BY JOSEPH STRASBURG
The 2017 Housing and Vacancy Survey (HVS), a triennial survey released by the United States Census Bureau, demonstrates that New York City’s rental market has evolved into an increasingly deregulated market and should continue to be steered in that direction.
The overall rental vacancy rate of 3.63 percent in 2017 has steadily been increasing since 2011, but even the increased vacancy rate is suspect. There was an enormous increase in the number of vacant apartments that were unavailable for rent to 245,425, of which 78,630 were awaiting or undergoing renovation. If these apartments were added to the 79,190 vacant apartments available for rent, there would not be a housing emergency.
In addition, there are clear segments of the market, both geographic and in terms of rent level, where no housing emergency exists. In terms of rent level, the initial findings show that the vacancy rate for apartments renting for $2,000 or more per month is 7.42 percent. Once the granular HVS data has been released, it will be possible to determine that the 5 percent vacancy threshold is breached at rent level even lower than $2,000.
Geographically, the initial findings reveal that the borough of Manhattan has a vacancy rate of 4.73 percent. However, given the margin of error of this survey, the Manhattan vacancy could well be anywhere in the range of 4.3 percent to 5.16 percent. Again, when the actual HVS data is released, it is likely that the area of core Manhattan will have vacancy clearly in excess of 5 percent.
The non-vacancy findings of the 2017 HVS all paint a rosy picture of housing conditions and the position of renters in today’s rental market—a picture that is contrary to the image of a housing emergency. For example, incomes are finally rising faster than rents—10.9 percent versus 8.1 percent over the last three-year period. Housing and neighborhood conditions are better than ever and even overcrowding has been reduced, an indicator that more households are able to achieve independent living.
Housing affordability, as measured by the percentage of income spent on rent, has remained static during the last nine years, leading to the prospect that continued income gains will actually increase affordability going forward. Lastly, there was a gain of 69,000 housing units over the last three years, leading to largest rental housing stock on record.
In addition to these findings, it must be noted that rent levels as recorded by the HVS are not at all in line with media reports claiming that the average rents in the city are above $3,000 per month. In fact, the median contract rent for all renters is only $1,337 while rent stabilized apartments are even cheaper at $1,269 per month. Even median asking rents for vacant apartments are only $1,875 per month, dispelling the notion that the city is a “high-rent” town.
Also notable is the fact that the city now has almost as many non-regulated apartments as regulated apartments. The non-regulated universe has a vacancy rate of 6.07 percent, while the median contract rent in that sector is only $1,700, indicating that non-regulated housing is doing a better job of meeting renters’ needs than regulated tenants.
The median contract rent for all rent stabilized apartments increased by only 2.6 percent from 2014 to 2016, coinciding with the zero increases imposed by the city’s Rent Guidelines Board. This may be a further boon to tenants, but is a growing disaster for the owners of stabilized properties who experienced an increase in operating cost over the same period of more than 5 percent.
In light of the preliminary findings of the 2017 HVS, RSA believes that it is necessary to phase out rent regulations, which have failed miserably to abate the housing emergency. A program of targeted financial assistance would be better suited for income-eligible households and would once and for all provide benefits only to those truly in need.
Joseph Strasburg is the president of the Rent Stabilization Association.