Rent Stabilization is the Savior of NYC Landlords!

Thanks, financeguy. An excellent summary. (Because I agree with it, mostly; RSA may not.)

"RS, in short, is largely responsible for the NYC of stable communities and long term residents that we know. Without it, tenants would be as transient here as they are elsewhere, limited to students and people with no credit rating."

New York City experienced some of the nation's most traumatic turnovers of "stable communities" during the 1960s and 1970s when about 1 million people left the city and wide swaths of the city declined precipitously by every quality of life standard. So much for the success of rent regulations stabilizing neighborhoods and preventing long term residents from leaving.

Regulations on rent were meant to prevent price gouging during and after World War 2 when there was a housing shortage. It was never meant to prevent generations of families with subsidized housing so that people can live one class above their incomes.

where did you copy and paste your article from finance guy?

HDLC: As far as I remember, the problems of block busting and white flight were worse in the owner-occupied parts of the city than in the RS dominated areas. They also affected virtually every city in the country, those with and those without RS. I don't think that race tensions, deindustrialization, the decline and fall of the old factory-employed working class, fiscal crisis, bad management and heroin can be blamed on RS.

In any event the RS system had a major reform in the 1970s, and I'm pretty sure RS didn't even exist in the 1960s. The RS system we have today is quite different from the RC system put into place after WWII. The post WWII rent control system was meant to be temporary and it had created impediments to new investment that became serious problems when it stayed in place longer than anticipated.

Critically, for the last 30 years or so RS has not applied to new construction and major renovations; units are only stablized after being rented a market rent. So today RS does not affect the profit incentive to create new housing.

As for stable populations, I think that the statistics show pretty conclusively that NY renters are more stable than renters or homeowners elsewhere in the country (nationally, homeowners move about every 5 years on average). In any event, most NYC landlords seem to believe that RC (a different system) increases life expectancy by years and years.

Alpine/Pres: I actually write my own stuff.

***"Rent stabilization is a primary reason why NYC has rental housing suitable for people with choices. Without it, middle class tenants would disappear and landlords offering middle class housing would be out of business.***

Wrong. Landlords offering "middle class" housing would still be in business -- they'd just be renting out their "middle class" housing to people with deeper pockets. Those apartments aren't going anywhere.

***"It isn't a subsidy at all: no one is taxed to keep rents down, no one is forced to build or rent a RS apt, no money is transferred from one party to another."***

Again, wrong. The people who subsidize RS tenants are market-based tenants forced to pay appreciably higher rents to compensate for the money NOT collected from the RS tenants. This is simple economics.

****"In fact, the available empirical evidence suggests that NYC's RS rules largely even out rent increases"***

For whom? Not the market-based renters.

NYCMatt:

Simple economics says that prices are set at the margin and at equilibrium, they equal the cost of producing the marginal unit. RS reduces the cost of building because it makes rental returns more predictable and therefore less risky and because it makes renting more attractive to tenants and therefore makes them willing to pay more. So, simple economics says that RS REDUCES market prices.

NY isn't at equilibrium, so what we actually need is more complicated, non-equilibrium economics. But simple economics doesn't support your point. High rents for market based renters are the result of (1) high cost of building in Manhattan and (2) the vastly greater profits to selling to owner-occupants.

Your assumption seems to be that RS reduces supply, thus increasing prices on a fixed stock of apartments. In some short runs this might make sense, e.g., if both sets of rents were below the cost of creating new housing, so the supply of housing was effectively fixed in a zero-sum game between RS and market tenants. But that's not NYC today.

Whatever effect RS has is utterly overwhelmed by the bubble. The real constraint is that owner-occupants are willing to pay vastly more than rental value for apartments, and so profit-maximizing landlords and developers attempt to move apartments from the rental market to the owner market. As the bubble pops, this will change and many condos and a few coops will shift back to the rental market bringing rents down -- miraculously, with no changes to RS at all. The reason your rent is high is not because RS is constricting supply (it doesn't apply to new construction), but because the bubble created infinite competing demand.

And yes, the empirical evidence is that outside Manhattan, RS tenants usually pay more or less market, and in Manhattan the same is true except in booms, where they lag behind, catching up between booms. Since we are just at the end of the longest and most dramatic boom of a century, there probably are significant differences right now.

Whatever advantage long-term RS tenants have over current market rate tenants, it pales by comparison with the advantage that long-term coop/condo owners have over recent buyers and all tenants. It is the buyers from the 70s-80s who you should envy, not the renters.

Just as a hypo, what would happen if RS were suddenly repealed? Lots of RS landlords would jump their rents, and lots of RS tenants would be forced to downsize. Then there would be a crash in rents, because there aren't enough high income RS tenants to fill all the RS apts at current market rents. But since market rents are already way below the value as condo/coops, landlords would race to convert to condo/coop. This would reduce prices in the condo/coop market but increase rents. Hard to know how long all this would take, but in the end,

presumably, we'd approximate equilibrium, in which market rents would equal the marginal cost to produce a comparable apartment and investors would be indifferent between holding to rent or selling to owner-occupants. That's equilibrium because at any other price someone can make excess profits by increasing supply of whatever is overpriced or decreasing whatever is underpriced (by new construction or converting between rental and owner-occupied markets).

But that is the same equilibrium that we should reach with RS: MARKET rents should equal the marginal cost to produce comparable apartments, and investors should be indifferent between holding to rent or selling to owner-occupants.

So at equilibrium, RS is irrelevant. Again, that isn't necessarily correct at NON-equilibrium.

Sorry -- I meant irrelevant to NON RS TENANTS. They get what the market can provide, which is based on the costs of construction and effective demand.

