How the Market Drives Rents Down
Tenants in rent-regulated apartments are bracing for tonight’s meeting of the Rent Guidelines Board, when next year’s rent increases will be revealed. That rents will go up is inevitable — it’s just a question of by how much.
However, they’re not going up everywhere. In fact, rents in non-regulated buildings are clearly going down lately. Nicole Gelinas of the Manhattan Institute explains why in an excellent op-ed in today’s New York Post:
In some neighborhoods, a dozen high-rise condo buildings are newly finished or under construction. But wait until dark and you’ll see that few lights are on in some new buildings.
Developers are finding it hard to sell as the market tightens – so they’re switching buildings to rentals.
On sites like Prudential Douglas Elliman, pages of “luxury” one-bedroom apartments, never lived in, are there for the taking. The market is in flux, with some owners thinking they’ll get $4,000 a month and others hoping to get $2,700 for near-identical apartments.
With tens of thousands of layoffs working their way through the city’s banking industry, and with permits to build 30,000 or so new residential units issued in each of the last three years, it could be a renter’s market for middle-class and affluent Manhattanites for quite some time.
The winners wouldn’t just be six-figure-earners, though, if New York really had a free market. If a state-of-the-art “luxury” apartment commands only $3,000, down from $4,000, then a less-nice apartment that might once have rented for $3,000 should rent for $2,000 – and so on down the line.
The good news is that apartments are slowly but surely leaving regulation, once their rents exceed $2,000 a month or the tenant’s income exceeds $175,000. With a fully unregulated market, New York City would see a boom in construction and housing availability across all market sectors. Gelinas points out that too really bad bills in the Assembly would undo the deregulatory progress that has been made. One bill would raise the ceiling to escape rent regulation from $2,000/month to $3,500. The other bill would repeal the Urstadt law, which prevents City Hall from passing its own stricter rent regulations. This being the final week of the current legislation session in Albany, all renters and would-be renters should hope that the clock runs out on these awful bills.