Manhattan Rents Set to Spike Higher for 2008 and 2009

What does rent regulation have to do with free-market rents?

Relevant only to rent stabilized apts, not free market rents.

But it is related to the overall rent/buy question. As rents go higher, owning looks better. Problem is, the price of heating oil hits coop and condo owners very hard, especially in smaller buildings.

Kind of like when Medicare reduces insurance premiums. Private insurers will soon follow suit to lower their payouts . Same situation here but in reverse. Private rental buildings will now see this as a reason to raise their rents as well. Keep in mind fuel, maintenance and other costs are increasing due to inflation mainly stemming from raising oil costs. . Expect rents to increase in the next several years possibly quite substantially due to higher costs.

Lowery- Your right at this rate in 30 years it will be smarter to buy at these levels.

BTW Medicare is regulated by the Government too. Private insurers follow Medicare reimbursement very closely.

houser, you don't know what you're talking about. Unregulated assets are priced based on their output value; regulated assets are priced based on their input value. So electricity is priced based on what it costs to make it, whereas cars are priced based on the value the buyer gets from it.

Insurance is a regulated market; prices are based on what it costs to provide the service, plus a predefined profit. Doctors make money every time they perform a service, so they have an incentive to overcharge. Completely unrelated to free-market real estate.

Just FYI, regulated rents are deregulated at $2,000 per month & if the renter makes more than $175,000 two years in a row. That is not a market that competes with the prices we're discussing here.

I couldn't get a rent stabilized property if I begged for one.

As usual stevejhx that's complete garbage. Garbage in Garbage out. Bottom line rents are going up 3.5 to 7% on regulated buildings. Rents will be going up in Manhattan for 2008 and 2009. They will continue going up in Manhattan. You see stevejhx no matter what you rant about it's not going to make a difference. Expect to continue paying higher rents and the fact that inflationary pressures are causing landlords to spend more money for upkeep isn't going to help either.

houser - come on! The Rent Guidelines Board raises rents EVERY year. That does not mean that non-regulated rents will be going up. Apples and Oranges.

october, it's as useless to argue with houser as it is to argue with JuiceMan or kylewest. The fact is that market rents are falling, I watch them closely. Where I used to live - the Westminster - was charging $4,600 a month for 1-br 1-ba just 6 months ago. Now they're asking between $4,000 and $4,200.

"As usual stevejhx that's complete garbage." houser doesn't even know the difference between price theories for regulated and unregulated assets. Once again, not even an AA in Home Economics from Hostos Community College can houser claim.

If nobody's renting a market rental it doesn't matter what oil prices - input prices - are: there's an availability, so they'll take what price the market will bear, cut back elsewhere, or just accept a reduced profit.

One minor point of information: there are high-priced rental units that are covered by rent stabilization regulations. Buildings that are covered by tax abatements (or, I think, that were financed with the assistance of Liberty Bonds) provide stabilized leases to their tenants.

I'm not sure how much of the overall inventory in the city this represents, but in some neighborhoods it's significant and likely to have at least some effect on unregulated rents.

That's because stevjhx moved out and into an apartment in December. He's equating a rent drop int the month of December as a barometer. Once again Garbage in Garbage out with stevjhx. You lose I win.

Good point jordyn. Unfortunately rents are going up and they may in fact be going up substantially over the next few years. Blame this one on energy costs.

SPIKE? are you kidding me? 3.5 - 7% is broadly within inflation. and even that - only for regulated rents!!

eric 7% on rent regulated but do expect the private sector to go up more in some cases. Keep in mind 7% per year is not to shabby particularly as we get closer to the rent vs buy ratio.
I looked at rental places this past weekend and all I saw were higher prices and we are not even in rental season now that's when the fireworks may start going off. I am trying to lock my rental lease in now for August. Man it's going to suck having to move my furniture in and out and having to deal with security deposits and application expenses and the stress of finding a place and having to battle with other renters vying for the same place. Oh well here I go again. You know the other day I say a bunch of guys wheeling their furniture and mattress around in a shopping cart in the middle of Times Square. I thought it might of been stevejhx but he does that in December. Have fun doing that every tear stevejhx. Talk about quality of life issues.

jordyn, you are correct, but they are vacancy reset.

meant to say
I saw a bunch of guys wheeling their furniture and mattress around in a shopping cart in the middle of Times Square. I thought it might of been stevejhx but he does that in December. Have fun doing that every year stevejhx. Talk about quality of life issues.

