Let's say a one bedroom apartment in Manhattan can be found for as little as $2500 (likely very low), and that AirBnB going rate is $200/night for that same apartment (likely quite a bit higher in reality). They only need to rent the place for 12 nights a month to break even, and they're then free of the hassle of tenant law.
Renters can't sublet their place on AirBnB, only owners can. And you'd select long-term tenants over short-term AirBnB'ers b/c it's less work (or should be). But your point is still valid: the presence of AirBnB can disincentivize a slice of owners to rent to locals.
I'm just saying any study on the negative effects of AirBnB on housing is myopic if it doesn't include arcane rent stabilization/control laws and the obscene price of new construction.
Airbnb is drawing attention to these legal issues, because now, the city has to pretend it cares about legality and enforcement since the power structure has shifted under Airbnb. This seems healthy to me. Our Housing Court in NYC is a joke. On the one had, it allows tenants to represent themselves, which is actually easy to do since it operates more like a community high school principal's office. On the other hand, housing court is a slow, slow process- it is ineffective at providing timely relief to abused tenants, and entirely ineffective at helping with certain types of landlord perpetrated swindling/lying/harassment that's rampant in NYC. The reason it is ineffective for this, is that these issues aren't handled by housing court.(for example if a landlord is rerouting the heating system so that tenants pay for the heating of common areas--a landlord responsibility--that is costing each tenant on average an extra $200 a month-- these tenants can't address this issue in housing court, because housing court doesn't handle this problem. They can't represent themselves. In order for the court to order an inspection by the electric company, these tenants must hire an attorney on retainer in order to force that inspection- otherwise, the landlord will not allow the electric company to inspect.) I'm happy that Airbnb is calling the city's bluff. Hopefully, it will challenge the city to beef up its legal system in all ways. Currently, the landlords are the ones favored by the city, while the tenants are the ones "favored" on unenforceable paper.
By law, my state strictly limits the amount of security deposit a landlord can charge. And none of this calling it "last month's rent" nonsense - legally any monies collected beyond the first month's rent that the landlord is hanging onto is a security deposit no matter what the landlord wants to call it.
I thought this was par for the course.
I just checked and NY has no statutory limit on security deposits. Wow! That seems like a problem.
Landlords can ask for whatever they want within the law, and people can either accept it or go elsewhere. New York, apparently, has no law limiting security deposits. [0]
> Who the hell has 10k lying around just to rent a place?
People (or, perhaps, e.g., their parents) renting in (at least certain parts of) New York City, apparently.
[0] Several other jurisdictions do; California, for instance, limits them two months rent for unfurnished units, three months for furnished units, and increases the limit by half of a months rent for if the tenant brings in a waterbed -- and note that "last months rent" is treated as part of the security deposit limit, so if you break it into "first, last, plus deposit" the deposit part is limited to one months rent for an unfurnished unit, etc.
This is such a waste and hugely frustrating for folks who live and work in these communities trying to find accomodation.
> These properties are barely fully booked during the summer months or holiday/peak seasons, and are empty for weeks at a time in the winter and off-seasons.
> This is such a waste and hugely frustrating for folks who live and work in these communities trying to find accomodation.
A lot of people get a lot of joy out of holidaying somewhere like Scotland in the summer. When there are limited houses and a lot of people who want to use them, there will always be winners and losers. Is it really so implausible that for a house in a scenic rural area, a succession of people renting it for a week or two each over the summer might end up getting more out of it (between them) than someone wanting to live and work in it for a whole year?
Are you really suggesting that just because you live and work in your local (scenic) rural community you couldn't possibly enjoy the surroundings just as much, if not more, than as a few fleeting transient warm bodies with suitcases could? As residents, we're quite proud of our village and surrounding rural lot and deeply care about and appreciate what we have.
Also, and ultimately, it's the local permanent residents that sustain, year round, the two pub/restaurants, the village shop and the assortment of plumber, electrician, carpenters (all of which also provide substantial local employment), not infrequent visitors occupying holiday homes that lie empty for 50% or more of the year.
There's got to be diminishing returns on beautiful surroundings, surely - seeing a mountain for the hundredth or thousandth time can't compete with seeing it for the first time. So better to give dozens of people a chance to see it once than have a few people see it over and over again. (Or if someone really does want to see it over and over again, they can pay what it costs).
