|
Getting your Trinity Audio player ready...
|
By: Meyer Wolfsheim
New York City continues to face a profound housing crisis defined by escalating rents and a dwindling supply of available apartments. As reported, the most recent federal New York City Housing and Vacancy Survey revealed a vacancy rate of just 1.4%, a steep decline from 4.54% in 2021. Median rents climbed from $1,500 to $1,641 in the same period, encompassing properties from luxury high-rises to public housing.
Mayor Eric Adams has proposed a Charter Revision Commission to explore strategies for expanding affordable housing for working-class families. A major focus in this debate is rent stabilization, which governs approximately 960,000 apartments citywide by capping rents through policy rather than market forces. While these policies provide stability for tenants lucky enough to secure a unit, critics—including researchers cited by the New York Post—argue that they exacerbate housing shortages and market inefficiencies.
Economic Consequences of Rent Regulation
Economists have extensively studied the long-term effects of rent control. In 1997, Harvard researchers Edward Glaeser and Erzo Luttmer described the phenomenon of “misallocated housing,” where tenants remain in apartments that no longer suit their needs due to artificially low rents. This dynamic contributes to inefficiencies, such as smaller households occupying larger units while growing families struggle to find adequate space.
In 2018, the Brookings Institution echoed these findings, noting that rent-stabilized tenants often remain in their units to retain financial advantages, regardless of changes in their housing needs. Recent Census data affirm this in New York: only 24% of rent-stabilized tenants moved in the past year, compared to 57% of market-rate renters. The Post has highlighted the inequities this creates, with some high-income tenants benefiting from these subsidies while others face dire housing shortages.
Quality and Maintenance Issues
Rent control also impacts housing quality. Research cited by the New York Post notes that when landlords cannot recover maintenance costs through rent increases, many neglect necessary repairs or leave units vacant. A 2024 study from the St. Louis Federal Reserve Bank found that rent-controlled properties often suffer from deteriorated conditions, reducing overall housing quality.
New York City reflects these findings, with tenant complaints about rodents, leaks, and heating issues more prevalent in rent-stabilized units than in market-rate ones. Additionally, stricter rent-increase caps introduced in 2019 have led to an estimated 10,000 “ghost apartments”—units left vacant because landlords cannot afford to make them habitable.
Lessons from Buenos Aires
The Post has also highlighted international examples of deregulation’s potential benefits. Buenos Aires, Argentina, eliminated rent controls in 2023, sparking a 170% increase in available rentals. While nominal rents rose, inflation-adjusted costs declined by 40%, enabling tenants to access better housing options while incentivizing landlords to reinvest in their properties.
While such sweeping reforms may be challenging in New York, targeted adjustments—such as allowing the deregulation of vacant units—could similarly unlock a wave of housing supply and investment without displacing current tenants.
Experts suggest that reducing property taxes and water rates for rent-stabilized units could help landlords cover maintenance costs. Streamlining regulatory processes, such as the annual registration of rent-controlled apartments, would further ease administrative burdens on property owners.
A more ambitious proposal involves eliminating vacancy controls, which currently restrict rent increases on empty units. This change would enable landlords to fund repairs and renovations, bringing more apartments back onto the market while maintaining tenant protections for occupied units.
Efforts to reform rent regulations have faced significant resistance. As the Post noted, property owners’ legal challenges, including appeals to the U.S. Supreme Court, have largely failed.
