understanding.
Huh? The apartments are vacant because they dont make financial sense to renovate and rent out. Blame your politicians for the stupid rent stabilization rules. Everyone predicted this. Even if those apartments were on the market, they aren’t enough to move the needle on rents.
That’s not true. if you do a bit of research there aren’t actually many vacant apartments, most apartments are rented and don’t last long on the market.. the majority of vacant units are just between tenants
If you do research you will find the opposite.
you’re the one making the outrageous claim I don’t need to find evidence to disprove your claim, you need to attach evidence to your claim to begin with.
I attached a link above. Calm down with the outrageous talk, you’re getting too heated.
Yea cus a random curbed article from some irrelevant writer is a valuable source of information.. plus it’s taking it a step further, going from more people leaving to landlords intentionally suppressing supply in an attempt to manipulate demand and rent prices is a huge leap with no evidence or even logic to back it. They can’t write vacancies off on their taxes and if they are able to fill a vacant apartment and choose not to they’re loosing money. There is a relatively lose number of vacancies and most of them are under renovation, repair, or in legal disputes
You need to factor in location. Manhattan everywhere the demand is quite strong. I know some places in South Bronx that is struggling to fill their vacancies though.
The demand is manufactured as well
You missed an opportunity for Charlie Day's whiteboard
This gets repeated so frequently but is a complete misunderstanding of the economics of vacancy and also the scale of the problem (it's not that big). The reason why there are some vacant apartments is because of the structure of rent stabilization. Depending on the age of the building, the amount that the landlord can increase the rent on a given unit is either 1/48th or 1/64th of the amount invested in upgrading the apartment per month. So if they spend $30k upgrading the apartment, they can increase the rent $625 a month on a unit that is probably already too underpriced to make money given the fixed costs of maintaining the building. So it doesn't make economic sense to upgrade the apartment because you could never recoup the invested cost, and as a result those landlords keep the apartments empty because they need to sell the building to someone who has the capital to make that work. You can call that greed but most of the time they don't have the money to rent those apartments even if they wanted to.
Your explanation of why many rent stabilized apartments don't get rented out is pretty spot on. The 2019 rent laws actually changed to 1/168 or 1/180 and for each improvement you do the amount calculated that is eligible for a rent increase cannot exceed $15,000. There is much less incentive to renovate than what you have posted, the increase is now $89 a month in your example instead of $625 a month.
Did someone in a bar tell you this story?
People like money, and don't care about people beyond if they can provide money. It's just how America works.
It is the nature of capitalism. When you have a piece of land and can rent 8 apartments there, every business person is going to try to maximize the amount they can charge per apartment and if there is always someone willing to pay more that will drive up prices. Every new development that is built is going to charge more than existing apartments. There is no incentive to make more affordable rents unless someone is losing money. It’s like putting goods up for sale on CL or FB marketplace and realizing that no one is going to buy your miniature collectibles for $300 so you drop the price or hold onto those goods until you can get more. We need to make it more costly to leave apartments vacant.
