In the case of NYC, shouldn't the researchers factor in whether the nearby apartment buildings are rent stabilized/controlled/?It makes a difference. Are owners seeking to buy out their current tenants? Are more tenants leaving even if they don't have to worry about rent increases?
1
Now, a luxury apartment home should scream ‘perfection’. They are loaded with many benefits and advantages.
Amenities
Location
Security
Parking spaces
Luxury apartments come with multiple amenities that you do not usually find in regular apartments. For example, a luxury apartment usually has a fitness center, pool, valet, trash pick up, etc. These amenities make your life easier and more enjoyable because you get all the basic services under one roof.
Read more: what are luxury apartments
@Humayoun Often you just pay for amenities you never use. How about developers just create nicer apartments and leave out the frivolous extras like dog spa, kids playroom etc. Even gyms, most neighborhoods offer plenty of outside gyms.
It cannot be written enough. One Manhattan Square is a huge eyesore that is seen for miles around. It also destroys the elegance of the Manhattan Bridge. It is a sin perpetrated on humanity and this city for as long as it stands.
2
"The only way to ease a housing shortage that’s pushing up rents, they say, is to build more housing. Construct enough of it " -- There's the problem. You have to construct ENOUGH of it. A couple of towers with 600 condos total is not enough. That's just gentrification.
4
I think the problem with the recent flurry of development here in is the fact that it only benefits those in the top 0.5% of earners....the other 99.5% can't afford to rent or buy in these buildings....
So all of these theories don't matter, as evidenced by the mostly unoccupied 'Super Towers' popping up all over Manhattan...
4
This is a philistine discussion. The building discussed is a major eyesore which blocks or distorts views of one of the city’s leading landmarks. Greedy developers make high rise buildings when about a fifth of the city is in poverty.
2
I am going to speculate that if you go into an economically depressed, run down area (poor neighborhood) and put in luxury housing you will attract resources and amenities that the people who can afford luxury housing want nearby creating a new "cool" neighborhood causing rising demand for property in the area to put retail, restaurants, entertainment, and more expensive luxury housing. This is accomplished by buying up property, driving out current residents, and renovating or replacing the existing old buildings with shiny new ones and on and on.
6
For any new housing capacity to make a tangible impact on housing costs and increase affordability, it must significantly supersede demand, and the reality is that demand for housing in NYC will almost always dramatically outweigh any appetite for new housing capacity.
New York City’s cultural and cosmopolitan appeal is largely to blame for this, but this principle can be practiced well in cities with inefficient conventional zoning laws and poor land use restrictions that have created artificially high housing prices in cities like Atlanta.
3
The Mast study is a simulation study and only showed a tiny effect, not a policy significant effect.
The trickle-down idea of housing supply as pushed by Glaeser and Been is entirely bogus, is not theoretically valid and useless for policy purposes. It might be useful for exclusionary suburbs, but is not useful in a mature, historic, and built-out city like NYC. The assumptions used to create the model just don't hold in NYC.
4
This building ruined the skyline of New York. Which means this is the building that ruined New York.
3
Long term residents who own their homes are being inundated with people trying to buy their homes. Flyers with incentives of CASH, no repairs necessary are disgusting! Poor people who were left behind when others left for suburbia are finding themselves pushed outside of city limits now. Forced out of their family homes because the new luxury high rise buildings drive taxes up so high that they are now unable to pay. Gentrification is unfair most especially for the poor, it's happening in real time and must be stopped now.
3
The laws of supply and demand on pricing obviously still exist, even for rental apartments, HOWEVER, they are not immune to the tax breaks and real estate investment industry that has come to dominate America, even rural America.
The rich need to pay more money to get them to stop hoarding, simple as that. Why wouldn't you charge exceptionally high rents, limit your building to less residency, if you're assured of deducting your losses and having regular rental income from rich renters? The real estate still appreciates in the tax-cut assisted bubble.
Voters need to realize how much tax cuts hurt them.
5
Why should the so called long term residents care, the taxpayer is paying their rent whether directly through section 8, or indirectly through rent control.
1
@Rahul
Yes, of course: the lives of the poor are carefree. We should all be so lucky.
6
@Rahul Hardly anyone eligible for section 8 or other forms of housing assistance actually gets it. And if you’re calling rent control “taxpayer subsidized” (1) the poor pay taxes too and (2) all renters are subsidizing homeowners who get to deduct interest paid on their mortgage, which renters do not get to do.
2
"Hey I can't wait until that luxury condo building opens in my neighborhood so my rent will go down!" - Literally no New Yorker Ever
10
@WellAdjustedAndroid I used a new building opening to prevent my landlord from raising my rent. I was given $100 increase to renew. I toured the new building and showed the landlord the floor plan, 2 month free rent offer, and the pictures I took of amenities. Last week I signed a lease renewal at my existing rent. No increase.
3
Since the rental housing 'system' has been captured by hedge fund capital according to prior articles in the NYT, it seems unlikely that a free market would now be operating. Interesting to read how Emily Badger matches up those earlier stories with this upbeat article
4
Seriously? This is like asking if water is wet.
All new housing here in the DC area is this so-called luxury housing. The average rent per month is more than $2,000. I know, I’m paying it. My apartment building renovated into a “luxury” building. As a result, my rent has gone up $300 in the 2.5 years I’ve lived in the building. We have no more affordable housing here, and we’re already feeling the Amazon Effect on housing and rental prices in Arlington. If this region can’t get it under control, a lot of brain trust will leave simply because even middle-class wage earners can’t afford to live here.
2
@Evamarie Socha the point is your rent would go up even more if new buildings weren’t constructed. Those people renting $2k units would take existing properties instead, raising them rent anyway, leaving nothing else behind.
2
Medical professionals are usually required to disclose industry relationships when expressing a professional opinion on a drug or treatment. Perhaps the NY Times should ask reporters such as this one to do the same in order to assure that the reader can factor in any financial relationship to the real estate industry.
5
Tokyo is the world’s largest city with a population of 37 million people. New Delhi has 29 million and Shanghai about 26 million. Look a how big Cities are Today.
Tokyo has the same population as-- All of Canada.
UN says these growing Big Cities are due to an accelerating shift from Rural to Urban-living areas around the world.
North America has 82 percent of people living in cities, compared to 74 percent in Europe.
Most people are moving to cities which pushes up prices.
New York is a Big Apple.....
3
We live in a fast growing city. Stats I read say the trend across the world is for 80% of people to live within 50 miles of a city Globally. With all that demand focused on moving to Cities --the result is increasing prices. Blame the ever increasing Global population on the move to cities. If the trend switches and people move to smaller places far away from big cities --prices will stabilize or maybe fall. Watch the Trend.
5
@john "Blame the ever increasing Global population on the move to cities."
John's incisive mind pierces to the heart of the matter: the problems of the urban poor are caused by the problems of the rural poor, just as the problems of the rural poor are caused by the problems of the urban poor.
1
The problem in NYC is that the real estate industry uses every trick in the book to avoid rents decreasing at all costs. There is already a HUGE excess of vacant luxury housing in NYC - tens of thousands of vacant units. This has not lead to any relief for rents on the lower end of the market because the industry prevents the market from operating as it should. They do this by offering free months instead of lower rent. There are buildings in NYC that will, offer up to 4 months free just to avoid having to lower that "rent rate" It is artificially keeping a soft market from correcting. It doesn't matter how many luxury units are built, the industry will never let that trickle down to lower rents for the average renter.
7
The four months free rent lower the effective rent over the life of the lease. Your argument makes no sense.
2
@GC The main argument is that all this new market rate/luxury housing is not reducing rents in other segments of the market.
5
@GC The four-months free rent lowers
the effective rent over the life of the lease only for the wealthy who can and, ultimately, will pay full price. It does nothing to alleviate rent-pressures on the un-wealthy. Your argument makes no sense.
1
Is this research tainted by the proximity of really expense housing? That particular building may be close to lower income housing, but it is just a short cab ride away from some of the most expensive real estate in the city. A better experiment might be to build the same luxury housing in Brownsville, or in the South Bronx. Would that ever happen?
4
I have lived in San Diego for almost nine years and have seen rents rise as the city has a no-growth housing policy. Many Los Angeles resident see lower rents as a reason to leave the City of Angels.
Proposition 13, passed in the 1970s, allow long-time residents to pay low property taxes at the expense of newcomers. Even commercial property remains taxed at low rates, rather than support improved roads and better schools. California has some of the lowest spending per pupil in the nation.
Many wealth residents that bought decades ago hang on to their property, renovate and don't more up in real estate to new housing like the residents of pro-growth Atlanta from where I came. The lack of property for sale keeps rents high.
People pay a high tax here for living in paradise. As a result low growth pushes some residents to move to Idaho, Nevada, Arizona, Colorado, New Mexico, and Oregon.
6
Poor neighborhood with relatively low NYC rent. Some workers actually able to live there. New high rise primo building goes up - property values adjacent go up as higher rent stores and restaurants open. Apartment rents go up because landlords can now get much for money for a fancy neighborhood. Old buildings sold and renovated - rents skyrocket.
I don't see the average working class person getting any benefit here - just the landlords. Workers have to move to Idaho to afford rents, and there's no subway there to NYC.
Somehow the city needs much more affordable (I mean actually affordable) housing or it will become an enclave only for the very rich - not healthy. Trump would be happy because people of color would be many fewer and his shallow elitist Republicans would not have to associate with the "ref raf".
17
Or one could develop like Donald J.Trump has...to increase rents and increase investment returns, all at others expense! Trump Tower Moscow? SOHO? NJ? NY? the list goes on in the 'free' market.
2
Neighborhoods change in NYC! Imagine that! Look at any area of the City since whatever date you pick! People have moved! The Lower East Side, Harlem, Yorkville, Bay Ridge, Brooklyn Heights, Long Island City, Astoria, etc! What area is the same as 100 years ago?
9
@Donna Gray But the reality is that as neighborhoods have gentrified, greedy landlords have ruined neighborhoods, by pricing out the businesses and interesting people that made the neighborhoods so attractive in the first place. Take the west village for example. One by one, all of the unique restaurants and shops close. A new one every day. They are replaced by drug stores, dry cleaners, banks, and nail salons. The artists leave and the apartments are purchase, combined and renovated into 12th homes for Russian Oligarchs and the children of billionaires. A once vital neighborhood becomes a ghosttown for thr rich to park their blood money. It is a terrible thing for a city.
11
@Donna Gray Many NYC neighborhoods have morphed into one that of wealth with little character or difference it is mostly bland and homogenous.
4
What happens is services increase in the neighborhood the quality of shopping goes up and crime goes down. As someone who has lived his whole life in the East Village 50 plus years I saw first hand the changes that came it was great.
4
@EAH The east village has not been subjected to as much gentrification as some other neighborhoods because they haven't been able to build any supertalls. The new residential development in the east village has therefore been slower and gentrifications has been slower. There are also no subway stops in much of the east village, just along the outer edges. This has also helped keep gentrification at a manageable pace in the east village.
1
I live in Phoenix. Same thing happens here. Markets do not help me pay my rent. I am on very low Social Security and pay almost half in rent. I fear soon I will live with my dog and my motorized scooter in my old crummy car. Yes, we do need govt. subsidized housing. Markets do not help us poor folks no matter what you rich folks say.
20
The article makes it appear as if rent increases are an atmospheric phenomenon, when in fact they are the product of the unrestrained voracity of real estate developers and brokers, a voracity left unchecked by feckless or corrupt politicians who couldn´t care less for the welfare of people.
21
So much progressive anti-empiricism here. I don’t care about your feelings or personal experiences, prove it rigorously or you’re apart of the problem. Otherwise you’re engaging in the same kind of emotion driven thinking that popularized the welfare queen or voter fraud myths.