I need to buy a place but like every other idiot on this board I'm also trying to time this market and waiting for the drop in prices. I feel even more like an idiot having stevjhx as the head cheerleader

I'm glad you finally admit to feeling like an idiot, houser, because again, all you can resort to is insults.

Sorry I didn't mean to insult you.

houser, this is very interesting. Are you saying that there is a relationship between rent stabilization rents and free market rents? Does this relationship cause a lag in free market rents?

Interesting question Juiceman. Before I answer that question can someone tell me what percentage of all apartments in Manhattan are Rent Regulated?

I don't get it. This battle is waged every year like clockwork. In the middle of the range we have 5-5.5% 1-yr increases and 7.5% 2-yr increases, for people who are paying below market rates. How does this have any kind of substantial impact?

It's called Demand and supply. Please let me know what percentage of apts in Manhattan are Rent regulated and then we can come to some ananlysis as to why this is important when it comes to rental increases for 2008 and 2009

BTW--Rent Regulation is why historically we have low rent vacancy in Manhattan compared to cities who don't have rent regulation.This increase unfortunately will have an impact.

A lot of luxury buildings are rent stabilized.

"Please let me know what percentage of apts in Manhattan are Rent regulated and then we can come to some ananlysis as to why this is important when it comes to rental increases for 2008 and 2009"

1. above statement shows that analysis is not done yet

2. title of thread reads "Manhattan Rents Set to Spike Higher for 2008 and 2009"

anyone else see the disconnect here?

that's not even bringing in the whole apples to oranges comparison problem to begin with.

If the RS tenants can handle this increase, they stay and nothing changes. The fact that a below-market rent has increased a little should have no bearing on the considerations of someone looking for a market-rate rental. If some RS tenants can't swing the increase and move out, the units, unless in an undesirable neighborhood, will be renoed w/ the 1/40 rule being used to take the rent above 2k and deregulate them, thereby increasing the supply of market-rent units.

What am I missing?

Analysis is done just want confirmation

Looks like 4400-4900, Steve. Guess they raised their prices again.

See relatedrentals.com

will that's because Steve comes up with examples in the slowest period of the rental season. Watch rents take off to historic highs this season. You'll see more people wheeling and carting their furniture around the streets of Manhattan.
I am going to get my beach chair out and sit back and watch. It's great entertainment.

As a stabilized tenant, I'm enjoying this discussion a lot. Carry on, please.

Except you, tenemental. You're spoiling the fun by injecting logic.

The beauty of rent stabilization is that it allows tenants to live in their unit at affordable prices while simultaneously keeping the vacancy rate of available units rather low. It's a win win situation

Interesting West81. Now West81 you claim to be a rent stabilized tenant and at the same time you are looking at apts to purchase in the 3 to 5 mil range. I wouldn't be shocked if there are people worth over 100 mil in rent stabilized apts.

Yes, most Rose properties are rent stabilized. I think Rockrose are as well. Could be Related (shocking, I know!) are, as well. Archstone. Rent stabized.

All part of a deal for tax breaks, etc. Some units in each building are set aside for middle and lower income, depending on the building and the deal (e.g., 89 Murray)

Come to think of it, 21 Chelsea is rent stabilized. Well, maybe not.

I kind of like the real wealthy people who know how to take advantage of the system by renting a three bedroom well below market value in rent stabilized building and now it's just the husband and wife taking up all that room.

Houser: There are certainly wealthy people in regulated apartments. Unfortunately, I'm not one of them. The apartments we can afford are pretty depressing, which basically means we'll stay put for now. It's a lot more fun to look at - and write about - properties that are beyond our reach. FWIW, when I go to open houses I'm always candid with brokers about our situation - especially when they start pitching to represent us on the buy side.

Then why are you looking at 3 mil plus apts?