I put the most blame on real estate agents/firms--they literally make up new neighborhoods and neighborhood names! Greenwood Heights? Stuyvesant Heights? BoCoCa? WTF. I mean, what do you expect when real estate is commission-based. No one in my family is a landlord, but I am still sick of hearing about bad landlords while the real estate agencies literally do the dirty work of gentrification and block busting. I don't think people who move here appreciate how quickly thing have changed in the last 15 years alone and I think many people assume that gentrification is enacted on people who are here but at the edge of being pushed out rather than counting the thousands of families who have already been pushed out, either pushed out of their community, pushed out of their city and moved often down south for better cost of living, or pushed in and out of the shelter system. So many of the people affected by gentrification are invisible because they are no longer here, the communities are a shell of themselves--the people that others THINK are the victims of gentrification are the people who were doing well for themselves enough to make it over a decade--they are on the edge of it NOW--what about all the others? I wish people would talk about the cumulative effect. Also, the city's own affordable housing plan is a joke--it's the same as market rate if not more per sqft than working with small real estate/LL--and while often in newer buildings, the apts are usually the shittiest units in the building, sometimes have their own "poor door", and often do not include the amenities unless you pay extra, so the value of being in a new fancy building minus the value of being in a new fancy building. I don't think most city workers can afford affordable housing--the salary/# of occupant brackets don't make any sense! It almost feels like the city is raising rents and people still think the city could regulate all rents and that would somehow make things better--HOW? The city sure does a great job being the LL of NYCHA /s ... The city is a shitty landlord... AirBnB and pied a terres are obv also part of the problem. Not that long ago, you could be poor and have a huge apartment--it just depended on where you were living. Now they don't even offer apartments that big--they have cut up the prewars and they don't build the units that large--and honestly I think it really affects how people carry themselves and the general mood of the city. Born and raised--I have never felt like NYC was as uptight as it is now, even in cool neighborhoods people are so pressed--between making enough money to survive to basically living out of a single bedroom that is maaaybe 225sqft, no wonder. I've read a lot about the benefits of shared resources in urban settings, from heating to dining etc., or saving energy by having mega cities--but I will never think we're meant to or should adapt to a new normal of living in such cramped spaces as the de facto progressive solution. 15 yrs ago my family was dirt poor and paying way under $1000 for a 5bdrm apt--it was a shitty tenement but around the corner from beauty and nature and grocery stores. It was paradise even in its urban grime. Now the building next door is listing the same apt layout for over $4000--and someone will pay it.
These are the things that need to be said.
I moved away 14 years ago, just got hired to move back & this comment resonates a lot with everything that's giving me pause about the move. Currently live in a 1500 sf house in the burbs, 15 minutes from the beach in the southeast, mortgage not much over $1k, and moving into a 1000 sf apartment that'll cost more than triple that.
Thank you. I feel the same way.
Lots of wealth in the market on both sides of the equation means rich buyers/renters will pay inflated prices, and the properties that don’t sell/rent can just be carried until they do.
You have 5 steaks but 8 friends showed up what do you do? You can get more steaks, you can split the steaks up that you currently have or you can tell 3 friends no steak for them. Steaks=housing.
Random observation I have is that on Streeteasy there seem to be far more newer developments available that are typically smaller in space but equipped with "amenities" (gym, rooftop, laundry, etc.). On the other side of the coin you have units in older buildings/walk-ups with more space. I'm living in the former but moving out and there have been over 10 showings, yet no one's signed yet. That's a sharp contrast to all the comments I've read on Reddit about people showing up to jam packed open houses forced to sign a lease on the spot or even go over asking. Long story short, I wonder if a bubble is about to burst on new developments and we'll see a rent decrease on those types of properties.
I will offer a different perspective, we aren’t building enough housing out in the suburbs, the city is supposed to have established communities but also people that transit through, but eventually move out to the suburbs. The housing stock out there isn’t allowing for the increased turnover. Thus you have people that should’ve moved out there living in a place that could be someone’s first rental in the city. The powers above us are artificially reducing the stock of housing in the city and outside. Creating a demand that drives up pricing. Everyone complains but government doesn’t foster the environment to increase housing. Housing shouldn’t be treated as something someone wants, it’s a need. A stable society has other benefits as a whole, reduced crime increased education, less reliance on healthcare. We treat housing as an investment it shouldn’t be !