3
Although I've written several times about the so-called problem of luxury apartments and gentrification of neighborhoods I've received little notice or support for my views. I do not oppose gentrification. I do strongly oppose low cost housing, subsidized by government loans and tax breaks. Low cost housing is not affordable or sustainable housing. The populations that move into low cost housing continue their daily struggles to exist and just get by. While decent, affordable housing is important the critical missing elements are jobs, transportation, child care, health care, and transportation as well as good, sustainable schools.
Those who are complaining about a luxury high-rise don't understand the benefits, all of the benefits that upscale living brings to a neighborhood. The greatest benefits are more taxes into the coffers of the city, township and general metropolitan area where the luxury units are built. It also means that more a permanent, less transient population will come to the community and they will need goods and services thereby encouraging business to relocate. That means jobs. Upscale units also will pull up the value of the neighborhood allowing property owners to reinvest in their holdings and raise rents. And that's not bad. It means restoration and the end to stagnation.
Granted it does not solve the problem of the poor, the disadvantaged, the jobless, homeless, seniors on fixed incomes, and nor does it end discrimination against minorities.
8
@Jack Frost I think part of the problem in NYC is that the population moving into these luxury tower is NOT permanent. In fact, much of this vacant luxury housing sits vacant for years. You can pour over articles quoting the numbers of vacant luxury units in NYC. I believe i recently saw that over 30% of luxury housing building in the last 5 years, was still vacant. That is CRAZY for a city with a perpetual affordable housing crisis. Many of the units that are bought/rented, are not first homes and so are vacant much of the time as well. That does help the city's coffers, but doesn't help local businesses.
6
@Jack Frost The 1% want to automate or outsource everything so as not to pay workers.
2
@Jack Frost No city can address the missing elements of transportation, child care, health care and good schools unless it addresses in tandem the availability of housing that's affordable for bus drivers, subway maintenance workers, child care workers, teachers, nurses, orderlies, receptionists and cleaning personnel for hospitals, schools, office towers. Add to these the people who staff supermarkets or who cook, wash dishes, and mop floors in the upscale restaurants that move into high-rent areas. Compared to the rents or coop prices in the upscale buildings, such housing would be considered "low cost," and yes, to some extent government subsidized. With suburbs becoming too expensive to be a refuge for low-paid employees who commute, the city risks losing even more of the people who provide these and other critical services.
7
Just a president or two back I remember being told -- a lot -- that the market would take care of things like housing. And everything else too. I guess I missed the memo where we moved on if there was one.
7
You never heard that, at least not since Reagan. And we will never know since government will not let the market operate. Zoning and building codes make the cost of housing sky rocket.
2
@Richard Developer greed makes housing prices skyrocket.
2
There are three groups of people living in Manhattan: 1) Extremely wealthy; 2) Recent college grads sharing apartments; and 3) lower-income families/individauls in rent controlled/stabilized apartments.
Who do you not see living in Manhattan? Everyone else from lower middle class to upper class (excluding the extremely wealthy) because the housing practices have made it completely unafforadable.
26
This is not a poor neighborhood. It's a neighborhood in the midst of some of the country's most expensive real estate with an unusually significant number of middle class people due to rent regulation (who otherwise could not afford to live here), and a few subsidized low income projects, and an equal number of transient rich people (students, young professionals etc). It's an anomalous neighborhood if anything, but not a poor one by any stretch.
7
Is the Two Bridges neighborhood located in an “Opportunity Zone”? If so, were the developers of One Manhattan Square the beneficiaries of some generous government tax benefits? Thinking about how wealthy investors have gamed that program, as previously reported in the NYT, including the Kushners in New Jersey.
17
I understand that this article was a discussion about economics, not aesthetics (how American). But really, from the picture, I'd say that regardless of the impact on rents in the neighborhood (and I'd bet my boots the poor will be adversely affected) that new building is kind of hideous. While the apartments to the right aren't going to win any awards, at least they don't dominate the cityscape like their soulless, glass and chrome neighbor; they're humble. Without that skyscraper, my eyes would be drawn to the water, the bridge, the buildings in the background, and the smallish, earth colored apartment buildings. With it there, the city scape is dominated by this building that says, "My money and power is more important that all the miscellaneous quotidien stuff around me." Too bad NYC sold its soul to the highest bidder; there are some things that once gone, you can't get it back, and the heart and soul of NYC are among them.
27
I am looking at that godawful super-tall "Manhattan Square" monstrosity from my apartment in Seward Park on the Lower East Side and dreading the addition of any more buildings like it. They are taking away what few feet of riverfront the not-wealthy may enough - a waterfront that was fine for the underclass when there were no parks along the river and the river was an open sewer - but are now simply snatching up land between the rest of us and the river. These things must be stopped or, if not stopped, then built to sensible heights like the rest of the existing neighborhood: 20 stories, not 99.
13
@Don Um, it's the same "upper class" that pays the taxes to subsidize the affordable housing for the rest of the population. Aren't they entitled to something in exchange?
2
@Don While I agree that the One Manhattan Sq. building is hardly architecturally aligned with the buildings around, or even 'nice' aesthetically, Seward Park Co-Op is both a) a terrible eyesore of buildings, as public housing from the 50's and 60's in the U.S. fits that depressed and bland architectural mold; and b) extremely expensive. I know, I almost purchased in that co-op and was priced out by all-cash buyers, and this was right after the housing crash.
The juxtaposition of "working class" versus "luxury" when comparing Seward Park co-ops from a rental perspective is completely artificial - rents for a 1 BR in EITHER building are in the mid 3000's!
@Ed "Aren't they [the upper class] entitled to something in exchange?"
Well, you got me there, Ed. The upper class is certainly entitled, I have no doubt.
1
This is uncommonly nuanced reporting of studies, which is part of what's needed to address difficult problems like housing. So it helps, but you're also going to need a more holistic perspective as it only deals with a slice of the market. Plus it still necessarily holds many things constant, which is not how life really works. Somewhat similar to another fine article on housing in today's Times, it leaves out important things. (https://www.nytimes.com/2020/02/13/business/economy/housing-crisis-conor-dougherty-golden-gates.html#commentsContainer&permid=105237636:105237636).
In this case, while it shows that gentrification (under the study parameters) probably doesn't worsen things for the low income residents of the neighborhood, it doesn't do much for them. So, while having some empirical findings is a step in the right direction, as it lowers the range of uncertainties, that's a pretty low bar.
Now if you marry these researchers with a creative way to address the issues mentioned in the last paragraph, you can get at more of the problems.
It still leaves out crucial well known issues like crime and education, some partially discussed ones like relative power, and a new one: how do people of different socioeconomic classes not only get along--but learn to like each other?
4
"Neighbors may assume that the high-rises cause the high rents. That’s plausible if new buildings attract much wealthier residents, who in turn attract higher-end amenities that make a neighborhood more desirable." Um, "more desirable" to whom? It is really important to spell this out. Otherwise the unspoken assumption is that what is desirable to wealthy people is what is desirable to all, which is absolutely false.
13
@KMH Amen! I have lived in NYC for decades and do not find the type of businesses that these ugly "luxury" (cheaply designed and built, but expensive) towers bring to be desirable. They bring dry cleaners, nail salons, drug stores, chain restaurants, banks, and retail that ends up closing as soon as their leases are up because they can't make any money from the part-time residents of a few tacky modern towers. Generic living is not what brought anyone to NYC.
3
Oh my God , more studies to answer the simple question as to whether putting a luxury building in a working class neighborhood pushes up the working class rents in the immediate vicinity.
Uh, yeah, they do. But if you conflate this question with very different questions like : 'What happens to rents in LUXURY buildings in the same area?', or 'What happens if there's more housing across the entire METRO REGION?', you can produce all variety of obtuse results that do not answer the important question - is THIS poor schmuck's rent going up?
Studies that provide answers to demographic questions are useful for everyone, if clearly and simply defined, and honestly carried out. But we put ourselves at peril to let pressing social problems be decided by the results of 'research studies'. Many studies purport to overturn pedestrian common sense, and in fact draw attention precisely because of that. But that only holds if you take the bait and don't dig into the details, and the average person does not have the free time nor the expertise to analyze the research design of a study quoted in the NYT.
It's called lying with statistics, and in our 'data driven' modern world it is the ascendent kind of falsehood.
11
@zauhar "Figures don't lie, but liars do figure."
Wait, what? Am I reading the Onion?
Why would anyone think a new luxury rental or co- op building would reduce rents in the neighborhood where built?
15
Let development happen. That’s why it is called development. There is an improvement all around the area.
3
@Roberto Villeda "There is an improvement all around the area."
For those who can afford it.
2
Real estate Tax policy needs to change. Developers can build it - and wait til people come at the “right” price. As long as developers can take the loss against their taxes - they can afford to chase the high end even if a sizable portion remains empty.
12
@Reb The city promised action on this very issue for years, but have not delivered. The real estate developers have local politicians in their back pockets.
The NYC real estate market is a study in how a few thousand people with little talent or vision make more money than all of the millions of hardworking residents of the city that they hold hostage. Slum lords and sleazy brokers rule in NYC.
3
Wow. I looked at the study. Tons of formulas, graphs, circles and arrows and a scroll of endless references.
And this is the concluding paragraph:
"This paper suggests that new market-rate development reduces (or slows the growth of) residential rents and residential property sales prices in the immediately surrounding area, while increasing neighborhood consumption amenities. Opposing such development may exacerbate the housing affordability crisis and increase housing cost burdens for local renters".
This appears to be a fancy academic apologist justification for development interests.
Show me real affordable housing, not what we are being told is "affordable housing". This study is just showing us that instead of 10 people living in a unit to deem it affordable, we may just need 9.
8
@duvcu Real affordable housing is housing that is dense, configured for a variety of incomes and lower cost to maintain over time.
A tall building in NY might meet those needs, or it might be one of those super tall pencil apartments, that is neither more dense, nor cheaper to run, nor configured for anything less than 30M dollars a piece.
Don't dismiss development. But be critical of when it serves a narrow interest in NY. It would be easy to build something that meets the needs of many NY.
But absence of development is a path to ruin. Somehow housing supply must be increased. And now for just the poor or the super rich. But for all.
5
A city that cannot house it’s’ own teachers is in trouble. Even the rich need teachers.
18
Kinda naive here but, "The only way to ease a housing shortage that’s pushing up rents, they say, is to build more housing", don't see how building apartments that have the top floor unit going for $21 million +. What sickness justifies this opinion?
10
Whether or not these higher-end buildings lower rents, the optics are just bad. Here in San Francisco, you have blocks of tent cities circling the new luxury apartment buildings in the Mission. The big glass gates open, and an SUV with tinted windows rushes out. It's a bad look, and it's causing a lot of resentment.
13
By all means, keep the poor neighborhood poor. Don’t do anything to improve the neighborhood, lest evil gentrifiers move in, with their fancy coffee and upscale clothes. Poor people want to remain poor, and only seek whatever indulgences are bestowed upon them by benevolent bureaucratic overlords.
4
@John "Poor people want to remain poor"
No, John. The system operates so as to ensure that the poor _have_ to remain poor. Otherwise, taxation would have to be restructured in a manner that annoys the rich.
1
With extensive rent control and other laws biased in favor of renters for low rent housing, no developer will build new low rent housing. The laws passed last year in NY helped some low rent tenants but will ensure long term shortage of low rent housing. The laws effectively guarantee that only non rental housing will be built now in NY.
4
@Sk "extensive rent control and other laws biased in favor of renters for low rent housing"
Don't you mean,".... biased in favor of _owners_ of low-rent housing"? You remind me of a landlord who argued to me that renters get a special break because they don't have to pay property taxes!
Somewhere, someone is over analysing the problem.
Suppose there is no pressing demand for the renting
of apartments in an isolated part of town, so you live there
because it is close to work/where you grew up...