At equilibrium, RS DOES make a big difference to RS tenants and landlords. It eliminatss a major problem of negotiating tenancies -- that tenants who invest, emotionally or economically, in their homes open themselves to exploitation by landlords that become, by the tenant's investment, quasi-monopolists. Defending against this problem without RS is difficult and hurts both tenant and landlord in something analogous to a market for lemons.

"Just as a hypo, what would happen if RS were suddenly repealed? Lots of RS landlords would jump their rents, and lots of RS tenants would be forced to downsize. Then there would be a crash in rents, because there aren't enough high income RS tenants to fill all the RS apts at current market rents. But since market rents are already way below the value as condo/coops, landlords would race to convert to condo/coop. This would reduce prices in the condo/coop market but increase rents."

I don't see that as being a bad thing at all.

Renting is never a good long-term situation, particularly if you expect to retire at some point on a reduced income.

RS has been great for the average middle long-time NYer.
Most of the complaints for the system are landlords who bought too high assuming they could kick out the stabilized tenants and rent or sell for more
and relative newcomers to NYC who for some reason feel entitled to what long-term NYers have.

"RS has been great for the average middle long-time NYer."

Not necessarily.

That long-term middle-class New Yorker has never built equity in his home, and is forever stuck on paying ever-increasing rent.

At what point does one become a long-term NYer? Ten years? Five years? Twenty years? The only people who deserve rent stabilized apartments are people were born in the city? Old-timer rent stabilized tenants do in many ways screw newcomers; it is unreasonable to expect people to resent a fundamentally unfair system.

Sorry, "to expect people NOT to resent..." - typo.

Some will say you're not a "real" New Yorker, deserving of cut-rate rents, unless you were here on 9/11.

Others will say you're not a "real" New Yorker unless you were here before the dot-com boom and bust.

More will say not unless you were here during the go-go '80s.

Nope - still many others will say you're not a "real" New Yorker unless you were here to purchase the edition of the Daily News whose headline read "Ford to City: Drop Dead".

No wait -- that's not good enough. You had to have been here during the Stonewall Riots.

Eh -- not really, will say others. You had to have been here during the Beatnik days of the Village.

But wait -- no -- unless you were in Times Square on V-J-Day -- you're not a "real" New Yorker.

No? Well what about all those people who were here in October 1929??

I think my head is going to explode.

RS is good for landlords? Seriously?!? I should have guessed. That is why so many buildings built in the last 20 years have been specifically for the purpose of renting them out in the rent stabilized system. In fact, the average landlord can't wait for the end of their market rate leases so they can convert their apartments to the RS system. The lines to do so are staggering. There is a shortage of lawyers to make the conversions....

Oh, wait. I woke up. No, there aren't ANY apartments being converted back. No rental buildings are built with RS apartments that weren't first bribed to do so with various tax inventives. Why do you suppose that is?

financeguy - here's my take.

1. I'll start by saying that at this point it would be crazy to get rid of the system quickly as it would displace too many people. We need not create policies that leaves tens of thousands on the streets. I think that a system where we slowly destabilize all units is the best policy.

2. There is a reason that NYC's housing is significantly more expensive than other US cities. One reason is RS (other's include absurd zoning laws, absurd approvals processes, absurd building codes, the mob, etc (btw I don't buy the "we don't have any land argument as we could building 1,000,000 units if needed.) You need look no further than other US cities to realize our system doesn't accomplish it's own goals.

3. Luxury decontrol is a joke.

4. Any system that discourages landlords from improving their properties is a bust from the jump.

5. Any system that discourages people from buying instead of renting is fools gold. Remember with home ownership your payments don't go up at all for 30 years and then they go away - as life expectancy continues to increase imagine having a mortgage payment for only 1/3 of your life and the rest of the time you just pay maintenance and taxes (or live with your parents for free).

6. Any housing system that creates the government morass that is the DOB, DHCR, HPD, Housing Courts, ECB is inefficient. Too much tax payer money is used to monitor this system. Not sure the budget for these agencies but it's got to be tens of millions a year???

7. Any housing system that is not needs based is a bust from the jump.

8. Once vacant, all units should be destabilized.

9. It shouldn't take 10 months to evict someone who doesn't pay their rent. It's not the landlords job to house broke people.

That long-term middle-class New Yorker has never built equity in his home, and is forever stuck on paying ever-increasing rent.

There's no need for equity, housing is inexpensive and rents increase modestly and the owner doesnt have property taxes, or skyrocketing maintenance and energy, or assessments, or other ownership costs.

You can't say rent stabilization is unfair to landlords and other renters and turn around and say it was bad for rent stabilized tenants.

godenoc "You can't say rent stabilization is unfair to landlords and other renters and turn around and say it was bad for rent stabilized tenants."

Why can't you say the system is bad for everyone?

"There's no need for equity, housing is inexpensive and rents increase modestly and the owner doesnt have property taxes, or skyrocketing maintenance and energy, or assessments, or other ownership costs."

Housing is "inexpensive" as long as the tenant's income doesn't decrease. But after retirement, most Americans are bringing in about 1/4 of what they were earning pre-retirement, if that. Unless rent somehow drops to 1/4 of what they were paying pre-retirement, it's no longer "affordable".

However, the OWNER by retirement will have paid off his mortgage -- the lion's share of his housing costs -- and now in retirement really IS paying 1/4 (or less) of what he was paying for housing during his peak earning years.

what about maintenance? what about property taxes? what about insurance? you are a complete idiot.

Renting and paying a mortgage are just alternative methods of financing. It is absurd to think that one is inherently better than the other. It's all in the details. RS is one detail that solves one of the problems with renting -- the commitment issue.