> Also, and ultimately, it's the local permanent residents that sustain, year round, the two pub/restaurants, the village shop and the assortment of plumber, electrician, carpenters (all of which also provide substantial local employment), not infrequent visitors occupying holiday homes that lie empty for 50% or more of the year.
Well if tourists are able to pay more for housing than permanent residents then they're probably also going to be spending more on meals out, more likely to want upgraded plumbing or electrics (or damage those in an unfamiliar house).... But assuming you're right, employment is a means to an end, not a goal in itself. If someone has their heart set on a career as a chef or shopkeeper or plumber or electrician or carpenter, good for them, but that doesn't mean they're entitled to do that job in a particularly picturesque place.
lol Who let in the robot?
Obviously not, if all your neighbors are renting out their homes
Assuming you mean AirBNB lets, so of course not all my neighbours are renting out their homes as holiday lets.
If not, then why wouldn't medium to long term tenants also appreciate their village and local surroundings.
1) Build enough housing for everyone, tourists and locals alike. 2) Ban short-term rentals entirely.
Option 1 might alter the surroundings or vibes, but option 2 will destroy the tourist-dependent component of the local economy, which for many places IS the economy.
Yes.
No innovation, just exploitation. Silicon valley.
I fail to see the difference, maybe you could expand?
> In a rural area, if it really comes down to it, people buy
Folks are seeking affordable rents because affordable (and habitable) property to buy is pretty much non-existent.
> or rent a plot of land and throw a prefab home or trailer on it.
Perhaps in your country, good luck with getting away with that in the UK. We've got some fairly strict planning rules that make that kinda thing more or less impossible. Also "renting a plot of land" for this type of use isn't really a thing here.
But "rural" in the US and "rural" in the UK are orders of magnitude apart. There are individual ranches in Texas larger than whole counties in the UK. The kinds of nomadic people that provoke anti-camping laws require a certain population density to support their lifestyle, so in the US, it's usually the NIMBYs that try to ban certain kinds of dwellings on other people's land. It's a question of how many people would even know something is there. If you never even see your mail carrier, you're not going to have a problem erecting any sort of building you want. But if you have neighbors that can see your dwelling from theirs, they will be interested in your private business.
So if you're in the middle of the wind farms and corn farms in northern Indiana, no one cares if you have a manufactured home on your land. If you're on undeveloped land just east of Denver, you can't even pitch a tent on your own property without a permit.
Yes. That's what I was explaining. You can just do that in many rural areas of the U.S.
That's the big difference compared to urban development. You don't need billion dollar loans and a lobbying firm to add solve the problem on the supply side. It's very common for semi-retired middle class people to buy undeveloped land with good highway access, subdivide it, add some housing, and flip it.
The remaining available/eligible land is held by large house builders in their "land banks". Some of these tracts of land have been off the market for years and years, yet nothing ever gets built on them until the house builder decides the time is right to screw the maximum price out of buyers.
I'm kinda hoping that when Scotland does finally become independent we will solve these problems with radical land ownership reform.
Usually you deal with bad 'land hoarding' with a high enough property tax rate. And if you want to avoid effecting the old and the middle class, you add exemptions for primary residences.
Council Tax - a tax on residential properties. Properties fall into one of eight bands, A to H, where A is the least expensive and H is the most expensive. Your council tax bill is made up of the council tax itself which is the largest portion (goes to the council to pay for schools, libraries, street lights, etc). The remaining portion pays for water and sewerage.
Non Domestic Rates - businesses pay these. Water and sewerage are payable in addition. I don't know the ins and outs of how they're calculated.
Unfortunately land hoarding is an unresolved issue in the UK, there isn't as far as I know any penalty or charge - much of this land has no services or business activity so can't be taxed. There have been suggestions by some UK members of parliament that house builders should be forced into a "use it or lose it", thus far there's not been any official position from the government. I suspect the issue will be swept under the table until the next time the media hoves round and puts this back in the spotlight again.
It's considerably less built up than most people think [1-2]. The problem is that our planning laws do not realise that farmland is an ecological desert, and so we're not allowed to build on most of the UK, pushing the value of the little land that can be built on through the roof.
[1] http://www.bbc.co.uk/news/uk-18623096
[2] https://www.telegraph.co.uk/finance/newsbysector/constructio...