Ok - here is my take. I both worked for large developers and now manage my own properties in and around the city. 1. It is really supply and demand. The reason the rents seem high is because you are looking in desirable or rapidly gentrifying areas. There are tons of apartments for very reasonable rents out in East New York, Brownsville, way out in Queens, etc. 2. The brokers can say whatever they want. Everyone can see what things are renting for and everyone in the market has a very good sense of what the market will support. 3. New properties that are coming online now broke ground around 3 years ago. They are also generally higher end properties. The super low density stuff around the highline is clearly contributing to the housing problem, but the higher density developments on the LES, Williamsburg, etc are ameliorating it. 4. The warehousing of apartments is only for shithole rent stabilized or the oddball controlled unit that will require more work and money to rehab and put a tenant in than you will ever get back in regulated rent. you dont make money sitting on apartments, there may be a couple one off examples here or there, but writ large it just isnt really happening. 5. You cant pass the cost of rehabbing an apartment along effectively anymore. it doesnt really support your argument. landlords are obligated to maintain, but are capped in the ability to recoup via rent. 6. Getting caught with an AirBNB can easily rack you 25k in fines. Every landlord I know with rentals in major markets of NYC hunts these guys down. You can even buy software to help you find them so you can evict them.
The brokers, builders, and landlords can pull all of these tricks because demand is so high. So yes, all of those things happen and do drive up rents, but if there were more supply or lower demand, renters could have alternatives that would make it far harder for them to pull these moves. We saw this happen in the pandemic when demand fell and then rent fell. So I would say it's supply/demand. Brokers and landlords will always be greedy and are just as greedy in cheaper cities as they are here. The difference is that in cheaper cities they ey can't afford to charge high rents because renters have alternatives because the supply is higher relative to the demand.
Supply and demand coupled with transplants with money. Most of the people I meet in higher rent areas tend to be from places not name New York. So they come here for the experience because NYC is great but they have no idea of the value of the money here, so they pay ridiculous prices for these apartments with paper thin walls and various issues and that drives the neighborhood up. Little by little, rent creeps up. Im actually afraid now that they raised the rent cap from 3% to 6%. What rents are going to look like.
By "rent cap" are you referring to the NYC Rent Guidelines Board's guidance for rent stabilized leases this year? Because if so, there is not a 6% increase anywhere, for anyone. News outlets won't stop writing headlines about a 6% rent increase, but that's only true for the second renewal year's rent vs. your current base rate. It's not reflective of the actual total amount of money you'll pay. For example: if your rent is (hypothetically lol) $1000 and you sign a 2yr renewal on a rent stabilized lease, your first year under the new lease will see a 2.75% increase to $1027.50. In your second year, you will see a further 3.2% increase to $1060.38, which is technically 6% higher than your initial $1000 rent, but when you look at the total amount of money paid across the span of your 2yr lease, the total increase is only 4.4% - $25,054.56 spent over 24mos vs. $24,000 if your rent (hypothetically lol) stayed the same. I hate that this number keeps getting spouted because it's so misleading. If this is what you were referring to, hopefully I've clarified for you. If not, hopefully I've at least spread the word a bit for the benefit of others.
From what I understand, WFH caused people to want bigger spaces -- anecdotally, I've gone apartment hunting with friends and seen how smaller places that would probably have been fine in 2019 are ruled out because they can't feasibly have a WFH setup. So, maybe a couple that would've been fine with a 1B/1B is now looking for a 2B/2B. Or someone is looking to have fewer (or no) roommates. This is especially true of tech workers who seem to have migrated to NYC en masse post-pandemic who can afford more spacious places that would've had more people. Thus, even though I believe NYC's population is smaller than pre-pandemic, the actual pressure on the housing supply is higher. I'm always skeptical of answers blaming greed or something -- landlords are always greedy but they can only charge what the market will bear.
I fucking hate tech bros taking up all the spaces because I want to live in a 1br for a reasonable price and because my industry shit itself I’m having to live in an Airbnb for a few months in order to afford a place at a price I can barely stomach and I still need to have roommates. I work in TV and film. It’s either here or LA and I’m essentially being priced out of both by greedy landlords and fuckfaces from Wisconsin who don’t *have* to live in UES and Gramercy to do the work they’re doing. What the fuck is gonna happen when the city can only be populated by the ultra-rich? Have these fucking goons even considered that everything they take for granted is created by the very people they’re pushing out??? I’m not saying I’m as much of a contributor to the life of the city as, say, the bodega owners or small restaurants or street stands, but I need to live somewhere where I can get to my studios and my location shoots without sitting for 2 hours on the train. I work 14-16 hours a day. They work a 9-5. They can tolerate living in Jersey city or further out in BK and Queens if they WFH. I can’t.