Now a developer comes in and builds apartments that
are no better than what you are living in. Unless your
area is the new trendy place to live, why would rents go up ?
They might go down if the developer decides to offer bargain
rents for his new building.
Otherwise that section of town will be trendy and the landlords
will raise the rents.
3
@John Brown "Unless your area is the new trendy place to live, why would" a developer come in and build new apartments there?
Let’s look at the greedy guts demand that all local ordinances be ignored in favor of their so called solution to the housing crisis...the crisis they are manufacturing. The hedge funds purchased as much real estate as possible during the 2008 downturn and now they want to maximize their return on their investment. The have decided that the market rate of $3500 for a small one bedroom/large single is reasonable and have priced the rest of the market accordingly. If they build, it is high end only. They are content to let units sit vacant for years rather than rent “below market.” The only way to fight their absurd avarice is to impose a vacancy tax on the vacant units The homeless “crisis” we are facing has been manufactured and brought to you by the same bottom feeders who sold Mortgage Backed Securities based on liar loans...
12
@SW Right now there is an excess supply of housing at this range in NY. Not significantly oversupplied, but enough that if there was a significant downturn, would there suddenly be a lot of expensive apartments with no one living in them.
Then you would see:
1) Reduction in rents (either by current owners or after bankruptcies that lower the costs).
2) Reconfiguration to increase density so they could make more rent from the same building.
3) Buildings go empty because they can't be reconfigured and it is too expensive to reduce rents.
4) Builds get torn down because they are so expensive the real-estate basically gets thrown back to the city. (how much you want to bet some of the pencil apartments end up like this in 20 years).
Make sure what is built fits #1 or #2, and no problem.
ZONE A. Isn’t the land along that part of the East River designated as the highest risk for flooding / zone A? So why oh why is development of these massive structures permitted in the first place? We taxpayers will be left holding the (sand) bag for this reckless policy.
7
"But at the bottom third of the market, they concluded that new buildings had the opposite effect, accelerating rents." This is the result of the population growth, not the new buildings. For each Zuckerbergs and their hordes of coders moving to SF, there will be more demand for baristas, house maids and medical assistants. These service people will have to live somewhere and it's not going to be new shiny buildings along Folsom Street.
5
Of course rents will rise. They always do when an expensive housing development occurs in a neighborhood.
4
Builders of these large buildings should have to reserve 20% of units for Section 8 holders or applicants.
7
I love city living, and I’d want nothing better than to live in one of the beautiful towers that are being built around San Francisco. Single-family-homes sprawl and suburbia are boring, ecologically unsustainable and socially destructive. They are cultural deserts that promote conformism, political polarization and parochial small-mindedness. Big cities are the way of the future. And gentrification is the necessary component of making cities flourish. Who wants to live in crime-infested slums? The only reason I won’t move to San Francisco is the plague of homelessness and street crime, and I hope that once gentrification increases, these will dealt with the same way they are dealt with in any global city: jail, rehab, and involuntary confinement of the mentally ill. If advocates for the poor want cities to have low-rent housing, the only way of doing so is building municipally-owned units that can be rented /sold only to people who are vetted for criminal records and who have steady jobs. The rest can move to suburbia. Living in a big city is not a human right.
2
All new buildings should have a proportion of units reserved for affordable housing.
3
Rents like wages social security checks ALL go as time goes by. No neighborhood is the same as it was 40 years ago thank God
Time moves on people move with it or it moves you
2
Not addressed is what happens to the people displaced by the new construction. In a city something has to be knocked down to create something new.
3
In Vancouver this happened and the clowns who bought the condos sued the city to clean the neighbourhood up. It didn't happen but eventually the pressure of disposable income began to change the neighbourhood. But the process is slow and the suckers will have to wait.
1
Rents will increase even on lower range units because of everyone's favorite parasite, the real estate broker. They convince landlords all across the rent spectrum that rates will increase and they are fools for not hopping on the bandwagon, thus accelerating a trend that might have taken years longer to be felt.
4
What are people entitled to stay in a place they do not own for a price they determine? I spent the bulk of two decades effectively working two full time jobs in order to own two small multifamily houses. Now the they finally are starting to show a profit, bernie and his bros want to pass national rent control.
Rent control does not solve the problem. And it robs me of the retirement I have worked for. The affordability of rent is due to the fact that rents have tracked inflation, but incomes have not. Those incomes have instead gone to corporate owners (see the stock market?}. Why do I need to pay because of corporate profiteering?
Ps In my liberal town, single family and condo owners vote to limit construction while voting to reduce their own taxes. This puts the burden of taxes on multifamilies and renters! Then they turn around and cry fake tears for renters. Disgusting.
4
@J c my rent over 20 years in suburban Northern Va has exceeded inflation by more than 50%. I should be paying $1114 but I'm actually paying $1625, about to be $1670. The reason? My neighborhood became trendy, lots of luxury condos and apartments went up and my landlord increased the rent accordingly. I will have to leave the area entirely to retire.
6
Is the first sentence of this article even a sentence?
"New apartment buildings often look to activists like precisely the problem."
3
I have to note it's being studied at NYU an institution infamous for it's own land grabs and real estate hoarding.
11
Here's a fun thing to do when reading articles about the housing crisis or the inequality crisis or the low wage crisis or the traffic crisis or the carbon emissions crisis: do a text search for the character string "migra" to see if words like "immigration," "immigrant" or "migrant" show up in the article. If they do, the author is serious about listing all the major causes.
Usually, of course, they aren't. For example, if I Google
"housing crisis" immigration
the first webpage listed is an academic study from ... 1989. Granted, the second is from 2019 in the Los Angeles Times, but it's a letter to the editor pointing out that immigration plays a role in the housing crisis, even if newspapers don't like to admit it.
2
Are skyscraper luxury apartments in poor neighborhoods in Manhattan the problem? Or the solution to market-rate housing in overbuilt New York City? Will damming the Hudson and East Rivers save the city from flooding in coming years of hurricanes and climate-change? Ask the folks who lived in the Hanging Gardens of Babylon in Ancient Iraq.
The Netherlands have dammed their modern country from floods. 'Build, Baby, Build' in America is a viral meme of our 21st Century social media times. But no human beings can hold back Mother Nature and Father Time for long. Wasn't Mars an undeniably inhabited planet before Earth became the spark of life in our galaxy?
2
That anyone would consider this horrid monstrosity a luxury residence just renders me incapable of speech.
A visible disfigurement is what it is, an intrusion on the sense of order.
I just cannot believe it.
8
Allowing developers free reign means short term profits for developers and neighbourhoods designed for speculators, non-resident investors, money launderers, and short term rentals.
"“just building housing” doesn’t work because housing is nothing like apples. Developers want to maximize profits as much as possible; that means building market-rate housing, which is worth far more to a developer than affordable housing. Yet as the aforementioned study found, building four market rate condominium units results in a demand for an entire lower income household, and possibly more than that. In other words, building market-rate housing actually makes the housing crisis worse for working-class people....
“the data doesn’t shake out that way...an oversaturation of market-rate and luxury rentals in big cities meant that housing costs dropped — for the wealthy. “U.S. cities struggling with soaring housing costs have found some success in lowering rents this year, but that relief has not reached the renters most at risk of losing their housing,” the Washington Post reported. “But the decline is being driven primarily by decreasing prices for high-end rentals. People in low-end housing, the apartments and other units that house working-class residents, are still paying more than ever.”... “rents [fell] for the highest earners while increasing for the poorest.”
https://www.salon.com/2018/11/04/despite-thorough-debunking-neoliberal-housing-politics-prevail-in-the-bay-area/
5
We need to give free homes, electric cars and healthcare to the city's homeless and undocumented immigrant workers..
1
@Aaron Why not? Siphon it from the 740 billion military budget!
Even before reading I can say how stupid can you be? All rents go up, never mind the reason exclamation point
1
Are skyscraper luxury apartments in poor neighborhoods in Manhattan the problem? Or the solution to market-rate housing in overbuilt New York City? Will damming the Hudson and East Rivers save the city from flooding in coming years of hurricanes and climate-change? Ask the folks who lived in the Hanging Gardens of Babylon in Ancient Iraq.
The Netherlands have dammed their modern country from floods. 'Build, Baby, Build' in America is a viral meme of our 21st Century social media times. But no human beings can hold back Mother Nature and Father Time for long. Wasn't Mars an undeniably inhabited planet before Earth caught the spark of life in our galaxy aeons ago?
1
What kind of gibberish is this?? Obviously, gentrification causes rents to skyrocket and pushes poor & decent people out of their longtime homes. This is a fact. We have witnessed this every time. Ultimately, we know how this ends up for people & prolonging it does not make it easier. why would you even attempt to re-spin this truth!!!
7
Maybe the economists who wrote this piece should have left their offices and talked to real life renters before publishing. They also forgot to mention and factor for greed; leaving thousands of apartment buildings empty to purposely inflate the market.
3
Greed. Rent control, a bad word?
1
My, what a fairy-tale world we live in! Studies! Which of course were not biased in any way to conclude, "Just let us build these luxury and ultimately flippable condos and we will all be happy! Shut up you people of more meager means, what have you got to lose," (besides your homes, your neighborhood, and your very future in this city.) Sorry, but I stopped believing in fairy tales long, long ago. Come on, NYT. Let's see someone weigh in for sensible urban planning.
4
The claim that allowing for more luxury development to be built in order to bring down prices for others feel like nothing more than a myth. I feel that it's more of a way for developers to have more of what they want to be built. In reality, they actually rise up prices to just about anything that surrounds them. Unless there is a way to make longtime residents and businesses not get affected by the rising costs, such projects will have them getting priced out a lot. For the most part, it's mainly the affordable housing that under special laws such as public housing, Section 8, Mitchell-Lama, and some others that don't get affected by rising costs due to gentrification, but not the case for everyone else. Also, whenever I hear about the claims that a private developer will include affordable housing, I start to ask this question, "Who is it really affordable to?" My guess is that it's not for the lower classes, but possibly for the upper middle class at most considering how much they cost, plus they make up a small percentage of the building to start with, which still makes them predominantly luxury. I never did believe that allowing for this will help the neighborhoods they are in considering how much the rich doesn't like spending time with those lower then them and will most likely take a cab or drive somewhere more upscale. More importantly, this places a further strain for the already existing infrastructure that can barely handle who is there now.
7
Rents never "fall." Even disasters only cause a temporary dip, if any. Unless landlords can be induced to lower profit expectations, they'll never lower rents to affordability. And what would induce them? Either no demand at all, which is impossible, or financial incentives. So, a city will have to guarantee a certain amount of income to landlords in order for them to lower their rents.
2
Well long term hopefully tax revenue grows for the local government. For if subsidies are used then costs go up for residents of these towers . Are additional police added to the precinct . Are new schools built? Same hospital space? So watch out for growth in the demand fir public sector.
2
A question unanswered is what happens when privately owned but publicly financed subsidized housing is build in a low income area with middle income areas nearby.
Do the middle income areas deteriorate?
Do the middle income people move out as traffic problems and schools become worse??
1
This article seems to ignore the effect luxury housing has on COMMERCIAL rents.
It is here that the spiral of neighborhood disintegration starts. Residents in these towers want Their banks, Their CVS, other major chains, and high end restaurants... all of which charge more than local providers had.
Here in just the square block I live on (Amsterdam/88/89th) the local liquor store, the laundromat, the nail salon, Domino's Pizza, two 99 cent stores, the bakery and the dry cleaners are all gone. We have a TD bank occupying 4 storefronts and 3 new expensive restaurants. Two families which ran two of those businesses had to move, and there are eight empty storefronts, as the building owners have jacked up the rents.
In my building the new landlord is going after the longterm tenants and challenging their right to be there so they can renovate and take the apartments off stabilization.