Look if I had 50 mil in the bank and could live in one of those well market rent stabilized building I would too.It just funny that a family worth that amount of money whose kids have left and now it just a wife and husband living in a 3 bedroom get to use up all that space while at the same time contribute to low vacancy rental rates in the city.

Houser: From a macroeconomic point of view, how is that rent-stabilized couple any different from a pair of elderly empty-nesters who bought a big co-op thirty-five years ago and continue to live in it? Morally, you may see a difference because one couple "owns" their apartment and the other exerts control over a property that "rightly" belongs to the landlord. Personally, I don't see much difference. They were both wise - and fortunate - in their housing choices many years ago, and they both continue to distort the market by inefficiently occupying more prime real estate than they need.

West81 I don't even know where to begin with that reasoning. I am not sure that the majority will agree with you on that rational. Well everyone is entitled to their own opinion.

west81st - the difference is that the elderly couple does not get public money (taxes) to pay for their apartment. It is a big big difference. Subsidsd housing is for those who cannot fend for themselves. I didn't expect such hypocrisy from you.

21 Chelsea is market rent. Related buildings each have different rules regarding stabilization. However, at least 21 Chelsea does not normally raise more than .25% above stabilization, I assume because they'd rather keep tenants like me who pay every month in place, rather than risk default to get a few extra dollars from someone they don't know.

Those are not the prices, not in Westminster - just looked, check back regularly. This week the 1 br is slightly more than the last 2 they had, each of which was $4,095.

dco - that depends on what energy source will be heating apts 30 years from now. And steve -- you have not weighed in yet on Sunday's NYTimes article on declining real estate values in NY?

Although I shouldn't but I am quite curious of stevejhx opinion of West 81st rational. I would tend you would agree with him because you are probably a proponent oforthose that love taking advantage of the system.

westelle I don't think West81st is a hypocrit. He is entitled to his opinion but I do find it a bit offensive.

westelle: Maybe ignorance rather than hypocrisy. Is a typical rent-stabilized unit subsidized more heavily than a typical new-construction condo? We're not talking about public housing here.

I would never defend rent regulation. It's a screwy system. I just think regulated tenants get villified in ways that make very little sense.

actually I am no defender of landlords but dam rent control apts make the landlords of these units look like the monsters.

West81: whatever. We can go on in this empirical discussion on what's subsidized more than what, and the grader scope of things, and what is life anyway, etc. The bottom line: the system ripe for abusing is abused, and the abuse justified.

Actually, houser, I think that subsidized housing is the stupidest thing on the face of the earth, perhaps just behind subsidized ethanol.

No subsidy - be it a tax deduction or a handout or a market impediment - makes a long-term difference in the market. Equilibrium will be reached, but the distribution will be different. Rent stabilization only causes unregulated rents to be higher, and, in fact, everywhere on the face of the earth where they get rid of rent regulations, rents fall in the medium- to long-term.

There is NO God-given right to live in Manhattan, or to do anything else you can't otherwise afford to do. No one has a God-given right to fly first-class, either. I lived in a stabilized market rate apartment and moved out of it, because if you look at which buildings have 20% of their rents forever reserved for the low-income, with the remaining 80% stabilized but reverting to market rates on vacancy (to be restabilized again), they are ALL more expensive than buildings like 21 Chelsea that are fully free-market.

Stabilization is dumb.

So how does rent stabilization impact the realtionship of incomes and rents?

stevejhx than of course you as well as 99.9999% of the people on this board would disagree with West81st following assessment.

Look if I had 50 mil in the bank and could live in one of those well market rent stabilized building I would too.It just funny that a family worth that amount of money whose kids have left and now it just a wife and husband living in a 3 bedroom get to use up all that space while at the same time contribute to low vacancy rental rates in the city.--houser

Houser: From a macroeconomic point of view, how is that rent-stabilized couple any different from a pair of elderly empty-nesters who bought a big co-op thirty-five years ago and continue to live in it? Morally, you may see a difference because one couple "owns" their apartment and the other exerts control over a property that "rightly" belongs to the landlord. Personally, I don't see much difference. They were both wise - and fortunate - in their housing choices many years ago, and they both continue to distort the market by inefficiently occupying more prime real estate than they need.

westelle -- I'm completely baffled by your position. Why are rent-stabilized apartments "government subsidized" whereas coops/condos are not? Rent stabilization occurs either when a unit was built a long time ago or when a tax abatement is in place. In the first case, there's no government subsidy at all and in the second case it's exactly equivalent to the incentive provided to build new condos. In the example West81 gave of two couples who had both been in their units for a long time (for the purposes of this example, let's say both since before 1974), what's the economic difference between the renter and the buyer? Both are paying a lot less than they would if they bought or rented today, but what's the difference?