AVuws isn't thinking systemically; he's thinking about an individual landlord's ability to exploit his quasi monopoly. Of course the individual is better off, in narrow short term sense, being able to do that. People with guns are also better off without laws banning theft... at least for a little while.

Jazzman's complaints are mainly not about RS at all. RS didn't cause the RE bubble or drive up land prices to silly levels. Nor is it likely that we'd be better off if HPD and the housing courts were even more underfunded -- just borrow a Jacob Riis book from the (underfunded) library and look at pictures of NY before HPD. And of course we'd all be better off if they were competently and honestly run -- with or without RS. Similarly, the difficulties of evicting for non-pay are not due to RS: it's even slower to evict "owners" who don't pay taxes/mortgages/maintenance. And RS would be largely the same if we had instant eviction for non-payment -- that's not the main issue it deals with.

NYCMatt is giving bubble talk-assuming some kind of divine right of eternal real estate price increases. In the real world, renters and homeowners both need to save for retirement. The question is whether it is better to have one massive undiversified leveraged investment in a single piece of real estate or a more diversified portfolio. Not obvious to me that the right answer is owning your home. A ladder of CDs would probably be safer and more profitable for most people. If you totally lack self-control, the forced savings aspect of a 30 year mortgage might be useful -- but of course that assumes that you have the self-control not to borrow your equity (and it turns out that most American homeowners lacked that).

"what about maintenance? what about property taxes? what about insurance? you are a complete idiot."

Read my post carefully: "the OWNER by retirement will have paid off his mortgage -- the lion's share of his housing costs -- and now in retirement really IS paying 1/4 (or less) of what he was paying for housing during his peak earning years."

That 1/4 represents the maintenance (property taxes are included in the maintenance, there's no reason to list those as a separate expense), and insurance (which renters should be paying as well, if they're smart).

Try to keep up.

EvNY -- Why do you resent RS tenants, who missed the bubble up and down, but not landlords and homeowners who profited from it at the direct expense of their children and newcomers to the city? It is the incumbent owners and the flippers who really "gamed" the system and profited at everyone else's expense in the most direct way: they extracted money from the city's success while helping to make that success harder to sustain. That's an achievement few RS tenants can match.

"Renting and paying a mortgage are just alternative methods of financing. It is absurd to think that one is inherently better than the other."

Wrong. What is "absurd" is not to realize that buying is inherently better than renting because you eventually PAY OFF the property free and clear, while rent payments continue F O R E V E R (or at least until you die).

Well, owning you do pay off your property, but YOU do PAY off your property.

Also, the great thing about rent stabilization is that it has helped stabilized New York and there is a whole big percentage of NYC's property and a whole big percentage of NYC's population that didn't have to ride the bubble up to bursting. I doubt that the original creators of NYC rent stabilization had in mind that they were trying to protect against the dangers of extreme market forces, but in fact they did and that is how all NYers have benefit. '

Honestly it is great that people are pointing out the wonderful societal benefits of rent stabilization for a change instead of attacking it with foolish economic theories or woe is me landlord complaints or touting the benefits just as an us versus them.

As far as real NYers, to me, if you either your parent or your child was born in NYC, then you are a real NYer. At least one generation has had to plant roots here to have another generation in NYC. Anyone else are just temporary NYers!

"As far as real NYers, to me, if you either your parent or your child was born in NYC, then you are a real NYer."

No. That would make your parent or child a "real" New Yorker, not "you".

Hi Matt, maybe I wasn't too clear what I said, but the point is if you want your next generation to live here, or if your parents wanted to continue their family here and raised you here, then that's what I'm saying makes you a real NYer. You don't have to be the one who was born here as long as you make the decision that you think NY is the right place for your next generation too. NYC is great!

New York can be even greater without the unfair burden of rent stabilization.

Matt, rent stabilization isn't a burden on anyone. Rent stabilization helps to stabilize NYC.
But, funny thing is, grumpy as you are getting, you are becoming a real NYer! ;)

"It is the incumbent owners and the flippers who really "gamed" the system and profited at everyone else's expense in the most direct way: they extracted money from the city's success while helping to make that success harder to sustain."

What a bunch of bullshit. Ever hear of the free market? This is the United States, not the Soviet Union. Supply and demand sets rental prices. If there is a lot of demand, then landlords have every right to charge high prices. They are not gaming the system.

A lot of people living in rent stabilized places are people who fought in World War II and their children. Allowing people who fought for America's freedom and planted roots in NYC to help build our great country and our great city to remain in NYC and not be subject to the whims of bubble markets and newcomers with bigger checkbooks but no history here is part of what makes this city a great city. If we just subjected NYC to whoever could write the bigger checks, NYers would have been forced out by the Japanese in the 1980s and later transplated by other Asian countries, rich Europeans and Middle Easterners and only the wealthies of NYers who could keep up like the celebrities, dot com bubble people and most highly paid Wall Streeters. That would have been the free market, pretty bad for NYC I think we would all agree.

I have no problem with WWII vets living in RS aptss., assuming they are not millionaires. It's the people like the parents in the thread below that piss me off:

http://www.streeteasy.com/nyc/talk/discussion/12644-25-east-end-avenue-accepted-offer-at-39-of-2007-price

"Matt, rent stabilization isn't a burden on anyone. Rent stabilization helps to stabilize NYC. "

Wrong. It's a burden on market-rate renters who are paying the difference.

financeguy - "Nor is it likely that we'd be better off if HPD and the housing courts were even more underfunded" you miss my point - I wish they had ZERO funding - there should be no need to have such organizations at all.