17
Thanks for sharing this very cool and important research. It would be great if the researchers could develop models for predicting when gentrification is happening. Then policy could be developed to help lower income residents buy into the property before it becomes unaffordable and benefit from the gentrification.
1
I would like to know what happens to the various small businesses that ably serve lower income people in these economically transformed neighborhoods? One would think that commercial landlords, seeking to maximum rents, would rush to replace the local bodegas with Starbuck-like coffee houses when leases expire, modest eateries with white linen tablecloth dining destinations, etc., etc. The deleterious effect on residential rents is but one problem that gentrification presents.
6
@John Grillo
I have watched most of the cheap and moderately priced eateries be replaced by higher end places in Harlem.
You can get a $13 sandwich but it’s now hard to find a decent slice.
5
@A. Brown
but those pricey places are still small businesses. I mean, not chains. There's confusion here between cheap stores and independent stores. plenty of small businesses are expensive. Bergdorf Goodman is or was a "smll business." Daniel and Per Se are small businesses.
1
Many years of living in NY and observing trends in changing neighborhoods my money is on rents (and prices) will rise. When a neighborhood "gentrifies" it attracts people who now want to live there and are willing to pay more.
Compare Chelsea 15 years ago and today. The supply of apartments has gone way up and so did the rents and the prices.
9
Building more luxury units may slightly depress prices at the high end of the rental market. However, it is certainly not going to hold down rents at the lower end of the market. Long-time residents of the Two Bridges neighborhood and the residents of these new luxury towers are from two different worlds. Two Bridges is home to a number of low-income residents, many Chinese immigrants, who live in subsidized or public housing. The new restaurants, bars, and coffee shops dotting the neighborhood are not there to cater to them. Rather, they push out the local stores and markets that catered to residents' tastes and budgets. These residents have every reason to be concerned about the impacts of the luxury towers on their lives.
23
@Julie W.
Your argument overlooks on-going inflation.
@5barris Your argument overlooks common humanity.
The article also ignores one of the main reasons luxe apartments are in demand: as “investment” or vehicles for money laundering. How many of these apartments are actually occupied most of the time?
Once the government got out of the business of developing housing, the resulting free for all benefited no one besides developers and foreign oligarchs. Forget about helping out native New Yorkers.
26
The underlying assumption in this article is that almost all new and newly renovated apartments and condos will be occupied full-time or most of the year. The article does not mention the growing numbers of luxury units that are, by US Census definition, “held for occasional, seasonal or recreational use.”
According to recent reports in the Wall Street Journal, Bloomberg, The NY Times and elsewhere, roughly 11% of total units in NYC fall into the category of “held for occasional, seasonal or recreational use,” and an even greater percentage of new construction falls into that category.
When extremely wealthy buyers purchase prime real estate primarily for purposes of “investment,” wealth parking, tax avoidance, tax evasion, or outright money laundering, the normal rules of supply-and-demand no longer apply. In such cases, real estate, especially luxury real estate, is developed, marketed and priced more along the amorphous lines of fine art, jewelry and suchlike rare collectibles.
Real-estate valuations based on “art market” dynamics are divorced from the economic realities of middle- and lower-income residents who are looking to buy, rent or maintain property. Allowing significant numbers of largely unoccupied luxury housing units to consume prime locations in a dynamic city like New York makes the city unaffordable and destroys the overall quality of life for the very people who make the city thrive.
65
@Scott Fordin
Very well stated. As a middle-class native New Yorker, born and raised, but living elsewhere, the dream of returning has died. I cannot see being able to afford returning.
Your comments are spot on. New construction catering to the wealthy as investments distorts the conventional supply and demand, and for long term residents who suffer excessive rent burdens in gentrifying neighborhoods, their quality of life in the city is diminished.
11
@Scott Fordin
I thing wrong with moving to Fort Lee or Leonia
1
@Scott Fordin By your logic, removing luxury housing units would increase supply and therefore decrease rents?
1
There are so many variables in this equation that have not been addressed: major demographic shifts, the effects of decades of rent stabilization and control, crime reduction, consumer preferences, nimbyism, etc. While this is fundamentally a simple matter of supply and demand, those two sides of the equation are more complex than it seems. One commenter mentioned Mitchell Lama, Stuyvesant Town, etc. This raises another very important factor. The federal government has basically gotten out of the housing business and that has had a terrible effect. No new subsidies for middle class developments (let’s presume any new ones would be racially integrated, unlike those mentioned) no money for public housing, which could add thousands of new units, and diminishing rental assistance. Also, a de-emphasis on subsidizing home ownership would allow for more mobility. That way, people could more easily move to where the jobs are. That could solve some other problems too!
9
@Daniel Doern
"There are so many variables in this equation that have not been addressed:"
Also - the effect of these massive new structures on the existing infrastructure, like water supply, sewer capacity, electricity service, gas service, internet service, postal service, parking capacity, emergency service (police, fire, medical, hospital, etc.), etc.
13
@Daniel Doern
Rent control is the most famous if all methods for crushing a stable rent stabilization market by natural selection
The cheap rent control units cause ALL other rents to sky rocket to make up the difference. Simple math folks. The rest of us wind up paying for rent control. Laissez Faire is what works every time
1
In about 1961 my parents bought a new home in Susquehanna Township, PA. It was moderately upward priced at about $24,900. Other nearby housing was priced from about $18,000 to $40,000 and there were moderately priced apartments, just a few row buildings, priced very, very modestly so that even a school teacher could easily afford the rent at a time when a school teacher's starting salary was less than $6,000 annually. on the far end of the street that we lived on was a large, undeveloped field that we kids used for playing baseball and football. However, by about 1968 the lot was purchased and 6 -8 apartment buildings were built on the lot. Each contained about 12 units on 2 floors. The monthly rent was from $180 and up. Not expensive but not cheap at that time either.
The effect of that housing was immediately felt. More children were added to the schools roster and people who were escaping deteriorating housing in the city, moved to these much more suburban and very pleasantly located apartments. After all, they were now part of the middle class suburbs. Another effect is that the value of single family homes was negatively impacted and values fell. The values remained depressed for almost 20 years until inflation and a new generation began to seek affordable housing. Today my parents old home is worth about $250,000. It should be worth much more. The apartments are shabby and the values continue to fall. Schools are deteriorating as well. Nothing was gained.
8
@Jack Frost Nothing was gained for your parents perhaps, but those who moved from the city gained a relatively pleasant suburban life at relatively affordable price.
And this is how NIMBYism works. Those who are already there, weather it is the city or suburb it doesn't matter, don't see any benefit from new buildings: only more traffic, cultural clash and, most of all, lower prices for their properties. So they throw everything including the kitchen sink and sun light ordinance to stop the development. And that's exactly how SF got where it is today.
8
@TKSung Thank you. My parents didn't lose as they moved from the neighborhood in the fall of 1966. Of course our friends and neighbors moved further out as well to nicer homes. The old homestead is still there and the streets, with mature trees and refurbished single family homes is very, very pretty. But the values are depressed mainly because, in my view, the apartments were never maintained or upgraded. Had nice condominiums or upscale, well maintained apartments been built the values, across the board for everyone would be far better. Yes, about 100 families gained a very nice place for a few short years. But by the end of the 1970s, low rent and poor up keep, as well as rising taxes destroyed the apartments. They should be gutted, totally remodeled and offered as upscale units. What followed after these apartments were, literally hundreds of other apartments built at the base of Blue Mountain in Susquehanna and Lower Paxton Townships. They too destroyed the value of the single family home developments, added students to the schools, and generally brought poverty to the area. They called this mixed-development. It was supposed to raise everyone's standard of living. All it did was ruin beautiful single family communities and bring lower standards of living. It didn't end poverty or bring prosperity and opportunity. More people moved even further away. Social engineering is a failure. You need to earn your way to better living. Affordable rent is a disincentive.
3
@Jack Frost, who was moving into those apartments? Were they members of a minority group? Could that be why homeowners moved away? Or perhaps they just didn't like any version of "those people." If that's not the reason, then perhaps the landlord is to blame for not keeping up the property, not the fact that the rent was reasonable. The town is also at fault for approving the building without ensuring that the necessary infrastructure was in place.
4
I am looking at that godawful super-tall "Manhattan Square" monstrosity from my apartment in Seward Park on the Lower East Side and dreading the addition of any more buildings like it. They are taking away what few feet of riverfront the not-wealthy may enough - a waterfront that was fine for the underclass when there were no parks along the river and the river was an open sewer - but are now simply snatching up land between the rest of us and the river. These things must be stopped or, if not stopped, then built to sensible heights like the rest of the existing neighborhood: 20 stories, not 99.
21
These builders build their buildings in neighborhoods where the price of land is cheap - that is, economically depressed neighborhoods. While it is good to know that the net impact is a slowing of rent increases and even a reduction in rents, what doesn't appear to be mentioned is the displacement of those who lived where the new building is.
Too often, the new construction happens without being accompanied by low-cost housing to replace that which was eliminated by the new construction. In city after city, homeless populations are fueled by this growth of high-end apartments that benefit the high-end. To be sure, new businesses come into the neighborhood, which should increase employment opportunities; however, those in need of employment can no longer afford to live in the area.
22
This, exactly. I’m a long-time resident of a sunbelt city that has become “trendy” and popular. The pace of new residential construction in the downtown area, and now radiating outward, is staggering. Massive apartment and condo buildings, one after another, with rents/prices that don’t seem to make sense, given the local wage scale. The problem is, older, more affordable properties are being demolished to make way for the shiny/new. I guess the demand must be there, or these places would not be going up at such a rapid clip. And yet I worry about our already overburdened infrastructure, particularly the aging sewer system. Given that this has always been a boom/bust area, I’d be wary of buying anything around here right now.
5
Both stories are true at the same time. The net-effect for low income renters is generally negative. What ends up happening is you change the definition of a "low income" renter. As more luxury apartments and amenities get built, the median income rate for the neighborhood goes up. The low end slowly cycles out to a cheaper neighborhood. Even if you can still afford the rent, you might not be able to afford the Whole Foods. Inflation is up overall and low income families are simply forced to move away.
They are replaced by "low income" residents with a higher average income in the "low" category. If the typically low income tenant was making $30,000 a year, now they might be making $40 or $50 thousand. Still low relative to the neighborhood buy higher than in the past. The $30 a year people move some place cheaper and less desirable. It's slow moving gentrification.
11
Lack of supply is certainly a detriment to affordability, but if the only developments built cater to higher-income renters, then while overall rents may drop, they generally won't drop enough to make them affordable for the working poor.
So, the better answer is to provide incentives for developers to build more tax credit properties in these areas along with the market rate developments. Tax credit properties specifically target lower-income renters, and in a market like New York, this kind of supply can help stem the problem.
The recently enacted rent laws serve counter to the mission to make housing more affordable. These new laws limit application fees to a point (a max of $20), that performing a through background check is almost impossible -- which can lead undesirable tenants negatively affecting the safety of the community, not to mention the profitability of developers who make these large investments necessary to build new housing -- which is a direct disincentive. The new laws also effectively prohibit reasonable rent increases, which virtually eliminates any incentives for landlords to make improvements to units.
The answer is not to enact prohibitions like these, which serve counter to the interest to make housing more affordable to lower-income renters. The answer is to increase the supply of rental housing, and providing incentives for tax credit housing would far more effective in meeting this goal than what the new rent laws outlawed.
5
Sure, flooding the neighborhood with luxury building might result in sales and incentives and help minimize the margins that the developers require. But the dynamic is like how a Mercedes Benz and a BMW dealer on the same block compete with each other for high end car buyers. Good news if you're in that market - not so good news for the used car dealership who sees property taxes or rent go up, and thus not so good news if you're in the market for a used car.