SteveJHX -- if the market magically reaches equilibrium for equivalent units, why would people be willing to pay more to live in stabilized apartments? Are you suggesting people are willing to pay a premium to live with low income neighbors? That's about the only explanation that would make sense.

Once again West81st what I don't understand is that you live in a rent stabilized building and yet you are looking at 2-4 mil apts that you now claim you can't afford. I just don't understand this.

I do want to complement on your OH experiences and opinions for they are excellent and I truly enjoy reading your analysis.

westelle: Well said. The system is full of perverse incentives, so it breeds perversion on all sides.

Just to set the record straight: stabilized tenants don't get rent-subsidy money from the government, and I don't think their landlords do either. Rent regulation is a government-operated price-control scheme, not a subsudy program. That doesn't make it better or worse than a subsidy program; just different.

I agree with following analysis on rent control

"It has drained hundreds of millions of dollars from city treasuries, is open primarily to those with money and guile, and plays a role in exacerbating the housing shortage. Yet rent control has developed a culture of protective tenants frightened of an unregulated market and politicians who play to their fears, making rent control politically untouchable. It is a classic case of the majority gridlocking the political system for personal gain and in the process hurting the entire community."

JuiceMan: "So how does rent stabilization impact the realtionship of incomes and rents?"

It distorts it, and that is the problem. That is why the market today is so different from the last downturn in 1988: rent control and stabilization are far less pervasive, there are more investor-owned condominiums and market rate buildings.

Rent control is why the Bronx burned in the 70's.

Houser, I don't see it as a "moral" argument at all. It's simply an economic one. But it is well known that in through the 80's there were many wealthy people living in rent-controlled apartments on Park Avenue, who were basically feeding of the building's owners.

jordyn: "if the market magically reaches equilibrium for equivalent units, why would people be willing to pay more to live in stabilized apartments? Are you suggesting people are willing to pay a premium to live with low income neighbors?"

They in effect do, if they believe that their rents will be held down, as well (which they will). But the owners get away with it by charging a slightly higher premium upfront if they can, which in a tight rental market they can. In a slow market, they can't.

stevejhx--Ah, so you're suggesting that people will pay more at the front end of their rental to get long-term stability and pay less on the back end of the rental. That makes sense and might be worth paying a premium for if you were planning on being in a given rental for a while, whereas you might opt for an unstabilized unit if you were planning on a shorter-term residency.

Studies show that people who live in rent regulated apt are weathier than those who live in unregulated apts.

stevejhx bottom line is that rent regulation is here to stay therefore rental vacancy rates will continue to remain low and therefore low supply will give way to higher prices couple that with inflationary pressures and you will see rents continue to go up in Manhattan. My forecast this year will be a 7 to 10% increase in rents for 08 and possibly more for 09.

"Studies show that people who live in rent regulated apt are weathier than those who live in unregulated apts."

Can you show me that study? I find it hard to believe that people in the projects are wealthier than people in Trump Tower, but if you can show me how, I'll listen.

And rent regulation is being undone through the $2,000 ceiling, which is not adjusted for inflation, and not likely to be, since most politicians, even if they can't say it, know that it will destroy NYC again.

"My forecast this year will be a 7 to 10% increase in rents for 08 and possibly more for 09."

Possible, if incomes rise that much (which I doubt). Rents can't rise faster than incomes (and neither can property prices * leverage).

I would be surprised if most people living in rent control apts are living there illegally on pennies on the dollar. In fact i bet the primary tenants are renting them out and making a profit.