Expensive rent in a rural area means people get pushed further away. In the medical practice that my mom worked at, employees commuted as far as 100 miles.
The land as you state is a different story. I love the idea of a disposable trailer home I could replace every 20-30 years with new technology, unfortunately due to social attitudes prefab homes are almost exclusively marketed and built for lower incomes.
Sorry my comment was ambiguous
The land itself does.
Of course, if you keep your home in good repair and updated to modern standards, that will help retain value. But you're effectively selling a new home at that point, and the costs you have sunk into keeping in that way extend well beyond the original value.
Land value is where you normally find the appreciation. The trouble with trailers in a trailer park is that you do not own the land, so what you bear is entirely structure depreciation.
Erm....have you seen what the property market is like in the UK. Most, if not all, property appreciates with little or no major expenditure.
There are exceptions. Markets can do funny things from time to time, form irrational bubbles and whatnot. Even cars sometimes appreciate without any major repair or refurbishment costs. Tulips were once an appreciating asset, as the story goes. But as a rule, things that become outdated, wear out, and die lose value over time.
The reason for this is that it's pretty damned difficult to separate the two, especially physically. Planning laws generally discourage complete demolition of dwellings unless they're pretty much near collapse or there's been a fire that's gutted the place or in more extreme circumstances perhaps all or part of the house has fallen into a sink hole.
In the UK, residential property (the structure bit) is, and has for a long time now been seen as an appreciating asset/investment. As I already said earlier, property here, if lived in and sensibly maintained, isn't considered something that "wears out" like a car body.
It sounds like you're not from the UK so maybe all this is an alien concept.
Edit: I forgot to mention that things get a wee bit more complex, especially in England and Wales because whilst you might own the structure, it's quite common that don't own the land it sits on. This is known as a leasehold, as opposed to a freehold where you the purchaser own the land as well as the building. Buyers of properties that are leasehold purchase their dwelling (typically with a mortgage) but also pay an annual ground rent to the leaseholder by way of a very long term lease (say 99+ years). Once upon a time the ground rent on the lease hold used to be a nominal amount of money, say GBP100/year. However...capitalism being capitalism, it's becoming more common for leasehold ground rent to be seen by certain investment houses as a nifty way of getting paid for doing bugger all. This can and has caused annual ground rents to increase to quite piss-taking levels.
There are some attempts to get parliament to reform this leasehold situation after it was found that new-build housing estates were being sold to buyers on a leasehold basis but the leasehold condition is not made clear to purchasers. It's sneaky, and another way for house builders to extract another bundle of cash by selling off new-build estate leaseholds to some offshored company for a tidy sum leaving the buyers high and dry. It's often possible to buy out the leasehold, but even in the first year of ownership the cost can be prohibitive, especially after shelling out for your new house. It's not unheard of for leaseholders to charge say GBP5000-7000 in the first year and then double the cost each year afterwards, often locking buyers into the leasehold until they're able to sell the property. Then there's also problems and costs associated with renewing a leasehold, but that's a whole other expensive and morale sapping thing.
You are right that I am not from the UK, so perhaps things are different (lots of room for local exceptions, as detailed in previous comments), but where I am from people compare the cost of a home against the cost of other homes, including the cost of buying vacant land and building a new home. The value of the land is implicitly considered because they see the actual value of land when looking at vacant lots and weigh their options.
Wear isn't the only consideration. An old home with low-amperage electricity service and nob and tube wiring that could burn down your home at any minute is less valuable than a home that is up to modern building standards. An old home with virtually no insulation is less valuable than a modern home that is airtight. These older features are more expensive to live with (higher insurance costs, higher energy costs, etc.) and the price has to reflect that. Same reason why a pristine car from the 80s is, in most cases (unless it has special collector value), still going to be worth less than a brand new model of equal original value in constant dollars.
To put it another way, I live in a rural area. The value of my property would be worth almost ten times more if the identical house was situated on land in the nearest major city. The value is the land and where that land is located, not the structure. The structure itself is, in this hypothetical example, identical. If we tore down the houses in both spots, the vacant lot in the major city would still be worth almost ten times more than my now-vacant lot. Houses can be moved – location is the value.
> As I already said earlier, property here, if lived in and sensibly maintained, isn't considered something that "wears out" like a car body.
