“So, what would happen if Manhattan were completely free of rent regulations and other forms of housing subsides?”
The New York Times offered this gasp-provoking hypothesis from Christopher Mayer, a Columbia University housing expert, in a July 23rd article. I, as a small time landlord, was transfixed.
“Tens of thousands of professionals, currently scared away by insane rents would be moving in from Brooklyn, Queens, and Hoboken to make Manhattan an island of the middle class and rich.”
Rent control started in 1943 to keep rents low for the returning GIs. They continue to stay so that now New York is the last and largest non-socialist city in the world which, in 93 years, has continually controlled or subsidized rents; no politician is brave or insane enough to try and end it.
If you are lucky, you have a rent-regulated apartment or, if you are very lucky, live in a rent controlled one. I know of a gentleman who lives above Burberry on Bleecker and Charles Streets for something around $600, the price of a closet for the tenant next door; he makes fruit pit jewelry and sells them at West Village street fairs.
There is plenty of resentment when we hear a rent regulation boast; the little old lady who is living in a 3 bedroom rent controlled apartment on Park Avenue or as one living artist complained to me, “West Beth non-artist widows living in large studios that should be rented to real living artists.”
I have often thought about what would happen if all rent regulations and public housing were to end – bang, just like that. As the Times article speculates, landlords would quickly fix up long-neglected and shabby rent regulated apartments to make them competitive with the hundreds of thousands of apartments suddenly available and, yes, the rents would come down.
When The Archive building opened and offered hundreds of spanking new apartments just blocks away from Charles Street, we found that we had to reduce our rent demands, for the three apartments we were trying to rent, to compete.
Back to the Times article:
“Rent regulations actually make the city less affordable for those unlucky enough not to live in rent regulated apartments – it is public policy that that achieves the near opposite of its goal and makes new arrivals compete for one half of all the non-regulated apartments in the city.”
“That is completely nuts,” says Mayer. “It creates enormous incentive for people to stay in their apartments that no longer fit their needs because they have had kids or their kids have left or their job has moved further away.”
This might be acceptable if all the rent controlled and rent stabilized units were inhabited by the poor; the programs were designed to help the poor. However, according to data from NYU Furman Center for Real Estate and Urban Policy, a majority of people in Manhattan rent regulated apartments earn far above the poverty level.
The Times continues to quote Mayer and economists, stating that rent regulations have actually prevented billions of dollars of renovation. The slum landlord never spends a dime but the new owner who wants to receive top dollar renovates and renovates.
Mayer speculates that landlords would agree to higher taxes if only rent regulations were ended. Ours has recently changed from less than $10,000 a year when we moved in 40 years ago to over $34,000 with accelerated payment twice a year (try writing out a check for $17,000 to “avoid penalties”).
Mayer offers that the extra tax revenue could go to help poor people afford market rate apartments. Yet this is another form of rent regulations with all the attendant administration costs and petty fraud. Recently, I interviewed a Boston city worker that reviewed requests by supposedly poor people for subsidized housing who admonished them. “Don’t lie about your income because if we find you are making more you will have to pay penalties.” She offered that their enemy was poor memory since they could never recreate their fraudulent numbers in a later interview.
Poor people are expensive and it is always cheaper to educate than to subsidize. This is why I have such great expectation in de Blasio’s demand for universal pre K – all four-year olds are equally rich in imagination and promise.
Vicki Been, director of NYU Furman Center, concludes that ending rent regulations would ultimately not benefit the poor who “rarely come out ahead.”
Rent control is eroding though. Some 231,000 units have been deregulated in the last 30 years. It is slow and it is easy to predict that we still have decades and decades of rent regulations before us.
What would Manhattan be like if we had not had rent control these last 93 years? It is hard to say, but let me take you back in history to the Upper West Side Depression days of the 1930s, before rent regulations. Every spring, my German mother would talk of moving. We would walk a few blocks away from the 5-story walk-up we were presently living in and she would eye a building that looked just a little better then the next one and review the sign, “Apartments to Let” which offered 1 bedroom, 2 bedrooms, and 3 bedrooms.
She would ask me to ring the shiny brass “super” bell and out from his apartment in the basement would come the super, dangling keys, and my mother would ask if he had a 3 bedroom apartment on the 5th floor (the 5th floor walk-up was sunnier and cheaper ).
We would climb the stairs through layers of ethnic cooking odours until the super opened the 5th floor apartment door to fresh paint smells. We would walk into the apartment on paper protecting the newly varnished floors (the kitchen was always off-white which was more like yellow) and my mother would ask, “How much?” The rents were always around fifty bucks or less and then she would ask, “How many months concession?” It was so impossible to rent apartments that landlords offered one and even two months free of rent to persuade you to move in.
The last big family apartment was at Tiemann Place and Riverside Drive for which my father paid $62.50 a month. Understandably, inflation is a natural element of any economy. However, I feel – no, I know – that we have moved into a period of hyperinflation that is taking all the fun out of living in Manhattan. Imagine paying $7.50 for a loaf of bread with a credit card and the people who will buy the Rudin multimillion dollar apartments are going to be different; a new kind of West Villager.
This brings me back to the theme of the Times article – maintaining diversity, some rich some not so rich, some creative, some working on Wall Street.
I think about the people working to put WestView together and perhaps not one of them would be in the West Village if rent regulations ended and they had to pay market rents.