"Similarly, the difficulties of evicting for non-pay are not due to RS: it's even slower to evict "owners" who don't pay taxes/mortgages/maintenance." You avoid the point of my argument - that it's not the responsibility of the owner to house broker people. If owners default we don't ask private citizens to bail them out anymore. Either the bank takes the hit or the buyer of the property pays the back taxes or the society as a whole pays for it.

Finally, look at the fruits of our system. Despite a thriving economy over the last decade we still have the most expensive and worst housing stock in the country. One need look no further than the fruits of this and other programs to realize they just don't work as well as a free market system (which of course is not a perfect system either).
Again, this program just doesn't accomplish its goals.

That is untrue Matt, very untrue. In fact it is downright silly if you even tried to work it the full extent of how that could be the case.

"A lot of people living in rent stabilized places are people who fought in World War II and their children. Allowing people who fought for America's freedom and planted roots in NYC to help build our great country and our great city to remain in NYC and not be subject to the whims of bubble markets and newcomers with bigger checkbooks but no history here is part of what makes this city a great city. If we just subjected NYC to whoever could write the bigger checks, NYers would have been forced out by the Japanese in the 1980s and later transplated by other Asian countries, rich Europeans and Middle Easterners and only the wealthies of NYers who could keep up like the celebrities, dot com bubble people and most highly paid Wall Streeters. That would have been the free market, pretty bad for NYC I think we would all agree."

Why are we rewarding the children of people who fought in WWII? What did they do? And frankly, why should any veterans be given a free pass to NYC real estate? This isn't the Soviet Union -- it's AMERICA.

What's bad for NYC is allowing forcing an unfair rent system that creates a communistic "caste" system, forcing the "haves" to subsidize the "don't want to pay market rates".

By the way, Matt, even though it doesn't harm them one bit, the point of rent stabilization isn't for the benefit of market rate tenants. It is for the benefit of rent stabilized tenants. So saying that a program intended for a certain population doesn't benefit another is not even a thoughtful position to take.

Why are we rewarding the children of people who fought in WWII? What did they do? And frankly, why should any veterans be given a free pass to NYC real estate? This isn't the Soviet Union -- it's AMERICA.

They and their families stabilize NYC. I'm gathering you are not a NYer but for maybe a few years living here. This program then isn't intended for your benefit. Sorry that is the case.

And as far as this subsidy, there is no subsidy whatsoever, there is a stabilizatoin in place between the landlord and the tenant. No other party is involved. You are not involved as I'm gathering you aren't in a rent stabilized apartment and I'm also gathering that you aren't a landlord (though if you are, you bought the place knowing it had stabilized tenants, right?)

What's not a "thoughtful" position to take is asserting that rent stabilization benefits everyone. It doesn't. There's no free lunch -- that's basic economics. If one person is paying less for something that everyone ELSE has to pay for in the open market, SOMEONE is forced to pay the difference.

Also, "And frankly, why should any veterans be given a free pass to NYC real estate?"

They aren't getting a free pass. They are paying rent. And we want them here. You say this is America and then you want to throw out our veterans and their families? That doesn't make sense and you have to be getting emotional because you aren't being logical.

No, no no Matt, no one else is paying more because there is a relationship between a rent stabilized tenant and an owner of the rent stabilized apartment. No one is paying a dime more.
This economics you throw out is some odd abstract. Within the rent stabilized apartment you have two parties, not some big economy that you learned by taking a couple of macroeconomic classes in college.

***"They and their families stabilize NYC."***

Define "stabilize".

***"I'm gathering you are not a NYer but for maybe a few years living here."***

If you call two decades "a few years", then guilty as charged. Of course, I actually OWN a little piece of New York, rather than living in someone else's apartment, forcing others to pay my share because I'm in a rent subsidized apartment.

*** This program then isn't intended for your benefit. Sorry that is the case.**

Of course it isn't. SOMEONE has to actually pull the weight around here, and I suppose it's those of us who are classified as "rich".

***"And as far as this subsidy, there is no subsidy whatsoever, there is a stabilizatoin in place between the landlord and the tenant. No other party is involved."***

Sadly, you still don't get it. Or you don't want to get it. Either a landlord is forced to operate at a loss, make less rent than he otherwise could, or if he owns market-rate apartments he passes what he's NOT making off the moochers to the market-rate tenants. To believe anything else is to live in a fantasy land.

"They aren't getting a free pass. They are paying rent. And we want them here. You say this is America and then you want to throw out our veterans and their families? That doesn't make sense and you have to be getting emotional because you aren't being logical."

Anyone who is artificially paying less than they should, thereby forcing others to make up the difference is, in fact, getting a free pass. And no one is suggesting that World War II veterans (and why we're including their families is beyond me, but whatever -- you realize that WWII ended 64 years ago, right? Their kids are more than grown up at this point.) be "thrown out". I'm only suggesting that everyone pay their own way, and pull their own weight. You know -- just how the market-rate people do it.

***"They and their families stabilize NYC."***

Define "stabilize".

-sorry I really can't do remedial.

***"I'm gathering you are not a NYer but for maybe a few years living here."***

If you call two decades "a few years", then guilty as charged. Of course, I actually OWN a little piece of New York, rather than living in someone else's apartment, forcing others to pay my share because I'm in a rent subsidized apartment.

-see what I said above. Are you starting your family here or do you plan to move out?

And no one pays anyone's share of a rent stabilized apartment other than the tenant. That's making things up.

*** This program then isn't intended for your benefit. Sorry that is the case.**

Of course it isn't. SOMEONE has to actually pull the weight around here, and I suppose it's those of us who are classified as "rich".

You aren't paying for anyone else. I don't know how you can even make that claim it is so silly but truly your sense of entitlement is unbelievable.