Even on the timescale of centuries? I don't see many century homes that haven't required major and costly updates to be still usable today. I don't think anyone is suggesting that houses deprecate as quickly as cars.
There are exceptions. Price, of course, is still bound by supply and demand. There are reasons why used home structures may become scarce, while new homes are impossible to build, forcing people to compete for used homes. But this is not exactly typical.
Well....centuries depends on how many centuries and what revolutions, unrest and discord might arise :)
The village I live in (as were a few around this area), was completely razed to the ground during the 1715 Jacobite rebellion. So things kinda hard to start again and many of the houses in the core of the village were rebuilt between 1730'ish to the early 1800's. These old houses are highly valued, also the core village is also an architectural conservation area.
I could discuss this stuff forever but I need to get stuff done today :)
Most value of residential property is in the structure. $/sqft of space is the metric, not the land plot.
I'd rather live in a proper house. But it's pretty common for working class rural Americans to live in mobile or prefab homes on nice properties with gardens, fruit trees, hiking trails, sheds for four wheelers, etc.
Trailer parks, which are dense neighborhoods of mobile homes or tailers, tend to be less nice and inhabited by people in poverty. Though they often have other options, like absolute run-down shacks way outside town.
Point being, there's some distinction in practice and I won't begrudge people living within their means.
Sorry, but not when the 2BR across the hall is renting for $4,000/mo and is on the market for 4 hours before someone gets it. Grandma doesn't have a right to live in the exact same apartment for the rest of her life at the expense of everyone else.
I'd be OK w/it if you have a humane way to implement it but I doubt voters in the city would ever sign off on it.
In California, this isn't a hypothetical. Especially because she pays property taxes as if the thing is worth a number much closer to $20k than $20mil.
I believe the landlord is bound by the language of the law, not the contract. If the law enabling grandma's rent control were fully repealed, there'd be no rent control-related reason the landlord couldn't raise Grandma's rent to market rent. Basically, Grandma AND the landlord both needed to know what they were getting in to.
Grandma: "I want this apartment."
Landlord: "OK, it's $250/month with rent control. But just so you know, if they ever repeal that law, and market rate is more than the $250/month you're paying, I'm raising you rent."
Grandma: "Understood. If I were the landlord, I'd raise the rent on the grandma renting my apartment, too."
I recently moved to an island in Greece. The small town am living in, has the exact same issue that the article is describing, yet even worse.
Everyone, literally EVERYONE, has their apartments/houses/properties that they don't live in, turned into Airbnb's. Doesn't matter if its in the town center or 30 miles out of the town center. Government only just now sort of regulated airbnb renting. (Average rent per month is 300 euros. During the busy period which starts at April and ends November someone can make 100euros a day from that apartment)
Up to now the town I am living in and every single village in its radius, had a massive housing issue. You couldn't find anything to rent. I had an issue with renting as well, and I was well willing to pay way above the normal to get something as I do work for a foreign company that pays me the salary of a western country.
I don't know how much of this applies to New York and if the article is going the right way with it, but I can most definitely reflect my own experience to that article.
I think Airbnb and anything that is similar should get regulated. I think Airbnb came in at a time where laws/regulations weren't in place for such a thing, or were very light, and it made sense for people to rent out their 2nd homes for it. Although it has created a massive issue with finding a home. As I mentioned above someone can make 3 times or more the money that he'd be making in a year of rent from 3-4 months of renting to airbnb.
Another massive issue that Airbnb and similar sites have also created in the area I live in is that the small hotel owners and family hotel owners are getting slowly out of business. That is happening because obviously the massive hotels can offer full packages and whatever and will always be profitable, but smaller ones still have to pay a lot of money on tax, licences and offer some sort of services that an airbnb owner didn't have to up until now in my area. Even now that its sort of regulated, airbnb owners are still going to have a better time than the small hotel owners.
So yes all in all, airbnb and similar sites, create a massive issue and I feel like something should be done about it.
It seems like the issue is a massive housing shortage and the solution is to build more housing.
By taking residential units out of the market, affects of short term rentals are affecting rents in other boroughs as well.
NYC isn’t San Francisco. Rent control is a known quantity that has been around forever, as has been the lack of space in the NY Metro area. AirBnb and similar services bend the supply curve, hurting hotels and renters alike.