I meant to say I wouldn't be surprised.

houser, that is an extremely broad statement (4 posts up). First off, the reason given by the Bloomberg administration for issuing such an extraordinary number of building permits in the past 6 years is to outpace population growth and help reel in pricing (it's in the press release).

Secondly, rent stabilization steadily shrinks over time, and rent control is nearly extinct. As I mentioned above, the 1/40 rule makes it very easy for a landlord to de-regulate a vacant RS apartment. Say the current rent is $1k/mo. If the unit is gut renoed - walls, floors, electrical, plumbing, appliances, which of course will easily cost more than $40k - the rent goes up by +$1k and surpasses the $2k limit, becoming deregulated. No number of Liberty bonds or tax-abatement inspired lottery properties will outpace the loss.

West81st, hope I'm not spoiling the fun.

Stevejhx I think there is a difference of poor people living in housing projects than rich people living in rent control apts. Wha's sad it's usually the low income people who lose their lease in rent control apts but the rich people know how to work the system (through connections). Ask West81st after all he's looking ay 3 mil apts.

houser:

1) when you make conjectures ("I would be surprised if most people living in rent control apts are living there illegally on pennies on the dollar"), you sound like you're talking out of your ass.
2) when you refer to "studies ("Studies show that people who live in rent regulated apt are weathier than those who live in unregulated apts."), i'm pretty sure you're talking out of your ass.
3) when you make leaps in logic about regulated vs. unregulated markets ("bottom line rents are going up 3.5 to 7% on regulated buildings. Rents will be going up in Manhattan for 2008 and 2009."), i'm quite certain you're talking out of your ass.
4) i commend you for the utmost consistency in what you talk out of.

"And rent regulation is being undone through the $2,000 ceiling, which is not adjusted for inflation, and not likely to be, since most politicians, even if they can't say it, know that it will destroy NYC again"

Not necessarily true. The $2,000 ceiling on luxury deregulation only applies if the occupants make in excess of $175,000. Thus, most rent stabilized apartments will not be deregulated upon hitting this "ceiling."

paul you certainly have a fixation for the ass. You must certainly be one.

btw, quick lesson about people that post on this forum: it's totally possible that you get some people that post here that live in rent-stabilized apartments. but houser, you're not allowed to use them as an example because of the classic problem of SELECTION BIAS. the fact that they're on this board at the very least means they have a regular internet connection. many, many of the poor folks that live in rent-stabilized and do not live with internet and do not have the wherewithal to be roaming on streeteasy... their opinions are not represented here. that's a long way of saying that the people you point to are OUTLIERS, and are not representative(s) of the sample. if you reply with: "yeah, but i PERSONALLY know plenty of people that live in rent-stabilized apartments, so they're not necessarily outliers..." ...... you are once again victim to selection bias.

BTW would be surprised if Paul is subletting his rent controlled apt that he probably acquired through his parents.

joepa, I see you're not responding to my post, but to something similar. The $2k deregulation applies in cases of income reaching $175k in two consecutive years OR vacancy. Unless it's in a neighborhood where a $2k rent isn't achievable (a 1br in Inwood, say), almost every RS apartment that becomes vacant will be de-regulated.

name-calling is always a nice way to go. it brings me back to warm, homemade chocolate chip cookies, with a tall glass of milk on the side. and then peeing in my bed afterwards. thanks for the memories, houser.

Paul rent control or stabilized apt should be just for the low income. Why do I have a feeling your have the means and are taking advantage of the system by living in a rent control or subletting one.

joepa, for stabilized apartments in 80/20 buildings, the 80 portion of the building has a time limit for the regulation: The Westminster it was 20 years from filing, the Westport it was 10, I believe.

The remaining 20% stay stabilized forever, but are subject to property tax breaks.

Don't know why they have to live in apartment they can't otherwise afford: Edgewater Park was good enough for my mother's family.

Steve - I wasn't commenting on the 80/20 buildings (which has nothing to do with the $2000 rent ceiling). Just correcting your otherwise accurate statement concerning luxury deregulation.