***"And as far as this subsidy, there is no subsidy whatsoever, there is a stabilizatoin in place between the landlord and the tenant. No other party is involved."***

Sadly, you still don't get it. Or you don't want to get it. Either a landlord is forced to operate at a loss, make less rent than he otherwise could, or if he owns market-rate apartments he passes what he's NOT making off the moochers to the market-rate tenants. To believe anything else is to live in a fantasy land.

The landlord isn't operating at a loss. What landlord is operating at a loss? Name one major NYC landlord owning rent stabilized apartments who is taking a loss. There isn't one.
And the second argument makes no sense either - very many of the landlords owning rent stabilized apartments don't also own "market rate" apartments. There's no one to shift the "loss" to. And even if there was theoretically a loss that needed shifting and someone to shift it to, no "market rate" tenant is going to pay more than they can afford in the market. This belief that the "market rate" would drop is absolutely foolish.

I think what I see here is that you live here two decades but you haven't had the benefit of people who have been here longer. Sorry Matt, you just aren't the candidate for rent stabilization. But don't go and lash out against others.

Anyone who is artificially paying less than they should,
No one is

thereby forcing others to make up the difference is
This isn't true, one bit

, in fact, getting a free pass. And no one is suggesting that World War II veterans (and why we're including their families is beyond me, but whatever -- you realize that WWII ended 64 years ago, right? Their kids are more than grown up at this point.) be "thrown out". I'm only suggesting that everyone pay their own way, and pull their own weight.
They are and they have for decades. They've invested in NYC, they pay their rent monthly. Their landlords make a profit.

You know -- just how the market-rate people do it.

Market rate people aren't the people that NYC intended to protect.
And they have no harm from others being rent stabilized. They aren't in the equation.

Honestly Matt, I think it is time for you to move on.

"Define "stabilize".

-sorry I really can't do remedial."

That response doesn't even make sense. Seriously -- how does a segment of renters not paying their fair share "stabilize" a city?

"You aren't paying for anyone else. I don't know how you can even make that claim it is so silly but truly your sense of entitlement is unbelievable.

No. What's "unbelievable" is the sense of entitlement that some people have that an entire segment of renters should be excluded from regular market forces, while the rest of us pick up the tab.

"Rent stabilization is a primary reason why NYC has rental housing suitable for people with choices. Without it, middle class tenants would disappear and landlords offering middle class housing would be out of business."

But that's not the case in other cities. Most cities don't have rent stabilization. In fact, we're the only city with this level of rent stabilization. Yet other large cities have expanding middle classes, lower housing costs and better housing quality.

"Second, and more important in NYC, RS means that tenants have stability and better incentives to care for their apartments."

Is there any evidence that this is correct? Do people in rent stabilized apartments take better care of their apartments. More importantly, do landlords take better care of rentals than homeowners?

"The landlord isn't operating at a loss. What landlord is operating at a loss? Name one major NYC landlord owning rent stabilized apartments who is taking a loss. There isn't one."

I personally know at least a half-dozen who ARE operating at a loss. And no, I will not reveal their identities on a public message board.

how do the rest of us pick up the tab, you idiot? tell me how you (the great property owner and vice president) would be paying one cent less if there was no rent stabiization.

If you lived in a rent stabilized apartment would you still be making these arguments? I'm just trying to figure out if you are jealous or righteous. I know it must be one or the other.

"Market rate people aren't the people that NYC intended to protect. And they have no harm from others being rent stabilized. They aren't in the equation."

No one should be "protecting" some at the expense of the others. And even a rudimentary understanding of economics illustrates that any "equation" includes EVERYONE in the macro-economic system.

finance guy definitely lives in a RS apt. based on his posts. But if his profession matches his user name and he indeed works in finance, it is hard for me to see how he would not be over the income limit.

"If you lived in a rent stabilized apartment would you still be making these arguments? I'm just trying to figure out if you are jealous or righteous. I know it must be one or the other."

The only "side" I'm on is economic truth.

I personally know at least a half-dozen who ARE operating at a loss. And no, I will not reveal their identities on a public message board.

No, you don't. You do not know a half dozen landlords who could be operating at a loss unless you know some guy who bought a place with a stabilized or controlled tenant in hopes that that person would die soon, but they paid too much and calculated too short the lifespan of the tenant. This is the biggest lie out there. Find me one major NYC landlord owner of rent stabilized apartments who is losing money. It is an absolute bald faced lie.

"No, you don't. You do not know a half dozen landlords who could be operating at a loss unless you know some guy who bought a place with a stabilized or controlled tenant in hopes that that person would die soon, but they paid too much and calculated too short the lifespan of the tenant. This is the biggest lie out there. Find me one major NYC landlord owner of rent stabilized apartments who is losing money. It is an absolute bald faced lie."

SAYING it's a lie -- insisting it's a lie -- doesn't make it one, dearie, no matter how hard you try.

The only "side" I'm on is economic truth.

Oh, right, listen, I'll crown you Lord Economics, and you can go an move on to another argument, maybe about purchasing power parity across borders and you can tell us that eventually the cost of a tube of toothpaste will be the same in the Philippines as in Manhattan and that right now the Filipinos are cheating because they pay less than we do.

Wow, Debbie -- you have a lot to learn.

Yes, trying to understand righteousness and jealousy, I have a lot to learn.

No. Understanding simple economics.

You must be a liberal.

matt--shove it buddy...you clearly get off on pissing everyone off. just keep making it up. you are particularly revolting.

Heading out to dinner, all. Have a good evening!

Oh, the L word.

Matt, go inside your little doll house and go play Samuelson and Keynes and Friedman to your heart's content.

hey matt: hope you get some three day old mayo with a couple of chicken bones thrown in.