Short term rental growth didn’t create all problems, but it makes many worse.
None of this seems relevant to the article. Did you read it before posting?
These are the topics the article covers:
- what percentage of AirBNB hosts are commercial operators that are likely breaking the NYC laws? (12%) - how is renting income distributed? 10% of hosts account for 50% of rentals & revenue. - where are AirBNBs contributed? - how many "ghost hotels" are there in NYC?
I don't think there was a single sentence in the article about affordable housing. There were maybe three or four sentences on rent and each time they reiterated that rents were only up 1.4% due to AirBNB.
I'm guessing you missed the entire section on "The gentrification factor".
The study, and others, claim AirBnB pushes out poor black people from neighborhoods because white owners decrease housing stock by renting out to AirBnb instead of locals.
E.g. "Wachsmuth and his team estimate that the platform raised rents by 1.42 percent in north-central Brooklyn neighborhoods such as Bed-Stuy and Crown Heights." In other words, rents are going up in black neighborhoods. Another quote: "According to the Cox report, black New Yorkers are also the most likely to face housing loss due to Airbnb."
As I said, it's easy to blame AirBnB for this problem and not look at how crazy rent laws distort the market. I don't want to see low-income renters forced out of their homes but AirBnB is only one factor.
Rent control/stabilization laws also remove units from the market, and building new units for anything other than rich people is prohibitively expensive because of red tape, bureaucracy and overpriced cost of NYC-area construction.
So yes, I've read the article. The question is: have you?
However, many people in NYC do not make big money and it comes down to living further away from Manhattan and having roommates. Depending on the industry you're in you can have a huge range in salaries based on experience, your reputation and simple luck.
Multiply that number by at least 5.
So you're saying that affordable housing is preventing housing from being affordable? LOL.
> The endless red tape in new construction makes non-luxury bulidings unprofitable. Want cheaper rents? Fast-track approval for new apt buildings.
Luxury buildings are more profitable because rooms are more spacious (literally requires less construction), you need to make fewer sales to make the same revenue (in a 10 story building you sell 40 condos instead of 80) and buyers are more financially stable (each sale is easier). Removing red tape has nothing to do with that.
There's certainly lots of red tape in NYC construction, but I see zero evidence that there is more red tape with non-luxury construction. This is just a ridiculous HN meme at this point: every problem is caused by regulation and the only tool we're allowed to use to solve problems is incentives. I, for one, am deeply skeptical that making things cheaper for rich people is a good place to look for solutions to the problems of the poor.
More to the point: none of what you've said means that AirBnB isn't to blame for the lack of affordable housing in NYC. NYC housing is a complex market, and a lack of affordable housing has more than one cause. The article presents its evidence why they think AirBnB caused the problem. Simply presenting alternate causes doesn't mean AirBnB isn't a cause, because I think we can agree there is more than one reason that housing prices are high in NYC.
I think you're conflating 2 types of 'affordable housing.'
People say 'affordable housing' when they mean 'government legally forcing landlords to underprice their units' versus what the term should actually mean, 'a reasonable price range of rents'.
> there's certainly lots of red tape in NYC construction, but I see zero evidence that there is more red tape with non-luxury construction.
There isn't necessarily more but there should be less to incentivize builders. No point in going through all the bureaucracy if your margins are going to be super low.
> Simply presenting alternate causes doesn't mean AirBnB isn't a cause
It's a factor, for sure. I'm not defending Airbnb as a nonentity, my point is that it's easy to blame Airbnb because they're a new player whereas academics and state politicians seem less enthused about taking a cold, hard look at housing laws, while well-intentioned at protecting low-income renters, probably play a far larger role in increasing housing costs.
Huh? No, "affordable housing" means "rents people can pay" (an extreme example being a $250/month apartment). This isn't complicated.
> There isn't necessarily more but there should be less to incentivize builders. No point in going through all the bureaucracy if your margins are going to be super low.
Or, you could take steps that actually address the problem with the lack of affordable housing. Given that you just admitted red tape isn't necessarily more for affordable housing, removing red tape doesn't address the problem with the lack of affordable housing.
Red tape is a problem, but it's hardly the most pressing problem. Builders are making plenty of money in NYC. So when we're discussing real pressing problems like the lack of affordable housing I would appreciate it if you stayed on topic and didn't bring up the irrelevant problem of red tape. I'm not worried about builders having to fill out more paperwork when people are literally homeless in the snow right now.