The disconnect with housing is that all of these oversimplified widget-based supply and demand analyses are just that. There is an amazing disconnect between the popular "It's Econ 101" understanding of the dynamic of supply and demand and what actual supply and demand curves represent.
Supply curves indicate what at what price a supplier will provide an additional unit of a good. And there's a reason why price rises with additional quantity, developers must compete with each other for the construction trade labor, building materials, architects, etc. But one thing is undeniable - nobody will sell housing for less than it costs to build it. So that new Mercedes will never be priced like a Kia.
Demand curves are the less visible element here that developers exploit through sophisticated algorithm-aided marketing, and we need to address that. Adding 10% to a neighborhood's supply is unlikely to ever offset additional demand by people earning substantially more than existing neighbors, and international investors.
4
The problem not mentioned in the article is the effect on commercial rents in newly gentrified areas that cater to the new wealthier residents that move into these higher end apartments. With nearly $3 coffees and restaurants that charge $30+ for a meal, $7 for a beer and supermarkets that carry organic produce- it makes life for low income tenants in the area unlivable. Surprise, surprise they move out and are replaced. In effect these low income residents become hostages in their own neighborhoods!
15
@Gilbert Rosen It's not just that it effects low income renters. High commercial rents really only allow for large chains, so whatever retail/food personality was in the neighborhood previously also gets pushed out.
5
Mortgage rent is what spurs many to purchase a condo or a house. Rents do not drop in new deluxe apartments near metro stops. There may be a small concession on rent to get new move ins but there isn’t usually a rent ceiling and you move out when when your rent increases the maximum amount year after year after year. Real estate companies may manage the day to day operations but investors financed the land purchase and construction and they seek to maximize their investment. It’s the American way. Owning things creates wealth.
1
Ms. Badger,
Like most economists and most columnists, you do not understand the first thing about rising real estate prices.
The problem is that there are rentals at all. Ownership is the thing that will bring down the prices of homes.
Let me quickly explain. If you have 100 homes occupied by 100 people, it can be said that most of those 100 people have every economic incentive and the desire to actually own that home. However, in an economy of haves and have nots, 40% or 50% of those 100 homes are not available on the open market.
In layman's economic terms this means that you have extreme scarcity in the marketplace--you only have a market that can meet half of the demand of the society.
What then happens is that the 100 theoretical homeowners are competing for the 50 or 60 remaining homes. This impossible demand then drives the price of the homes as individuals compete for the scarce resource. In the meantime, this raising of the prices on the homes that are sometimes available also raises the price of the rental homes. Those rental homes are always second or third or one thousandth homes for the investors that own them, yet those investors get tax breaks on the mortgages that the renters are paying, they get tax breaks on the improvements to the homes, and they get tax breaks in the form of depreciation of the asset.
My words are running out, but my understanding will fill a book one of these days.
9
@Justin Chipman I agree, but I don’t want to own a home anymore. I am tired of all the maintenance and just want o rent. So I hope housing prices fall for the middle class.
2
@Calleendeoliveira -- you could also move elsewhere so the rent won't be such a burden. Frankly, I couldn't afford to live in New York, so I don't. But I don't expect anyone to give me a break on the rent there just because I want to live in NYC. Actually, those who do not work but live in NYC should not be able to expect cheap housing. They should move out of the city where the rents are much more reasonable.
5
@Don Juan In large desirable cities, there are numerous people who work, and not all of them make gleaming salaries. The city depends on these people to provide services for those who do. Where do you suggest they live? Two hours out of the city, spending more on transit than they can afford? I am not talking about those who qualify for public housing, I am talking about those who make a bit over minimum wage who may even have family in the area and cannot just "leave", or those who may be wanting to establish themselves within the arts---basically the mix of people who make a city interesting.
NYC was brutal in the 1970s, but I was able to work right out of high school and afford an apartment and the city WAS interesting. Not as much anymore, and all 5 boroughs are expensive to live. The "move elsewhere" philosophy is just as unrealistic as as those who say that people in the heartland should just "move elsewhere" if the factory jobs are no longer available. As if it's so easy.
26
In Boston, all of the 50+ unit apartment buildings going up downtown, or ones where you can "walk" to a subway, seem to be branded as luxury (rooftop pools, indoor dog parks with astro-turf). The going rate for a one bedroom in any of them are closer to $3,000. While I whole-heartedly believe in urban density to attract business, jobs and a better supply of housing, it seems most developers want to maximize their investment (who would blame them). Any little bit that helps make housing more affordable is a good thing, but right now the rising tide seems to be champagne, not water.
23
About the only thing that lowers rent is high vacancy rates, and that often works out that the landlord will give amenities and incentives rather than reducing the monthly rate.
Older, less attractive stock doesn't rise as fast as brand new stock.
And if the housing is owned by a huge consortium, they may just choose to keep the rents high, ignore vacancies and take a loss until vacancies right themselves.
And the competition for rents is based on the entire area - a rental will be competing with all other areas that are within the same commuting time, same commuting cost. An increase in stock that draws from areas that have higher commute times or costs simply draws more people to the area, rather than creating more vacancies. The vacancies occur in another neighborhood.
A desirable location will be high priced. That is why gentrification occurs, and why people choose to build high rises in otherwise affordable areas. Location location location.
15
There is a larger picture. Global warming. To deal with it we need denser residential building, near mass transit, a more urban lifestyle; this reduces commuting time and emissions from commuting. We will also have to allow areas to return to nature, we can't keep building by the water.
So yes, let's build, but not on the lower east side by the river, an area that will soon be constantly flooding even is a small storm.
18
Out in the suburbs, new construction has created a bifurcation in the market where new construction and its critical mass of supply is so much more highly valued, regardless of location, that older units have actually plateaued or decreased in value.
Younger people would actually rather live in new construction hanging over the train tracks than live in or fix up anything old in a 'good neighborhood'.
Generational tastes have kept older units more affordable.
1
That’s unfortunate. Much better to fix up existing properties than to use up more and more open land just to benefit developers.
3
@CRS I agree. Often older existing homes are much more solidly built than newer construction and can be updated. I love my 50+ year old brick home that is made out of actual bricks, not brick facade.
2
I do not see a solution for 'affordable housing' in this piece. What is to be done with the displaced renters in the near term? Are they to wait until the new structures are aged to tenement status in a few decades?
There tend to be these 'little problems' that are not answered by such studies. What is a humane percent of income to pay for housing? For food?
Give us solutions.
18
In Houston, opposite is true. More supply doesn't rents will come come down. It all depends on the local economy regardless of demands.
Inside or near 610-Loop where Medical Center, big oil companies, and other major business located, plenty of high priced houses, town homes, and luxury apartments are available. But a lot of them are empty with not many buyers or renters willing to pay for the high price. Old houses, apartments still keep their prices as before. Employees rather live in far away places in the suburban and drive long hours to work. It is the local economy and nothing else to determine the price.
1
This article regurgitates developer-friendly math and propaganda.
This at least is true: "Neither study means that rents actually fall"
Developers always say more units will lower prices, but they always plan high-end units to attract *new* high-end customers because they make more profit that way.
If the market worked, rents would go down when supply goes up. Instead we get the following math-like ideas:
"those landlords probably don’t see new luxury towers as direct competition".
Pricing is not an opinion. A competitive market forces prices down.
"relative to what we’d expect rents to be if the new buildings were never built"
Fantasy. You cannot say an experiment succeeded when there was no effect because of some other theoretical effect.
Using the median rather than the average rent just means developers can continue to offer a few high-end units without changing the numbers.
The fair comparison would be between adding a few new high-end units or adding more below-average-price units.
A fair policy would be to build until the vacancy rate at the average rent is 5-20% (depending on the cost of money, using higher vacancy rates when money is as cheap as it is now).
But as with every industry whose profits depend on government policies, the regulatory agencies are captured and mutated to increase profits and reduce competition.
This capture is possible only if people believe developers and agencies are acting in good faith. Hence: articles like this.
30
Places like Manhattan and San Francisco have an unlimited supply of people who would move there if they could afford it. This makes the traditional economic correlation between supply and demand fall apart. If every housing building were replaced with a skyscraper that somehow offered units at the same prices as average rents before, they would all fill and demand would not lessen.
But this is never what happens. New housing is always much less affordable, so much so that developers can still make a profit with lots of vacancies.
Most importantly, as the research part of the article states, costs and demand for lower end units (which would be considered unaffordable in most of the country) do not get better. Even in studies that presumably are mostly based on locations unlike Manhattan or San Francisco, where supply can affect demand.
Places like this will never be affordable. Full stop. Building more units only makes things better for those not constrained by affordability. Which might very well be a useful thing to do.
Just stop with the voodoo economics about how it will make it affordable.
38
@Ted Flunderson The number of people who want to move to NYC or SF is not unlimited. Tokyo's metropolitan area population is almost double NYC's and over 4x SF's and Tokyo manages to not have an affordable housing crisis. If both cities continued to build more housing, at some point the number of people who want to move in will not outpace the supply of housing and rent prices will start falling. Additionally, as you hint, there is economic benefit to allowing more people who want to be in both cities to actually be there. Big cities have agglomeration effects. We should not downplay those benefits.
15
I assure you I don’t want to live in those places.
1
Japan does not allow immigration and its population is declining. This has resulted in a reduction in demand for housing. A stable or decling rate in population growth is the only true long term solution for the housing crisis.
2
Seems like free-market theory works only in radius of 500 feet, although it is possible that the rent for nearby apartments are not raising so quickly only because the new apartments are blocking the views, so 'old' ones lose some of their value.
9
Greenpoint, Williamsburg, Tribeca, Chelsea. Look at the cost history of rental apartments and co-ops in those neighborhoods and then try to claim that building new luxury apartment buildings does anything exept displace longtime residents, drive out small businesses and drive up the price per square foot multiple times more than can be rationally considered affordable.
37
@Fred
I live in TriBeCa. It's lovely. It's safe and quiet. My neighbors are very polite, well-educated, stylish, and considerate. I've never needed to make a noise complaint. The restaurnats are excellent. The espresso is terrific. The parks are full of laughing children. The bars are full of educated, attractive, charming people. In all sincerity, TriBeCa is close to Heaven on earth. I can't think of a nicer urban place to live.
6
@Anti-Marx and your point regarding rents is what?
4
@Anti-Marx What's your rent/mortgage/common fees?
I live in Harlem. When the luxury apartment buildings started going up on Frederick Douglass Blvd. the rents in the neighborhood began to skyrocket. For the past decade they have only gone up and up and up. Even the rent for apartments in the brownstones and on the top floors of 6 story walk-ups have more than doubled.
NYC needs to invest in housing for everyone, not just for those who can afford to pay $3,000 per moth for a one bedroom.
66
@Sallie -- those who cannot afford to live in NYC should consider a move elsewhere. No one should have the right to demand cheaper housing.
1
@Sallie
Why should NYC care about people who can't afford rent? Sincere question. I truly do not get why people expect a city to guarantee affordable rent.
I'm a single finance guy. To me, NYC is like a big cocktail bar. Everyone is trying to go home with someone (attractive). Arguing that the city should provide affordable housing is like saying the cocktail bar should guarantee that every customer goes home with somebody. I no longer see NYC s a city. I see it as like an Olympic Village for mating. Transplants move here from all over to find romance. I can understand that such seems like a very perverse way to view it, but it's how life seems on the lower West side of Manhattan.
In NYC, you have to convince people to care about you.
1
@Don Juan Why not???
1
"The only way to ease a housing shortage that’s pushing up rents, they [economists] say, is to build more housing. Construct enough of it — even if it’s high-end housing — and rents in general will fall."
If only economists understood simple economics.
Landlords always raise rents to the maximum that renters will pay. Supply has no place in this issue.
22
@Mike That's literally the fundamental assumption that underpins any supply / demand curve - that sellers will charge the highest price that will move their goods.