I don't think there's a need for physical harm.

Debfrank - you say "Find me one major NYC landlord owner of rent stabilized apartments who is losing money. It is an absolute bald faced lie."
but it's the tenant advocates who are constantly putting stories in the Post and Daily News talking about how landlords are losing money and going to default on their loans and then the tenants are going to have to suffer. They always mention St Town and Rivington - so there are two.

Well, listen, I don't know Rivington, but Stuyvesant Town, that's just an example of a bad transaction to the recent buyer. Met Life wasn't losing money with the rent stabilized tenant base. Tishman created their own loss situation by paying too much. They also did it on the back of the banks who let them borrow too much and will lose money themselves.
If the claim is that people are losing money because the tenants are stabilized, that is one argument and we all know it is bogus. If the claim is that people are losing money because they overpaid (to people who were doing just fine and not losing money) and made the assumption that they would kick out stabilized NYers and haven't been successful doing that, that is another story and none other fault than just bad deal doers.

Is NYC more "stable" because we have rent stabilization? Are we so much better off than other major US cities because of this system? I fail to see the fruits. Please explain why people on this board constantly are saying that a benefit (perhaps even main benefit) of RS is that it provides stability. I just don't see how we're more "stable" than other major cities and if we indeed are more stable I fail to see how it's helping.
Maybe what we really need is unstable neighborhoods? Doesn't Harlem seem to be much safer and better over the last 10 years. Isn't it the influx of new people that has made the difference? Do we really want to keep Bushwick stable? Is NYC really so great that we want to keep it just the way it is? Is 50% unemployment among black men in the Bronx the status quo that we want to protect?
Providing "stability" is not helping us obtain the goals of rent stabilization - we aren't better off than other major cities - the system just isn't working the way it could or was intended.

To be clear the major beneficiaries of RS.
1. Politicians - they collect big money from both landlords and tenant groups. Plus they collect huge voting blocks from tenants.
2. Wealthy people with low rents.
3. Tenants in gentrifying neighborhoods. Probably the most success garnered from RS is the number of rent stabilized tenants who can stay in their units when their neighborhood improves.

Those who don't benefit.
1. Market rate renters.
2. Taxpayers. (unless of course they have a unit).
3. Most of the tenants in poor neighborhoods. Most pay rents that are near or at market levels anyway.
4. Kids who no longer want to live with their parents.
5. People who recently moved to the city.

Jazzman, do you believe that if Harlem's and Bushwick's and the Bronx' housing stock is rent destabilized that there will be an influx of new (white? is that the suggestion?) people to those neighborhoods and that those new (white?) people will make it better (more livable for other white? people like you?)?

Those who don't benefit.
1. Market rate renters. - correct, they aren't on either side of the transaction and have no relevance
2. Taxpayers. (unless of course they have a unit). - correct, they are neither paying taxes as a result or getting a rebate as a result
3. Most of the tenants in poor neighborhoods. Most pay rents that are near or at market levels anyway. - well it is true that many rent stabilized tenants are paying just about the market rate anyway, making the whole argument against rent stabilization even more silly.
4. Kids who no longer want to live with their parents. - Not sure what is being said here.
5. People who recently moved to the city. - right, rent stabilization isn't intended to benefit people who are new to NYC. Just the opposite in fact. Also see #1, these new people aren't part of the equation and neither gain nor lose from a situation they are not part of.

To be clear the major beneficiaries of RS.
3. Tenants in gentrifying neighborhoods. Probably the most success garnered from RS is the number of rent stabilized tenants who can stay in their units when their neighborhood improves.

Yes, this is one of the best benefits of rent stabilization. Rewarding the people who made the neighborhood stable is the best outcome of rent stabilization.

debfrank -
1. I disagree that market rate renters are not affected - without question market rate renters south of 96th st would pay less in rent if RS were abolished. Stabilized units south of 96th would come back to the renting pool and areas like Harlem would free up thousands of units - the supply of apartments market rate renters are willing to live in would increase significantly and prices would fall.
2. I disagree that taxpayers aren't affected. Without stabilization our property tax revenue would increase - thus we would need to tax people less to collect the same revenue.
4. I'm speaking of kids who grew up in NYC and are now 25 years old -they are tired of living with their parents but can't afford an apartment because market rate rents are higher than they otherwise would be. Sure RS has helped their parents but now it hurts them.
5. It's shortsighted to essentially put a housing tax on recent college grads. These grads contribute a huge percentage of our tax revenue. Without them we couldn't fund all of our government programs. We need to make it easier for them to come to the city - not harder.

I'm not saying Harlem would become more white - I'm saying it will continue to become better - Harlem, for the first time in decades, finally has a public school that an educated parent might actually consider for his child (granted there still isn't' one good elementary school). Surely you don't want to defend the status quo of Harlem?

Rent stabilization is a disaster for the following reasons:

1. People who aren't lucky enough to have a rent stabilized apartments end up paying more because of lower supply. People who have a rent stabilized apartment and may want to move or downsize don't do it because of the low rent they are paying. This limits the supply, and is a main reason why free-market apartment rents are so high in Manhattan.

2. It provides owners no incentive for owners to fix up their apartment buildings. If capital improvements aren't going to get you much of a return, there is no reason to spend the money doing it. This results in run down and dilapadated neighborhoods.

3. All new yorkers end up paying more in other ways. Lower rents mean lower property values, which in turn mean lower property assessments. So the city collects less in property taxes. So you pay more for services, subways, sales taxes, etc to make up for it.