> I'm not defending Airbnb as a nonentity
Your previous post was definitely defending AirBnB, even if it was just so you could bring up your pet issue of giving already-rich people incentives.
> academics and state politicians seem less enthused about taking a cold, hard look at housing laws, while well-intentioned at protecting low-income renters, probably play a far larger role in increasing housing costs.
Plenty of people are looking at housing laws. It's just that if you look at housing laws without the myopic lens of "incentives are the only way we can do anything", it's pretty obvious that laws which prevent owners from raising rents on affordable housing don't cause the shortage of affordable housing.
I'm just not sure how one can be so confused that they think allowing raising rents is the solution to rents being too high.
I realize I'm being hostile here, but your viewpoint is hostile to the poor and homeless of NYC.
I recognize that you feel passionate about this issue, but hostility is counterproductive in this kind of discussion. https://www.sonyaellenmann.com/2016/05/hostility-online-disc...
A data point amplifying this assertion is the situation in St. Louis, where tax incentives are handed out like candy to almost exclusively luxury developments. The city has seen several credit downgrades since 2015, with weak revenue raising ability cited in the most recent instance. The higher interest rates the city now pays on its financing are part of the reason why growth in tax revenue (including several sales tax hikes) has been fully nullified by cost increases, with the result being a net loss. Affordable housing development is sparse, since it's obvious to builders where they get the most favorable discounts.
> Luxury buildings are more profitable because rooms are more spacious (literally requires less construction), you need to make fewer sales to make the same revenue (in a 10 story building you sell 40 condos instead of 80) and buyers are more financially stable (each sale is easier). Removing red tape has nothing to do with that.
You're misunderstanding the GP's point. They're saying that heightened building costs make it irrational to choose to build lower-margin projects like non-luxury housing, because you don't have the margin to absorb those costs.
It's always going to be irrational to choose lower-margin projects. Let's say there's a 30% margin on luxury housing and a -10% margin on low-income housing, and you cut red tape, increasing margins by 20%. It doesn't suddenly become rational to build low-income housing. Margins are now 50% on luxury housing and 10% on low-income housing. All this has achieved is that builders make more money when they build luxury housing.
The problem is that space in NYC is limited, and income inequality is such that the wealthy can and do pay orders of magnitude more for housing than the poor can. This means that, instead of dividing up the space in NYC between the wealthy and the poor, it's more profitable to divide up the space in NYC between the wealthy and not serve the poor at all. This incentive structure will always exist as long as the demand for luxury housing is greater than the total amount of housing available.
There's no reason to believe we've hit the ceiling on what the demand for luxury housing. So even if we were to selectively cut red tape only on low-income housing, the wealthy could simply pay more for luxury housing to ensure that it remains most profitable to give them what they want. And meanwhile you're giving these incentives to the wealthy construction and real estate companies, increasing the income inequality that caused the problem in the first place.
I've said before that HN would rather incentivize nails than use a hammer, and this is another case of this. If we want affordable housing, we need to require companies to build affordable housing as a condition of being able to build anything in NYC. Giving more money to already-wealthy people isn't going to solve this problem.
What difficulty? I'm guessing you haven't visited NYC in quite some tie. New York City has experienced an almost continuous building boom for the last 20 years. See the NYC Construction Dashboard:
http://www1.nyc.gov/assets/buildings/html/dob-development-re...
Note the the graph for "NYC Employment: Construction of Buildings (2000 - 2016)"
>"The endless red tape in new construction makes non-luxury bulidings unprofitable."
"Luxury" has become little more than a cliche marketing term used in promotional material. Almost all new construction has things like a roof deck or Amazon lockers and so is termed as "luxury."
Please provide a citation or any evidence that demonstrates the existence of "endless red tape" in NYC as a barrier to new construction.
Most of the new buildings that go up are luxury condos, out of reach for mere mortals like myself.
I actually purchased a condo in a new building in one of the neighborhoods this article mentioned about a decade ago but I was never able to move in, even after signing the contract, because the city wouldn't grant a certificate of housing occupancy to the builder (long story). But yes, I've personally lived the red tape issue.
It's not exactly parallel but check out this NYT article from December about why the 2nd Ave Subway was so outrageously over-priced -- while most people aren't tunnelling under Manhattan the issue of overpriced construction applies to all 5 boros: https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...