In fact, supply and demand would fail if landlords *weren't* doing this.
6
@Callum
The supply part of the curve depends on the cost of maintaining inventory at higher prices than buyers want to pay (i.e., whether they need to "move" the goods at all).
When interest rates are low, it costs little to hold apartments vacant even for new developers. After a building is paid for, owners are basically choosing what kind of people they want in the building, to minimize their management hassle.
And Mike is basically right: when there is an infinite number of buyers, there's no downward pressure on prices. The increase is supply is no where near what's necessary for the market to bring prices down, and it never will be in the few places that have jobs.
5
Substantially higher density without a corresponding increase in mass transit and utilities is a recipe for declining quality of life in those areas where it occurs. New York City really needs to whip construction costs into shape then set out on a huge expansion of the subway system. Perhaps zoning changes could be tied to special assessments for new construction to help fund the amenities that create the value.
18
New supply lowers rents. That’s basic economics. Just look at Singapore, Shanghai, and Taipei. The problem we have is that we don’t have enough new supply so people are still feeling the squeeze of rent increases that were already going to happen and the new building only dents the increase a little bit. What we need is MASSIVE new building very quickly so we reverse the trend of rent increases.
When you have a bacterial infection, you can either use antibiotics or not. But if you use too low a dose, your infection might not stop. That just means you need to use a higher not a lower dose.
9
@NewYorkResident
try population control that is a guarantee to work. No new buildings needed, no tax breaks for the developers, no zoning changes needed. a simple solution right in front of our faces but very few will even suggest it.
27
Of course, sometimes a bacterial infection is out of control and overwhelms the infected organism, in which case no amount of antibiotics will help. That’s overpopulation, and we’re the bacteria.
9
@lou andrews Population controls in big cities defeat the purpose of those cities. Cities are among many things a giant labor market. Roughly speaking, the more people you can reach within an hour of commute, the more productive the city is. Tokyo has shown that you can support a metropolitan area population of almost 40 million without having a housing crisis and still have the largest metropolitan area GDP. Why not aim for that?
5
You write: "Economists, on the other hand, tend to see new buildings as the solution. The only way to ease a housing shortage that’s pushing up rents, they say, is to build more housing. Construct enough of it — even if it’s high-end housing — and rents in general will fall."
Where is this fantastical premise even remotely true in New York City. Apartments in New buildings--like the hideous glass tower in the lead photo-are not even remotely affordable for working people. They are built for the global rich. So beyond the high-end market, in what sense are more apartments available. The average Manhattan studio price is about 3K. And my rent still goes up.
54
@sansacro 1) NYC these days has excessively strict zoning laws. Example - lot of those iconic buildings (Chrysler, Empire State, etc) couldn't be build in this day an age. Strict zoning laws means a drawn out development process aka more paper work + time it takes to review proposals, which ends up adding cost to build new apartments. Only way to recoup that is to charge more in rent therefore raising the minimum floor developers can charge.
2) In addition, strict zoning laws means you have less space + height to build making land more valuable and therefore expensive. This cost gets passed onto the price/rent of your apartment as well.
3) Many new buildings can only get built to the height they are by adding "affordable units". If half your building is below market/below cost of construction prices developers will just add that cost onto the "market rate units" which then become "luxe". So now you have a bifurcation where half the units (affordable housing) can only be accessed by people through a lottery and the other half are luxury apartments. Middle class people who are too rich for the affordable lottery and too poor to pay 3k for a studio get squeezed.
16
@Yu From what I've seen in NY and LosAngeles, developers are motivated purely by greed.
2
@Yu Yes, my colleague and I (we are college professors) applied for those lotteries, which my friend just barely qualified for. But the studios offered to him were not much cheaper than a Manhattan 3K studio, between 2K and 3K. He lives in a larger not-quite-gentrified Brooklyn apartment on a rat-infested street and pays 2K for more space so he stayed put.
2
In New York, I think we need to think in the context of 'expanding the realm of the city' in a way that goes far beyond what landlords and real estate developers can do. For example, upzoning Downtown Brooklyn and LIC was a brilliant move because it enabled huge numbers of apartments to be built where there was already great subway access with quick commutes to Manhattan's job centers. We could address the housing crisis by doing this again and again in other places -- but we'd need to improve transit to achieve this. Make super-express subways to selected low-rise areasof the outer boroughs (keeping commutes to Midtown or FiDi under 20 minutes), increase the allowable FARs tenfold, and let the developers do the rest. The housing crisis will be under control.
18
The built environment is much more than a economic space, it is social, political, architectural, etc. and so this reductionism of the built environment to nothing but an economic space is extremely unhelpful and damaging in many respects.
Consider a broader, more inclusive approach when writing about urban design.
So I'd be happy to write a rebuttal to this whole piece.
18
@@eee_eff I would like to read your rebuttal, unfortunately, the NYTimes has a word limit. Perhaps you could serialize it. Seriously I really would like to read it.
2
Notably, nothing presented in this article defeats the common sense assumption that new luxury high-rises accelerate the displacement of lower income residents living nearby. The luxury buildings attract amenities that make the neighborhood desirable to younger people who are not yet as affluent as those who take up residence in the new luxury buildings but who are more affluent than the long-time, lower-income neighborhood residents. It is this second-wave of newcomers, up-and-coming young people with more means than the traditional neighborhood residents who drive up rents in the neighborhoods in which these new luxury buildings are built. This phenomenon is well-known in NYC and it is not refuted by any of the studies cited. Notably, it is confirmed by the Minnesota study.
34
@ARB How is this common sense? There are plenty of very gentrified neighborhoods with no new buildings. Look at Park Slope. Or most of San Fransisco. Gentrification can and does happen in the absence of any new buildings all the time, so I don't how saying that it's caused by new buildings is common sense.
16
San Francisco is full of new buildings. I’ve spent a lot of time across that city over the last few years. Both residential and commercial construction are non-stop.
1
@MK It is not all caused by new high rise buildings, obviously, but that is not what is being addressed in this article.
1
The big issue with housing that very rarely gets talked about is zoning. Think of all the illegal apartments in Queens, clearly there is a demand for duplex housing there, but zoning makes it very hard to turn a single family unit into a duplex. You see this same issue (but much worse) in the Bay Area in California.
Now I understand that if you buy a single family house in a single family dominated neighborhood, you may not want a lot of renters who "move in and out" every few years. but a good compromise would be to place a cap on the number of dublex units (no more than 5% of the houses) rather than ban them. That would increase supply without changing the neighborhood. In NY that may mean you can build a luxury unit in Manhattan or the Brooklyn, as long as you build an equivalent number of market rate units in the Bronx. Compromises are what are needed.
8
Thank goodness! Our economic model of supply and demand holds true, as long as we only look at restricted data and over a long time period. For a minute there I thought we might have to talk about building public housing, or some other bad thing!
28
One new building isn't so bad unless the neighborhood and/or city is rapidly growing and prices and rents are rising.
If one new market-rate building fills up fast you can expect more such buildings to be built, most-often by displacing lower-cost renters and homeowners.
If a city is stagnant or falling in population a nice new building will tend to drop adjacent rents and property values.
Since 1975 Metro-Denver has more than tripled in population and since 1990 its median home price is up by 422% (according to the St. Louis Federal Reserve Bank).
Imagine how high rents would be in NYC if your population had tripled since 1975?
One new building isn't a huge problem in NYC unless it increases demand in that neighborhood, which then brings in more new buildings, and pretty soon lower-income and then mid-income tenants are forced to move to somewhere else that they can still afford.
That has been our experience in Metro-Denver. Here it is popular to buy an older single, scrape it, and replace it with an upscale duplex, triplex, or quad, where every new unit costs 50% more to double what the old single cost.
If you do that enough times there won't be any old singles left and along the way rents will definitely rise.
12
@Mark Richardson population/birth control. You just said it the population of Denver tripled in size.. any questions?
1
I think building more roads and more lanes on existing roads to ease or eliminate traffic jambs is also a hoped for result that rarely pans out.
3
In NYC, a new luxury building in an “attractive” neighborhood typically means the tsunami is about to start - landlords of small buildings will get rid of residents and keep apartments vacant, then sell to developers who will tear down the small buildings to put up luxury high rises.
81
@SLM - That has been going on here in Seattle ever since Bezos moved his business from Bellevue to Seattle.
1
They building looks like the 1974 movie, The Towering Inferno. Does anyone know how they will keep all the lights and electricity on during heat waves? As the area has not upgraded the local infrastructure in decades, and locally on the Island of Manhattan the past couple of weeks there has been a staggering number of water & sewer main breaks. Has Delbasio even bothered to think of these things or he doesn't care since after leaving office he will go back to his bubble living in a Park Slope townhouse.
20
Good point. All these buildings and very little electric infrastructure upgrade. No new substations which provide the power have been built for years so there is little margin for error when the heat waves come.
10
1. i feel like we also gotta ask the question at how much space people r taking up. new york is too dense for families of 5+ to be in one bedrooms, and the single and childless to be in 3+ bedrooms (even if they can afford it idc). we gotta find a way to budget space appropriately.
2. improving the mta woulda also make a big difference in where people look to live. if the mta was affordable and quick enough, people would look into living further distances from their job if the apt is more affordable. promoting movement would decrease density and spread money around the whole city, rather than concentrating the wealth to hot spots.
3. we just don't need any more hotel living apt buildings. we don't need more apts with gyms or pools or concierge. we need clean, decent units that are smartly designed w enough windows and closet space with a laundry room and one or two community rooms.
4. and definitely tax tf out of any owner that keeps a unit empty. maybe theyll chill out w all the money tenants gotta put forth and hoops that they gotta jump thru to even BE considered. housing is a right not a privilege. we don't all need a high rise with a doorman, but we all need a warm place to seek shelter
44
@brokenyc
NYC is for the rich. Last time I checked, America had 100 other cities. At least one or two will become hubs for the uber wealthy. That's SF, NYC, LA, and Boston. The non-uber wealthy are welcome to the rest of the country, and it's a very, very bog country. I don't complain that I can't afford to live below the highway in South Fork. When I ski, I'm priced out of Aspen and Park City proper. I stay on the outskirts.
Almost anybody can find a place to live. Just maybe not in one's dream location. Poor prople don't add anything more to a city than rich people do. My rich friends almost single-handedly support The Met Opera and Lincoln Center. I'm glad they're here. I'll take the Met Opera over Coney Island any day of the week.
4
The idea of "...build more housing" as a solution to housing shortage is synonymous to economists' notion of "...create more jobs." On papers, it sounds great, but as we know full well, not all jobs are created equally. Same goes with housing.
When we say, we want more jobs, we don't mean jobs that barely pay to live on. Afterall, we don't just work for the sake of keeping busy. We work because the job needs to pay to sustain a living. As we can see, our roaring economy at present is creating tons of jobs, but it's mostly gig-economy jobs that are getting paid less and less, with no safety net to fall back on when the gig is done or simply disappears.
As to housing, if developers are building just luxury condos to cater for the one-percenters, what good does that do for the rest of the 99% of the people? Is this really that hard for economists to comprehend?
Disclaimer: I don't believe building mixed-income housing is ever going to solve the affordability conundrum. All it does, is to allow a selected few to squeeze in via lottery, while the rest of the people look on with green envy. It's also questionable how long these lucky few will hold onto their units with artificially discounted prices? One generation, or maybe two? We should drop the pretense that we squeeze more and more people into limited space indefinitely. Rather, build public transport, extend to suburbs further out, AND THEN you can build to your heart's desire.
22
@tiddle Luxury is a vague concept. Most high end housing in NYC would be considered just normal anywhere else in America. And many rich people in NY live in housing that would be very low end anywhere else. If new housing soaks up the high end demand, that's less people competing for the rest of the housing.
6
Always good to hear from economists who work for institutions like NYU and Columbia where their rental apartments are subsidized.