By the way, I don't think that the remaining 20% in the 80/20 buildings remain stabilized "forever." They simply remain subject to the same rent regulation laws as other rent stabilized tenants. They can be deregulated for any number of legit reasons (vacancy decontrol/luxury deregulation, etc.).

let's assume that i did live in a rent-stabilized apartment. how would you like to proceed with the logic in your arguments? (blah, whatever, i don't wanna add to the "spam" of this thread any more.)

let's assume that i do live in an rent-stabilized apartment. how would you like to proceed with the logic of your arguments, or shoot down any logic in mine?

Paul you're one big hypocrite plain and simple.

tenemental - your post is accurate. The $2K apartment will become deregulated upon $175 income over 2 consecutive years OR upon vacancy. BTW, I've seen quite a few RS apartments under $2K not be destabilized upon vacancy (even in areas where $2K rent was achievable). The landlord either didn't have the money or wherewithal to put make the appropriate improvements to get the 1/40th increase. Come to think of it - it happened to me and I've been reaping rent stabilization benefits for 10+ years now.

joepa: "only applies if the occupants make in excess of $175,000" two years in a row. I posted that earlier.

I'm not so sure about what you say about the 20% of 80/20 buildings, but I can't support it. I believe it's permanent low-income housing, though each building might be different.

ok you win

One's view of RC/RS depends on whether one's ox is being gored, as is evident from a quick scan of the comments above.

When I did research on the issue of RC and RS in NYC for a Legal Aid brief 25 years ago -- and I have not looked into the issue since then -- it was clear that while it was originally designed from a public policy standpoint to protect lower income folks from being evicted during WWII when price controls were in vogue, it long ago ceased to protect poor people. Because it rewards tenure, and even permitting units to be "inherited", rather than using an income test, significant housing distortions resulted, eg., the widow rattling around a 10 room apt, while three generations of poor people were crammed into a two room apt. Owners often had no incentive to maintain properties, thus resulting in decaying housing stock. Those communities in other states that did away with RC/RS found that rents in general went down because the free mkt rents no longer had to subsidize the regulated units. I repeat my earlier caveat: I have not looked into the research since 1983 -- YMMV!

KISS excellent post I always find it interesting why some people(such as Paul) get very defensive with this issue. You know there are people taking advantage of the situation.
I realize there are people who truly deserve all the benefits of RC/RS and I support them 100%. What I don't support are phonies or hypocrites who use the poor as a publicizing tool so the rich can reap the RC rewards via loopholes in the system. Kind of like during the sinking titanic when one of men disguised himself as a women so he can get on one of the few lifesaver boats.

houser, you should talk to your therapist about that ADD problem of yours. you seem to have forgotten what it was the original post was about. an annotated excerpt from my original post in this thread:

1) you make conjectures: "I would be surprised if most people living in rent control apts are living there illegally on pennies on the dollar". that's pure conjecture. unfortunately, i don't think you have data on this.

2) you refer to "studies". ("Studies show that people who live in rent regulated apt are weathier than those who live in unregulated apts.") ... would love to see the study that you cite. and if you aren't misinterpreting the results of the study, i'd gladly shut up.

3) you make leaps in logic about regulated vs. unregulated markets ("bottom line rents are going up 3.5 to 7% on regulated buildings. [Unregulated] Rents will be going up in Manhattan for 2008 and 2009.") ... i do not believe you can simply state that one increase (in regulated markets) equates to a similar increase (in unregulated markets). that is, i don't think that they are highly correlated. i could be wrong, but you certainly haven't "proven" your point yet either.

now, about that ADD problem. not sure how it is that you'd like to start talking about "people taking advantage of the situation". that really wasn't part of anyone's argument, except when you started rambling. and i'm not quite sure which part of my post sounded "defensive" -- not sure what i've been defensive about. probably the only thing i'd like to defend is LOGICAL, CRITICAL thinking, which you have definitely violated. maybe i'm defending that.

lost cause.

stevejhx -- why do you engage in dialog with these people? They do appear to be open to a logical explanation on most subjects.

manhattanfox, I don't understand your question.

If Rent Stabilization were removed completely, it would add a MASSIVE number of apartments to the inventory. This HUGE increase in supply would DRIVE RENTS DOWN. Any decrease in the stabilization protection, or move toward that end, would have an effect toward putting pricing pressure on rents, NOT SPIKING THEM. Houser is Spunky.