That said, if the new buildings are less dense than what they replace, it would raise rents.
Luxury condos attract rich people that otherwise might not be in the local market, both directly (to live in the condos) and indirectly (by stimulating a local increase in services catering to a rich clientele, making the area, not just the condos themselves, more attractive to the rich.) This can make the net effect an increase in demand for other existing housing from the rich, rather than relief of such demand.
EDIT: I do mean this sincerely, not in a sarcastic asshole way.
You can get preferred treatment for preexisting apartments, but how would you manage that for newly built ones? USSR tried to, they failed and made lifes miserable. China tries and it's not helping.
This does preference people that already live there, but that seems elementary that the economic system should not have an inherent tendency to split up communities. People should be able to move when they want to, not when they are forced to. The reason everyone wants to move to NYC is for economic reasons. Maybe if more places weren't destitute, fewer people would need to move around as much.
The bottom line is that there aren't enough homes for everyone who wants to live there, so it comes down to how we allocate what there is. "Auction it to the highest bidder" has its issues but has a lot to recommend it: it's transparent, understandable, nondiscriminatory in a lot of respects, gives people a way to care more or less strongly, and means we get a market price for homes in that area that tells us where we should be building more homes.
We could use something like a lottery but that would mean a) houses would go to some random set of people who wanted to live in NYC, not the people for whom it makes the biggest difference b) we create a bunch of incentives for corruption - both the lottery itself and then people doing sublets/fake family transfers/... if they find someone who wants the place more than they do. Of course it's possible to fight that kind of corruption and for some things the principle is important enough to be worth it, but it's better if we can design the system so that it naturally doesn't happen c) we wouldn't be incentivising developers to build the homes that people most want.
(All that said I do think there should be a land/property value tax, to ensure that people only buy expensive land/buildings if they're going to actually use them, and to compensate the rest of the country who's priced out)
> This does preference people that already live there, but that seems elementary that the economic system should not have an inherent tendency to split up communities.
I did not fit in the "community" of the town I grew up in, and was very unhappy there. The city I moved to has been a lot better for me. So I feel quite strongly that everyone should get a fair chance at that, regardless of where they happened to be born.
> People should be able to move when they want to, not when they are forced to. The reason everyone wants to move to NYC is for economic reasons. Maybe if more places weren't destitute, fewer people would need to move around as much.
True as far as it goes, and I'm all for e.g. building much denser (NYC-like) neighbourhoods in other cities to help them gain the same advantages. But in the meantime we still have the question of who gets to live in the city that a lot of people want to live in.
Are there NYC-specific REITs for doing this in < 1 "house sticker price" increments?
"Hometown REITs" could help renters avoid being priced out, around the margins, at least.
[0] https://www.renthop.com/studies/national/heres-why-rents-are...
Do you really think that NYC and Sacramento, CA are even remotely comparable in terms of the available land, logistics and population density? That's absurd.
> instead channel the revenue away from the rent-seekers and into the hands of the public (i.e. by increasing property taxes)
Good luck getting that passed. And while I'm in favor of higher taxes on the land-owning elite almost half of NYC's income tax revenue is made up from 1% of its residents (https://nypost.com/2014/04/15/citys-one-percent-pay-larger-i...), about 35K people making > 600K. And income tax is about 2/3 of how NYS collects revenue (https://www.tax.ny.gov/research/collections/fy_collections_s...).
Raise taxes on them enough and they move to NJ or CT and it's actually a net loss for the city.
My commute from Nostrand to lower Manhattan was under 30 minutes even including the 10 minute walk to the subway. That's exactly why that area is gentrifying.
I used to commute from Nostrand to the UES and it involved taking the G train to the E train to the 6 train plus lots of walking. Easily over an hour.
Theoretically, increased taxes shouldn't affect the cost of living, because the supply is fixed, and the market price is way above maintenance costs. The revenue will simply shift from the banks and landowners to the public. At least that's the theory, but it should work for a gradual tax increase.
I favor a tax increase on the wealthy but I'm just saying implementing such a policy is more difficult than it sounds, especially because NJ and CT are so close by.
Source: Me. I used to represent high-wealth individuals.