Why do we allow RS tenants to have houses in the Hamptons? Sure few do, but why do we even allow it?
RS was implemented because of a housing crisis so why so does it allow behaviors that create scarcity (like one person having two places to live). If indeed it's goal is to fight against scarcity then a person with two homes would be the first person thrown out.

financguy, did not read more than your first sentence or two but you are a moron. No subsidy? Every single renter in NY who rents a mkt rate apt IS subsidizing the rest of the rent stabilized tenants. If over 1 million below mkt stabilized apts hit the open mkt rents for all non-stabilized apts would drop as a new equilibrium would be found in NYC. Free mkt comp would raise the level of housing stock. One coud go on for hours on how idiotic the notion of govt meddling in the rental mkt and only a few select lucky ones benefit. As if that is not bad enough, those few get to pass on their apts to future generations (as if they own the place) so if you don't have a parent who lucked out yrs ago or pay someone off you will never get a great deal.

You really think it is a coincidence that NYC is different from the rest of our country when it comes to renting real estate? We create the housing crisis by trying to manipulate it. The least efficient way possible to provide housing . . . and free mkt renters and select landlords bear the burden.

One thing is for certain 100%: RS keeps people in apartments that without RS they would move. Golden handcuffs and other reasons (like a friend of my mom's who lives in a RS 3 BR apartment which when her husband was alive and they had 3 kids, they needed). Right now, she'd actually prefer to live in a studio, but she can't move because it would cost her about double to move into one. So we've got a 3 BR apartment and a studio tenant who are "in the wrong place" because the current market has extremely high "barriers to entry" to some extent (to the extent that 100's if not thousands of larger - 2br, 3br, 4br - units are unavailable because they are underutilized or almost non-utilized, but still kept off of the market). Does anyone recognize what "barriers to entry" is one of the key components of? Think about what the other components are and how they relate to RS.

I find it hard to call any system which prevents both the consumers and suppliers of any good from making economically rational decisions/allocations as being a "good system".

PS It's also a cause of crashes in the NYC apartment ownership market, because there are all sorts of people who "should" be owners who aren't because they are locked into RS apartments. When I was doing sales training one of the questions I always told sales people to ask was what was their current living situation. I told my trainees that if they got the answer that the person on the other end of the phone was in a rent stabilized apartment and there wasn't some HUGE life changing event which was behind making the call (like they are in a rent stabilized studio and they are marrying someone with 2 kids so the HAVE to move) to forget about showing them anything and moving on to the next buyer.

mktmaker - hallelujah !

financeguy - did you get a C+ in econ 101, where they gave you the "+" b/c you knew who Karl Marx was?

that's a good point 30 yrs. Without RS, there would likely be more buyers in the market place and the floor in housing prices would likely be higher than it is. How many extra buyers would enter the market as a result of abliishing RS is anyone's guess...

Pres - we can't abolish RS - it would create such havoc - serious violence no doubt.

But what we can do is end some of the obvious injustices -

1st among them is luxury decontrol - if you make 3x the median you're out - people like Rangel, Patterson, and Quinn should all lose their apartments.

Next is an end to RS tenants living elsewhere - the law was created to help cure a scarcity issue - no more of the 6 months primary residence. Stabilized tenants should live in their apartments 10 months a year or lose it. While grandma is in Florida for 6 months leaving her apartment vacant in NYC I pay extra rent for my market rate unit - it's nonsense that we keep rents low for someone who only uses their unit 183 days a year. How does allowing Grandma to live in FL for 6 months help solve our scarcity problem?

Finally, we must end passing these units on to another generation - it doesn't make any sense that some kid gets a cheap rent after his family had the benefit for decades. The parents should save all of the money they could have spent on housing and the kid can inherit it when the parents die (the kids should benefit indirectly not directly).

The_President: Did you really say that releasing RS buyers into the market place would make the price floor higher? Most people that live in RS apartments, as in 30yrs example, don't move because they can't afford anything, not even a studio. How exactly are they going to raise the floor?

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The_President: Did you really say that releasing RS buyers into the market place would make the price floor higher? Most people that live in RS apartments, as in 30yrs example, don't move because they can't afford anything, not even a studio. How exactly are they going to raise the floor?

And the people who want to end rent stabilization want to throw out the working middle class from NYC so they can live among richer people. It is classist and likely racist.

Harbort - I want to eliminate RS for 2 main reasons. Both have the goal of strengthening the middle class.

1. I don't think it makes sense that the government passes laws that can (although it doesn't always) help the rich at the expense of the poor. It's just wrongheaded to legislate such nonsense.

2. I don't think it's healthy, long term, to make housing so expensive for recent college grads/young artists. We are losing plenty of talent who is choosing to not move to NYC and are choosing to move to other major cities because of our housing expense.

I'm abroad on vacation, so I'll just add a couple of things:

* the rich-in-RS argument is not just a matter of "not all", but so few as to be a classic straw man. That anecdata is thrown around to arouse reptilian jealousies ... that's about all.

* The housing shortage and lack of affordability in NY preceded RC and RS -- that's why the laws were enacted.

* So please stop arguing that RS makes NY unaffordable to the young and the artless.

* The resulting stability to the city, via RC and RS, was just a bonus, and held the city together better during the bad years than any other large northern city. That critical mass of middle class encouraged the financial services industry, among others, to remain in NY when changes to federal law allowed wild profits in investment banking, beginning in the 1980s.

alanhart - if it's "so few" rich people who benefit from RS then why do you have any problems eliminating it? It's terrible legislation - so wrongheaded. Call it a straw man fine - I'm not claiming it's a huge problem, I'm simply saying it's STUPID legislation. It's easy to fix, so get rid of it already. RS has plenty of benefits and luxury decontrol gives it a bad name.