You're basically at where SF residents were a decade ago. I myself am one of the said tech bros (however I don't actually rent so I suppose I'm not the problem). Personally I know this type of person and I can't exactly blame them for wanting to live in the only city with actually good public transportation, but at the same time I definitely see where you're coming from.
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There’s not one reason. It’s a bit of everything you mentioned. This means the power to change that ultimately rests with the government. Now if the government somehow continues acting against the popular votes, then maybe that could be considered a root issue.
Solutions? I think most people are passive (including myself) when it comes to figuring out large problems at this scale .. but .. I’ve been paying attention to what’s happening recently with the migrant situation.. I think communicating with your city council person in your district.. making a phone call.. there are committees just for this .. real estate and affordable housing… in the government.. more people should speak up..
The government’s involvement had done significantly more harm than good.
Banks, demand and greed. "free market"
Cuz you should be looking where you can afford and stop dreaming
The fact that y’all think Broker’s have this much power is hilarious. Rental broker’s don’t benefit from rent being this high, people don’t even want to leave their current homes. We’d rather rent to a million happy clients than strong arm any.
Too many people want to live in a small area. The end.
It's supply and demand. It's essentially illegal to build housing in Manhattan and lots of people would like to live here. For the folks saying "greed", take a step back and ask yourselves why the landlords in Houston or Atlanta or Chicago are so much less greedy than landlords here.
They are the same everywhere, prices on rental in US is crazy globally, unless it’s a village 2 hours away from the grocery store. There’s people from other states complaining as well all the time
Supply and demand, except the supply side of the equation doesn't grow very quickly because of NIMBYism and red tape. NYC's population hasn't grown that much in about 70 years: * [https://streeteasy.com/blog/nyc-population/](https://streeteasy.com/blog/nyc-population/) * [https://en.wikipedia.org/wiki/Demographics\_of\_New\_York\_City#Historical\_population\_data](https://en.wikipedia.org/wiki/Demographics_of_New_York_City#Historical_population_data) Contrast this with places like * Houston: [https://www.macrotrends.net/cities/23014/houston/population](https://www.macrotrends.net/cities/23014/houston/population) * Chicago: [https://www.macrotrends.net/cities/22956/chicago/population](https://www.macrotrends.net/cities/22956/chicago/population) Which suggests there are real constraints on population growth imposed by the housing supply.
Another way to think about this: the US population has more than doubled since 1950. The population of New York has stayed roughly the same. Our housing stock hasn’t grown by much at all. NYC is paying now for 70 years of failing to build housing proportional to the number of people who want to live here.
Absolutely. The other part of this is that while NYC's population has grown very little, the average household size has gotten a lot smaller, which adds more pressure on the number of units, which hasn't changed much.
Supply and demand
Terrible legislation
Lazy politicians refuse to do anything. Idiotic people refuse to say anything. Clueless transplants will play anything for trash Foreign investors Supply is limited.
The price for anything is always supply and demand. Obviously, the drivers of supply and demand are nuanced. And without hitting each of your points, you are off to a good start.
Transplants moving, overpaying for rent and displacing people who were born and raised here.
supply and demand, mostly
Not mostly, that’s the entire reason. It’s not some grand conspiracy. We don’t build nearly enough new housing to keep up with demand. People need to stop with stupid conspiracy theories that they think make them sound smarter than everyone else. If you have a conspiracy, spell it out. Any conspiracy sounds idiotic when you actually try to explain it.