Almost all "rent stabilized" apartments in Manhattan are within spitting distance or throwing distance of market rate. Once a significant number of them cross the $2700/mo threshold in a building, the rent destabilizes.
"Rent controlled" units account for less than 30,000 units in all of NYC. That number is never going up and that number is half of what it was 15 years ago. They are not 4BR apartments for $250 a month. This is a wonderful lie that middle class people believe because they don't actually know anyone with a rent controlled apartment -- they're kind of unicorns in the city.
The rent control board in NYC has approved the maximum increase after every single 2 year freeze since about 1990. Then landlords do improvements to get MCI increases as well. The median rent controlled unit in NYC rents for $1040 and is a studio.
The rent controlled 1BR that I live in has not ever been $250/mo and hasn't been under $1000/mo since maybe 1992.
https://www.economist.com/blogs/economist-explains/2015/08/e...
According to this there are 1 million rent stabilized (not controlled) units in NYC: https://ny.curbed.com/2017/4/13/15264890/nyc-apartments-guid...
If that's accurate, it's a little bit more than a rounding error.
Ultimately there has to be a balance. Throwing out long-time renters isn't a great idea but nor is capping prices to decrease inventory.
Personally I favor construction reform -- I mean, look how expensive that 1 mile of the 2nd Ave subway was. It shouldn't be that expensive to build in NYC.
> According to the 2014 NYC Housing and Vacancy Survey, there are about 27,000 rent controlled apartments vs. about 1,030,000 rent stabilized apartments.
Like you say, rent control is very different than rent stabilization. Rent control limits the actual rent. Rent stabilization limits the annual rent increase.
Rent stabilization doesn't really account for extra stickiness in the housing market (in other words, it doesn't meaningfully decrease housing supply). Rent control does but again, since there are so few of those it's basically a non-factor.
If you are concerned about affordability, the focus should be almost entirely on barriers to housing development.
I live not far from The Deuce and my neighborhood was plagued with drug use, prostitution, muggings and homelessness. We stayed in our apartments in an extremely dangerous city while hordes of people left. My landlord wouldn't have her building still if not for rent regulation.
Rent control allowed my mom to stop being a cab driver and go to nursing school. Rent control facilitated me getting a really great education and career.
I grew up needing food stamps, handmedown clothes and even shoes. How can you, with a straight face, tell me that bullshit?
Not wage stagnation or cost of living increases, or AirBNB (oh wait)
Just rent control
So let’s screw the people relying on it because in some narrow context about screwing others (that never happens otherwise in the economy!) rent control is bad
There are hacks and patches all over “the system”. That’s called free market making agreements as needed when needed, IMO
Just because when quantified some story is told that seems off to external players doesn’t mean it’s anyone’s concern but the parties directly involced
The cost disproportionately affects the wealthy. Due to the marginal utility of money (your first $10,000 a year has a lot more utility than your 100th), that means even a zero-sum benefit was likely a huge net positive measured in utility.
That breaks the site guidelines and you can't do it here, regardless of how wrong someone is. Please read https://news.ycombinator.com/newsguidelines.html.
This is absolutely language that I would use face to face with someone.
The fix is simple too: edit it out. Signal/noise ratio goes up and the comment gets better.
They won’t in the long run, but that’s where we are now.
https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...
(I realize that's not the point of the article you linked, and that it's usually the other way around, but the "X% of buildings could not be built today" on its own is just stupid).
I live in a condo that could not be built again under current zoning laws and regulations. And you wouldn't want it to: its not safe anymore (thus new code) and the current sewer is at capacity (until there's a major overhaul there, you can't build anything else).
Sometimes its not as simple as "build whatever!!!". We should be allowed to learn from our mistake and make things better.
If what you have now is worse than you think it should be then the argument isn't valid, agreed. But if you think the way the place is now is pretty good - if the things that are now illegal are the same things that set this place apart from other cities - then the argument makes sense.
Again I don’t think we should evict granny but there are 1 million rent stabilized units in the city. Great deal...unless you’re looking to rent.
I get not throwing grandma out of the $250/month 4BR she’s been living in for 50 years, but it means something like 200,000 rent-controlled/rent-stabilized units are also raising everyone else’s rent by decreasing inventory.
The endless red tape in new construction makes non-luxury bulidings unprofitable. Want cheaper rents? Fast-track approval for new apt buildings.