In the meantime the rest of us know from experience that one new building with "luxury" rentals leads to more buildings with more "luxury" rentals. The rents around BAM in Brooklyn haven't gone done now that a gizillion new high rise apartment buildings have been built. Instead affordable units have become harder to find.
Once upon a time in NYC developers got tax breaks to build units for the middle class -- Stuy town, Peter Cooper, the Mitchell Lama buildings. These buildings made it possible to live in NYC, to raise a family, to even save some money for a rainy day. Life wasn't so bad then...we had diners, cafes, movie theaters, even grocery stores. People act as if NYC wasn't livable prior to gentrification. Get real folks! Greed only rules when we let it.
189
@historyprof
And, in the cases of Peter Cooper and Stuy Town, developers got tax breaks to build segregated housing. So it's best to revise your statement to read, "These buildings made it possible for white families to live in NYC..."
4
The results were not that rents went down but grew slower than otherwise. Liberal can, somewhat, just as anti-data as conservatives when their emotions aren’t being validated
1
If the goal is to keep housing prices lower, then developers should be taxed for unsold/unrented units. That would encourage them to price them fairly. A NY Times story from Sept. reported that "among the more than 16,200 condo units across 682 new buildings completed in New York City since 2013, one in four remain unsold." That's ludicrous. Vacant apartments help only those who seek to keep prices high.
104
Land value tax
1
@Travis investment properties, foreign money.
2
@Travis
Right track, but go further: also tax units that are sold but unoccupied (which exceed the number of homeless people).
2
The evidence backing a causal relationship between densification and higher rents is not supported by this research, not even marginally. One thing that you do not mention is that this only looks at the effect of introducing a small amount of extra density in a tight market. It does not calculate the effect of significantly increasing density, and it does not capture general equilibrium effects: the citywide effect if many blocks added housing simultaneously.
No economist in their right mind is proposing that we only add a few luxury apartments and call it a day. Rather, the argument is that you need to drastically alter the density of the city. Add apartments everywhere and add as many as possible. Given the clear empirical evidence of a causal relationship between increased supply and lower prices in every other market ever studied, there's no good reason to believe that it wouldn't hold in this case as well.
13
this is an interesting article, but let's face it, it's going to persuade nobody, because people who oppose development don't do it primarily because they fear displacement of the poor.
after all, if that was their main worry, it would be very easily solved by lobbying for a set percentage of below-market apartments with preference given to residents of the area. this would solve the problem in most of nyc's neighborhoods. imagine for example that the city allowed skyscrapers on all of wburg's waterfront blocks. this could easily yield 20,000+ apartments, and if 25% of them were set aside for residents making median wage or under, nobody would need to be displaced.
but of course, if deBlasio proposed anything close to that plan he would be attacked as a sellout to real estate interests, people would start complaining about traffic, crowded schools, lack of light, etc. and they would keep opposing the plan even as the neighborhood was gentrifying and losing its poorest residents (as it has happened already in that neighborhood).
and in general, you don't hear people say "yes, let's build that skyscraper, but only if we increase the percentage of affordable housing from 25% to 35%, or 40%, or 45%, and we give priority to existing residents".
8
@Bogdan
They did precisely that on the Williamsburg waterfront /Kent Ave. in many developments near the former Domino Sugar factory. People lobbied to have a certain amount of the apts be lower and middle income units.
I'm not sure the percentage of uniots but it happened.
6
@Ignatius J. Reilly fair enough, sometimes it does happen. however, i remember when the edge went up (kent and north 4), people were against the towers full stop. when they proposed building high-rises in greenpoint, people were against them full stop (they still went up, and they do contain below-market units). when there was a discussion to build high-rises at kent and n14 street, nimbys wanted a park there instead (there are already three parks within walking distance of that lot). the nimbys won that one. and i could go on...
the point is this argument is just an excuse for nimbys, who would quickly find other arguments to oppose new development (what about the effect on the environment? what about the aging infrastructure? what about the shadows these buildings will project on the east river? you get the idea).
6
Aging infrastructure is a valid point. You just keep adding more people and buildings without greatly enhancing utility infrastructure , transportation and other necessary improvements. You can’t just keep overtaxing them and act like building has no consequences.
3
Its a hideous building that doesn’t blend into the neighborhood. The tale of two cities mayor is in the process of destroying east east river park, the local les ecology center, and anyone living in this building will have no green space, a subway station that’s not accessible, crappy bus service and overcrowded schools, and no local supermarket. Wait till all the residents have asthma from the fumes of the FDR drive.
15
@LES There has been an increase of hideous tall, expensive buildings in my residential neighborhood in Brooklyn, despite the passionate objections of long term residents. Our appeals to the city were ignored -because frankly, the Housing department could care less about zoning. Abuse of "eminent domain" is destroying our neighborhoods.
2
Where is Howard Roark when we need him? This misplaced monstrosity should be done away with.
5
Anti-gentrification forces are ironically proposing measures that end up being racist in effect. Higher rents in minority neighborhoods means more income for minority landlords and minority property owners.
It is a weird belief system that has no issue with middle class whites selling their single family homes to a developer for a large profit, but denies the opportunity (through government intervention) for minority property owners to profit.
9
The variation in rents is so slight that if you can’t afford to live on a certain block now, you still won’t be able to after densification. The problem I’d not a lack of housing, it’s a lack of affordable housing. If wealthy people want to live in your neighborhood, you’re doomed.
35
@MrMisocainea
So let me get this straight: Housing is a right, thus I should have the right to live anywhere I want, at someone else's expense, but that right does not extend to the rich?
What gives someone the "right" to live in a particular place of their choosing?
10
@Voltaire - First of all, you are talking about a couple of different things, and conflating them: one is a right to shelter versus a “right” to profit. I own this property and have a “right” to profit off of it, which trumps any right of humans to live there. Then there is one person’s right to live in a home versus the rights of a different person. You clearly think that the rights go to whoever can outbid the other person - but that’s a pretty new idea. You could as easily say that the right belongs to the one who’s been there longest, or whose family was there first, or who has contributed the most to the community - joining the neighborhood watch and the PTA and picking up litter. Or there is the “I own it and can do what I want” school of rights. I can leave it empty, burn it down, rent it out, or keep it to party in on alternate Leap Days, because it’s mine, and I owe nothing to the collective, or the nation, or my fellow man.
It’s just weird to me, how capitalism - which was never ever intended to be a moral or ethical code - has become the only morality many people have at all.
2
@MrMisocainea I've lived here ffor 40 years. Now I couldn't afford a lateral move in my own neighborhood.
1
read the original research at fed working paper 19-30..3million data points in 100 densest neighborhoods in US cities over 5-10 years..at the individual household level. impact on existing residents and children showed little negative impact and some bright positive signs. the issue is bigger than development including eviction policies, rent control and zoning rules.
1
In actual free markets, the price is always correct, whether that's good for you or not.
There's zero surprise that increasing the supply reduces prices by filling demand that otherwise would drive it up.
15
What part of "supply and demand" do these NYU researchers not understand?
'Gentrification' is just an euphemism for politically correct social engineering propaganda.
22
@Kai No, gentrification is the improvement of property to higher values, so it clearly displaces some, but to the preference of many more who move in.
13
@Kai given that these are mostly economics professors, i think they would have a better understand of "supply and demand" than some internet rando.
10
Probably NYU and its professors don’t pay market rates but are subsidized or pay very little property taxes.
4
Cities have to maximize property tax and sales tax revenues to provide the services that the likely lower income residents want. The money has to come from somewhere. I suspect most cities outside of NYC and SF are similar to Dallas. The actual size of gentrification projects is a tiny piece of the particular city’s area. If upper income households want to move into the city in a few, particular areas, then welcome them. If you have a million people living in a city of one million, 90 per cent of whose children are in low income households, and the city area is 385 square miles, these high end projects that need at most a grand total of a few square miles are the right thing to do.
3
@Michael Blazin Cities should reconstruct their income tax structure to be more progressive. DC raises property taxes on all residential properties for a mile or more around a new development so that people renting in marginal apartment buildings and hanging on to single-family residences that have not been "improved" find themselves paying higher property taxes (in the form of rent if they do not own) that sometimes drive them out.
1
We do not have income taxes in TX for very good reasons. As for assessments, I would fully expect DC to do them incorrectly. TX assesses property every year with fairly owner friendly process to challenge your assessment. By TX Constitution, enacted after Civil War, counties must justify the separate worth of each property and cannot use broad measures. If they did, the owner simply disputes the assessment and the county has to justify its calculations. The review board typically has three trained volunteers and usually finds for the owner if she makes a good case. Many times, the county rep lowers the assessment to requested value before proceeding.
Given how tight the leash is on county and other taxing jurisdictions, we have to let them maximize the revenue from properties that have potential.
2
Wait...only $1,620/month median rent? For a new apt in Manhattan? Am I reading that right?
When did Manhattan get so cheap? I'll take a dozen at that price!!
19
@Wally Greenwell it was a nationwide survey, not exclusively Manhattan
6
Well, the article says "The median rent for a new unit is now $1,620 a month, 78 percent higher than the median rent nationwide", and that seems to mean that the NYC median is $1,620. So, the sentence is either wrong or poorly written.
18
@Wally Greenwell the lines would be around the block waiting for those apartments. You can't even find a cardboard box in Bed Stuy for that kind of cash.
19
One Manhattan Square - THE MOST OBNOXIOUS BUILDING IN NEW YORK! How the City ever allowed this building to go up is beyond me.
14
@EC I’m sure there are plenty of other more obnoxious buildings in Manhattan if you think about it.
We can thank Michael Bloomberg for it.
1
“I think the fear of just saying ‘build baby build’ is a very valid fear. It’s up to planners and policymakers to engage those concerns in good faith.” Well then, we are doomed for sure.
11
@AEK in NYC Yes, central planning suggests a few people know the future and know what people want and need better than the millions of individuals who vote every day with their dollars and feet.
4
The part of the equation the author is trying to build is simple, if overlooked. If the rents in the new buildings are less than the median rents in the neighborhood, then pressure is to reduce rents to compete. If they are higher (as they always will be, with a gleaming new tower) then pressure builds to raise rents. Buy extension, should city councils exert rent controls, then they can control which way it goes.
3
@James Neumerski
You're kinda flying in the face of Macro-Econ 101 - the primary driver is Supply and Demand and has little to do with price signalling.
Something the PhD authors cited in the article proby know as well.
10
@James Neumerski
If a new apartment complex goes up and convinces people to move there from their old apartments, those older apartments are going to work that much harder to compete for tenants. It doesn't matter so much what the new apartments rent for, if there are a lot of buildings competing for a smaller number of tenants, the only way to prevent a vacancy is to reduce rents.
6
@nick True, but you only reduce those rents if the vacancy is so high that it compares to lost revenue if you have to reduce the rents of the tenants still there. Otherwise, they'd just move from the older high priced unit to the new lower cost one.
2
Rents will rise because that's what rents do in cities like NY!
Meaning cities that are thriving.
You don't need to be an economist or do a study to understand that.
Things change. That's life (in the big city).
15
and how are the poor and the true middle class without parents who help financially supposed to survive/live?
18
@Full Name
Look at Tokyo. Still a growing city, one of the densest in the world, but the median rent for a two bedroom apartment has only gone down over the last ten years. That's because they removed many of their restrictions on housing development. There's an endless amount of room to grow in the sky. It's a policy battle more than an engineering one.
13
@xyz Let them eat cake.
3
Perhaps it matters what city you're talking about. Once the nice shops and cafes come in, the housing prices rise. In my neighborhood in Berkeley, housing prices have risen near the new fancy highrise building and far from them, probably at a rate of 200-300%. Rents have obviously risen as well. So has the price of constructio over 10 years, leading to a vicious cycle in which only luxury units are now built. I wonder if people doing these studies talked to real people, or just looked at abstract numbers.