Of course there was a housing shortage before RS, but it's goal was to eliminate that shortage - how well has it accomplished it's goals? We've been trying for 5 decades, isn't it safe to say it doesn't accomplish it's goals? How much longer to we have to fail before we realize this system will never accomplish it's goals.

You say RS "held together" NYC better than any other "large northern city" - how so? Not sure what you mean here. Did Boston, Chicago, San Francisco, Portland, Seattle all suffer some terrible crisis that would have been prevented had they had rent stabilization? And why not compare it to city's in the South. Why not compare us to Dallas, Houston, San Diego, Atlanta. I just don't get the entire point of how RS has "held the city together." What would we look like had we had the national average of 66% of homeowners? You're saying that we would have been less "stable." What would NYC look like if it were less stable like "any other large northern city?" I just don't see how we're better off because as you say we're more stable. 1st there's no proof we're more stable and 2nd there's no proof that even if we were more stable that it's helped us in any way.

so...when you abolish RS, and tens of thousands of long term tenants can no longer afford the places that they have lived in for many years---then what? tough shit on them?

This discussion will be moot in a few years. RS will likely be going away after 2011.

Why? NYC will hit the 5% threshold of vacant units, as the combination of increased supply and decreased demand will be a double whammy. Increased rental units (both built for renting and all the failed condos turned into rentals) combined with job losses/population decreases should drive vacancies up over the 5% threshold.

It would go away sooner but the survey is only done once every 3 years and it was just done using early 2008 data which found a 2.88% vacancy rate:

http://www.nyc.gov/html/hpd/downloads/pdf/Selected-Findings-tables-2008-HVS.pdf

so...shall we hold off on discussing further?

while we're at it, why speculate about future prices of apartments...won't it be moot as soon as we find out what they actually are?

why discuss whether lebron is coming to the knicks....we'll know one way or the other in a year and half.

It seems as if the argument is that we should destabilize NYC so that the city can be affordable to twenty somethings so they can live near work. Long-term NYers who deserve their residences because of all they have contributed are replaced because of the new reality. Oh, and the working class rent stabilized who live in Harlem or the outer boros, or the teachers who live in NYC, who come in to Manhattan to run the retail establishments, the post offices, the subway, keep the streets safe and clean, ... well, they can move farther away because it is more important for the twenty somethings to live near their jobs. I don't get it.

Market rate renters do not pay more.
Taxpayers do not subsidize.
Landlords are doing quite well. The biggest portfolio of rent stabilized apartments in Manhattan was sold only a couple years ago, at a huge huge profit.

"so...when you abolish RS, and tens of thousands of long term tenants can no longer afford the places that they have lived in for many years---then what? tough shit on them?"

Um -- YES. That's how it works everywhere else in America. If you can't afford the home you're in, you MOVE.

***"It seems as if the argument is that we should destabilize NYC so that the city can be affordable to twenty somethings so they can live near work."***

No. It's so that there's a level playing field for EVERYONE.

***"Long-term NYers who deserve their residences because of all they have contributed are replaced because of the new reality."***

Not at all. If you can afford your residence, you "deserve" it. If you can't afford your residence, you DON'T "deserve" it. See how easy it works? The same way it works for everyone else.

***"Oh, and the working class rent stabilized who live in Harlem or the outer boros, or the teachers who live in NYC, who come in to Manhattan to run the retail establishments, the post offices, the subway, keep the streets safe and clean, ... well, they can move farther away because it is more important for the twenty somethings to live near their jobs. I don't get it."

You don't get it because you don't WANT to get it. If the "working-class" can afford their apartments, they can stay. If they can't, they have to find more affordable housing elsewhere. Honestly, this really isn't rocket science.

What I disagree with you about Matt is "EVERYONE."
I'm not interested in everyone. I'm interested in real invested NYers. No newcomer should be displacing the solid foundation of this city. If we can open up new room without throwing out NYers just because they are no longer convenient for the likes of you, then that's great, WE will welcome the newcomers as neighbors, but WE will not wave them in as WE are displaced - forced to depart based on some short-term Any Rand, Animal Farm or Lord of the Flies-based ideals.

Deb, no one has a birthright to New York City, no matter how long you've lived here. The same goes for Los Angeles, Miami, Cleveland, Pittsburgh, Indianapolis, and Anchorage. If you can't afford your home without passing on the costs to EVERYONE else vis-a-vis landlords operating at a loss or higher market rents, you have no business staying in that home. Period.

I think young families raising children and contributing to the economy are the best contributors to long term stability in New York. How does rent stabalization help these people? It seems to only hurt them by forcing up market rents which make NYC very unattractive for young families. Driving out young families to keep retirees in large apartments is not good civic policy.

Deb, no one has a birthright to New York City, no matter how long you've lived here. The same goes for Los Angeles, Miami, Cleveland, Pittsburgh, Indianapolis, and Anchorage.
NYC is not LA ... And this discussion is not about those cities.

If you can't afford your home without passing on the costs to EVERYONE else vis-a-vis landlords operating at a loss or higher market rents, you have no business staying in that home. Period.
Landlords do not operate at a loss. Costs are not passed on to others.

"Landlords do not operate at a loss. Costs are not passed on to others."

Open your eyes, honey.

Landlords do not operate at a loss. Costs are not passed on to others.

"And this discussion is not about those cities."

New York City doesn't exist in a vacuum. Thanks to technology, it is, in fact, in hot competition with other cities for BUSINESS. And one of the impediments to conducting business in New York City is a set of outdated rent stabilization laws that bids up the cost of housing for those "newcomers" you seem to discourage from moving here.

"Landlords do not operate at a loss. Costs are not passed on to others."

Repeating it again and again and again doesn't make it so, sweetie.