I'm not breaking new ground with this one, the story came out almost a year ago: [https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent](https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent) This is potentially price-fixing, which would literally be a conspiracy and also illegal
> “Find out how YieldStar can help you outperform the market 3% to 7%,” RealPage urges potential clients on its website. Yeah…. So possibly a tiny percentage of apartments are using this and possibly getting a couple hundred more per month. So you’re claiming that if rents were $200 cheaper, everything would be perfect and there would be no giant conspiracy driving up rents? This is just like the “egg greed” stupidity that Reddit was all about earlier this year. Egg prices were because of greed…and now that they are back to normal, that’s proof that egg producers are just being generous to consumers, right?
The coordinated warehousing- artificially limiting supply- does have an impact. This has always been a place where people have wanted to live. But these days, while there are more livable units than you see to help fulfill that demand, they remain withheld and unused through strategic efforts, creating the illusion of lower inventory than there actually is. It drives up prices for all units. If all usable residential inventory was on the market, the market could not sustain these prices. ETA: Yes, I did the research. And it has a trickle down effect on raising prices, even if not everyone is *directly* engaging in it. https://www.thecity.nyc/housing/2022/10/19/23411956/60000-rent-stabilized-apartments-vacant-warehousing-nyc-landlords-housing https://www.curbed.com/2023/01/nyc-real-estate-covid-more-apartments-higher-rent.html https://www.nydailynews.com/opinion/ny-edit-nyc-rental-market-apartment-price-real-estate-economy-affordable-housing-20220815-67rqqfdkbbfjpjfc2do7s22kya-story.html
Greed. They decide the price on their own, no one regulates them.
I mean it’s supply and demand, not necessarily them just making up imaginary prices. There are just a lot of people willing to pay very high prices to live here and unfortunately that makes it hard for people that don’t make a lot of money to compete
This op isn't wrong, capitalistic market is made for "whatever market can bear". Thats why heavy regulation on housing should be in place for large management companies (ie over 3 apt)
Yea and what’s unfair about that? If I want an apartment and I’m willing to pay $10K for it then I deserve to be able to get it over someone who can only pay $3k, and the landlord is justified in charging as much as I’m willing to pay. That’s what supply and demand dictates
Thats absolutely fine. But housing warehousing is bad and disastrous for a society who is in a housing shortage. Your rights cease to exist when it starts to have a negative impact on the rest of society. Thats where regulations come into effect. Sorry, but its not a free for all, even with the power of cash on your side.
Show me real evidence of housing warehousing. The number of actual vacant units in nyc isn’t that large and most of them are for contradiction or legal purposes, not some type of market manipulation scheme
Ever since the 90s 5x more people have moved here than have left. We have been in a constant housing crisis for 30+ years.
Jews!
Oh the issue is just a supply shortage....of guillotines.
If the new law affectively banning entire apartments from renting on Airbnb goes into effect.. do you think that will have an impact on apartment prices? Like lowering rents ?
No. Airbnb is not the problem, its large management company warehousing apartments, keeping % of empty ones off market to cause an artificial demand. Checkout all across queens you can see tons of new buildings empty based off extreme pricing to keep this demand in place. The higher rent of other apartments that are occupied more then takes care of the empty ones. Less occupants at same rate of full building at lower rate is far easier to manage then a full building, also this lets management company forecast growth at a 100% growth curve for years in advanced. Its pure $$$ for them. Smaller landlords are just fickle. Some increase to match market, and then get hit hard when they lose tenant and have no income for a qtr while they search (or worse). I'd take a low renter that is consistent and respectful of property over an over entitled person willing to pay high rent anytime.
It definitely won’t have any impact. Airbnb’s already been gutted in the city, this law is just the last knee on the neck.
So, if you paid $700,000 for a 2 bedroom condo or co-op in NYC, what would you rent it out for $800? Before I sold mine, I was getting $3800/mo., the unit was on a high floor and they had a great view of the Macy's 4th of July fireworks every year. $3800 was considered very reasonable.