11
@alcatraz
Berkeley rents go up because of an insane housing policy and the basic tenets of supply and demand.
If it is impossible to build vertically dense housing then rents will go up as population grows.
13
Economics aside, this building is an architectural abomination. Whoever is responsible for foisting this monstrosity on our senses should be shot out of a cannon come next 4th of July
85
@Neil C.
New York real estate is ruled a by a cabal of inbred families that compete amongst one another for bragging rights on the harm they can do to the fabric of the city in the name of a buck. The union of the Trump and Kushner families was an attempt to join this illustrious club by "outsiders" from Queens and New Jersey; to me, they fit right in.
6
Once again, economists assume that humans act rationally. My experience with landlords has taught me that greed and self-deception motivate them. A landlord sees a new building in the neighborhood and does not think, "My aging building and shoddy maintenance should drop in price, no, I'll slap some landlord white on the walls and raise the rent. My building must be worth more!" In all my years of renting and walking through slums and hovels, I have never met an honest landlord. They all feel exploited. Cities need to take on the small-time landlords by buying up their buildings and replacing these two- and three-unit buildings with highrises for workers.
41
@landless
A greedy landlord still has to confront the laws of supply and demand. If affordable apartments are plentiful, the landlord has to choose between a vacant apartment that produces no income, or a tenant paying the market rate. The reasons they can get away with high rents for crumbling apartments is because they know there's a supply crisis and tenants have nowhere else to go.
18
so were the developers of this high rise able to take advantage of "opportunity zone" tax breaks ?...let me guess.
19
A lot of years of tax abatement so we subsidize all these buildings and then have to hear that property taxes are “low” and need to be raised.
2
There's plenty of affordable housing around NYC, people just don't want to deal with using transit. Go look at apartments in Yonkers, Mt. Vernon, or New Rochelle. All are on Metro North lines and have access to the city. If you can't afford to live in Manhattan, don't.
28
@David And lower income workers are going to commute over an hour each way to job to provide for the denizens of Sky City? Increasingly, the answer is no. They will move to another city/state, and businesses will be unable to find help.
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@David
Yes, this is a great solution to get more and nicer space for the same or less. The problem is that you must factor in $248/month per person for a train pass from those locations, $127 per person for a 30-day MetroCard, $52 per month (or more) for station parking. For a working couple, that's an additional $800+ per month. You have to count it unless biking or walking to work for all or part of the trip.
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@Neil C. It's a free country - the lower income workers can do what they want.
If the answer is no, then we'll see more kiosks at McDonalds, more iRobot vacuums, and more software automating the tasks of administrative assistants. And life goes on.
7
Bottom line in imo this is what history has taught us.
The best way to handle rents is a mix of free enterprise and gov't.
If you let free enterprise run unrestricted you get the situation you have in many NYC areas now, insane rents that only the rich can afford with a sprinkling of "affordable" housing which I call slave quarters of the plantation.
If you do the opposite ie restrictive total rent regulation, you get the disaster you had in the 1070s ie buildings being abandoned because landlords could not make a profit.
There should be caps on how low and high a rent should be with free enterprise determining the rates in the middle.
Some exceptions could be made for the very poor or very rich but it should not be the rule.
6
Forty years ago I stumbled into a Manhattan rent-stabilized apartment at a very low rent. While rents have since risen substantially, so too have renters expectations. I got a low rent because it was a 6th floor walk-up with a bath tub in the kitchen. It also had only one closet - for the toilet - no kitchen cabinets, original windows which were scant protection from a cold winter night, and the boiler was on an illegal timer so the heat went off promptly at 11 pm - de facto bed time for all. My experience with the young people moving into the building I live in now is that they couldn't tolerate such conditions at any price. While rents are out of control in NYC, at least the condition of most apartments has improved.
17
@Steve725
Good for you Steve.
2
Yes of course market forces "work" in practice as they do in theory. The seeming contradiction in some of the data presented here is that all of these studies are trying to draw conclusions by looking at what is in fact two distinct markets which are somewhat related (in the long-run, on a replacement level) but completely different on a day to day basis: high-end housing and low-end housing.
Once you wrap your head around that, everything in the data makes perfect sense.
5
Much of the difficulty unpacking the impact of supply and demand in NYC largely relates to the complicated ways existing regulations intersect with market conditions and the many modern regulations that are trying to be imposed... frankly to counteract the unwanted effects of previous market interventions. The protections provided to existing tenants like forms of rent stabilization and or rent control have the effect of protecting *existing* tenants, but at the expense of *non*existing tenants. That is regulated inventory drives the price of unregulated inventory through the roof. If NYC magically unregulated all of the inventory in NYC (upwards of 50% of all inventory in the city under some form of regulation), free market rents would plummet. NYC would actually be a remarkably affordable big city.
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@Cara
You need to stop drinking the coolaid. Why in the world would landlords lower free market rents just because the price of regulated apartment rents increased. There is no city in the world that has the demand for apartments that NYC has. For everyone who dies or leaves there is more than one person coming to NYC to take their place. Boston ended rent regulation and rents are far more expensive than they were before. Greed is what drives the cost of unregulated apartments through the roof. You're obviously not a New Yorker, not a real one at least, and you should leave. If people like you left NYC that would lower the rents, less demand, lower rents.
3
500 luxury units are built. 500 renters move into these units and out of older/lesser units. 500 older/lesser units go on the market (necessarily pushing prices down), and 500 more renters benefit. Perhaps we acknowledge the benefit to those 500 replacement renters. The neighbors of the luxury building see rents go up, but as this piece points out, correlation doesn’t not equal causation. So yes build baby build. And turnover in tenants is a sign of a healthy/functioning market. Stabilized, sweetheart rents promote the opposite, dysfunction.
Regarding the closing quote, are we now using Robert Moses as a bogeyman to smear developers who are the solution to (and not the cause of) the housing supply crisis?
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@Andy Deckman
Luxury renters and those who need more affordable housing are two entirely separate groups. If Mercedes increases production it doesn't take sales from Kia.
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@Andy Deckman
Many of these apartments are investments by people who don't live here, don't pay taxes, drop by occasionally. In the meantime, small businesses are kicked out, neighboring buildings, often full of small service business helpful to th local residents are torn down and replaced with $$ buildings with banks on the ground floor,
Just look at what happened to Columbus Circle with the Time Warner center---- an inexpensive good computer repair shop on the second floor of a building nearby is gone from the neighborhood. The old building housing a physical therapy practice is being torn down.
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@Andy Deckman
"500 luxury units are built. 500 renters move into these units and out of older/lesser units. 500 older/lesser units go on the market (necessarily pushing prices down), and 500 more renters benefit."
Please show substantiation for this claim, specifically with regard to NYC. You cannot. It is fiction.
57
Think of how many affordable apartments could have been built in Hudson Yards....probably quadruple the number of luxury condos that were built. Tax incentives should be directly tied to the number of affordable apartments in each building, and "affordable" should be directly tied to that zip code's median income (e.g., if affordable is 1/3 of annual income).
For example, in Queens at 11101, the median income is $65k, so a truly affordable apartment rent should be $1650. Currently the median rent in 11101 is $2786. An equitable tax break for builders should be, say, 50% if half the apartments have a starting rent of $1650, and half at $2786. Even easier if they build more than one building (one with "luxury amenities," etc). Developers should be directly incentivized to build apartments renting as close to what is ACTUALLY affordable for the average new yorker in their neighborhood.
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@Brady
You are right, developers should be incentivized to build more, yet these new "tenant protection laws" do the exact opposite - why would I invest in rental housing only to have NYS / NYC tell me I have to directly subsidize rent regulated tenants and potentially house them for free if they complain about anything.
If the state wants to provide low-cost housing at society's expense, no problem, but stop making it sound as if developers are to blame - do you work for free?
11
@Voltaire42
Hudson Yards was and is being developed by Stephen Ross who is unencumbered by vast ownership of rent regulated apartments. He is only encumbered with greed. So, what's your argument again?
Oh, and the new tenant protection laws don't apply to new freemarket rental housing so shut the front door because you obviously aren't capable of investing in anything.
2
@Brady
Let's also recall that the only new subway station in decades was built for Stephen Ross at Hudson Yards by his BFF Michael Bloomberg; meanwhile, the rest of the system continued to decay. I omit the Second Avenue subway because that's been in the works for almost a century. and remains a joke in its current state.
What crony capitalist Bloomberg did to Manhattan to enrich his pals, is what he'll do to the US if elected president. Astonishing how blind his wealth-worshiping boosters can be to the consequences.
4
Of course the studies look at the neighborhood effect of high rent construction, because that is what is occurring. No one looks at the neighborhood effect of low rent construction - which of course is what is needed - because low rent construction is not occurring. These are studies looking to justify a reality that is part of the problem. What should be studied is the benefit of low rent construction, and how to make it happen.
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@George L.
Exactly correct. Since space for new construction is so limited in the NYC area, developers won't build "affordable housing" when apparently there's no problem filling luxury units.
16
@Pat But there is a problem filling luxury units. There are empty apartments all over the place, the times has run multiple articles about it. But the developers get their 421a tax break either way, and can thus afford to sit on empty apartments (and storefronts) until they find someone willing to pay, and even if the building sits half empty for a decade, they can take the tax break and STILL write off the loss.
24
@Brady
As the Times expose of the Trump family's financial chicanery demonstrated, between write-offs, depreciation, transfers, and made-to-order appraisals, it's almost impossible to lose money in NYC real estate. The tax laws were written by developers, for developers, and enacted by their stooges in City Hall and Albany. Only a certified bonehead like Jared Kushner could manage to find himself in the red.
4
It's NYC -- rents are not going down.
Saying that luxury units will lead to lower rents because they increase the overall supply is the trickle-down theory applied to housing. It doesn't happen in the overall economy and it won't happen here.
232
The scientists who study it (and about whom we presumably all read about for the last five minutes) say otherwise
21
@Pa- exactly!
4
@Pat - Spot on, Pat!
6
I am a Professor of Economics. We can agree to disagree, but put me into the "rents will rise" category. From an elementary economics point of view, new building creates more supply that would normally bring costs down. In reality, developers and investors seek to enhance their positions, which means higher rents, leading to higher revenue, which leads to enhancing shareholder value. With limited open space in Manhattan, this building on the Lower East Side will slowly result in costs for the rest of the neighborhood to spike at some point.
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@Michael Supply goes up, but rents will nevertheless rise because developers want to collect more rent?
It amazes me that New Yorkers, with so much direct practical experience in the housing market, nevertheless cease to believe in the existence of market forces when gentrification is involved. And today I learned this phenomenon can extend to Economics Professors!
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@Thatcher Ulrich I believe in market forces, but let's question the study for its relevance here. NYC is not Minneapolis. It's not even close. Better, let's ask for a study that is done here, for here, and how prices go up or down here where there is new construction. We should be asking how much that is new is actually intended for middle or lower income individuals or families. Please consider professionals like nurses, teachers, and social workers in that category.
We have a glut of luxury and ultra luxury apartments in NYC. "Market rate" near-luxury buildings are even going up in what have been traditionally lower and middle income neighborhoods or blocks. We have no where near enough so-called average-priced or starter apartments, let alone lower income apartments. Go on StreetEasy, search for 1BR apartments under $2500. Sure there are some, but look where they are and what they are--in a city of 8.5 million people--and factor in the cost of public transit (train/ferry/bus + subway/bus) for places where rent is less for more.
This problem is painfully complex in this city and region. Market forces alone are not going to solve NYC's problem. Political posturing only makes it worse.
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@Thatcher Ulrich Of course I cease to believe in market forces when gentrification is involved.
The gentry will and do pay more to live with other gentry and not poorer people.
Just open your eyes!
14