Typical economists have no idea about actual markets. Always about theory, never about reality. Always about the long term, never about the short term. Never understand the actual behavior about a decision maker or the implications of collective market forces on market participants.

"Always about theory, never about reality. Always about the long term, never about the short term."

WHAT?

WHAT?

WHAT?

The long-term is predictable. The short-term is not. Look up probability theory, add one more element to what you DON'T know.

The chances of throwing snake eyes twice in a row are FAR lower than the chance that if you've rolled snake eyes, that you're next roll won't be. The chances of your next roll of the dice never change, the probability of doing the improbable are extremely low.

"Never understand the actual behavior about a decision maker or the implications of collective market forces on market participants."

Yes, because people like to own so they can pick out paint colors & granite countertops.

Understood.

WHAT?

WHAT?

WHAT?

Steve is stuttering again.

The chances of throwing snake eyes twice in a row are FAR lower than the chance that if you've rolled snake eyes, that you're next roll won't be.

Steve, I have to applaud you, you obfuscate so much with double negatives, and similar strategies of fallacious argument that I actually have to assume that you are a smart guy who is simply trying to screw with other people here by saying the wrong thing and then just pounding your shoe on the podium for effect.

what?

what?

what?

you refer to "studies". ("Studies show that people who live in rent regulated apt are weathier than those who live in unregulated apts.") ... would love to see the study that you cite. and if you aren't misinterpreting the results of the study, i'd gladly shut up. paul1003

After reading this article Paul I hope you do shut up

RENT LAWS BENEFIT AFFLUENT OWNERS SAY

By MATTHEW L. WALD
Published: May 12, 1985

A NEW study of the effects of rent control and rent stabilization concluded that the systems do a bad job of protecting poor tenants while providing undeserved benefits to higher-income groups.

The study, based on data on housing in the five boroughs gathered every three years between 1975 and last year by the Bureau of the Census, was performed by Arthur D. Little, the Boston-based accounting firm, and is to be released later this week.

''It appears that there is little in the financial structure of New York City's private housing that protects the poorest households from paying very burdensome proportions of their income for rent,'' said the 134-page study. ''On the other hand, the structure appears to provide quite liberal housing cost benefits to the better-off households, most of whom pay below what is the commonly acceptable standard for the proportion of income allocated to rent.''

Among the study's findings were that upper-income households in Manhattan, with an average annual income of $40,400, pay on average $522 per month in rent, or 15.5 percent of income. Meanwhile, households in the lowest income group in stabilized apartments around the city pay more than 60 percent of their monthly income for rent.

''You've got a system that's failing,'' said John J. Gilbert 3d, president of the Rent Stabilization Association, which sponsored the study. The association helped to administer the 944,000 rent-stabilized apartments in the city until the spring of 1984, when the State Division of Housing and Community Renewal took over the job. The association is now primarily a lobbying and service group for landlords.

''Who is being hurt?'' said Mr. Gilbert. ''Tenants are being hurt as much as owners.'' He blames rent regulation for abandonment of housing.

The Little study attempted to quantify the benefits of rent regulation by dividing all city households into four income groups, adjusting the rankings for inflation over the last 10 years, and taking into account the number of wage earners and presence of children.

Among the lower-income households - single persons with incomes below $4,950 or households of four or more persons with incomes below $11,810, in both cases below the poverty level - two-thirds pay more than 40 percent of their income for rent, the study found. In contrast, among the higher-income households - those with income of $19,900 for a single person or $26,600 for a household of two to four persons - only 1 percent paid more than 40 percent of their annual incomes for rent.

Another way to look at the problem is to measure the proportion of households whose rents are within the limits set by the traditional rule of thumb that housing costs should not exceed 25 percent of income. That criterion, which has been obsolete for new homebuyers and many renters around the country for some time, is still met by 92 percent of the higher income group in New York City rental apartments, but by only 12 percent of the low-income group.

Little characterized the result of rent regulation as ''a strange patchwork of rent levels,'' adding that it was the wrong approach to this inequity. The disparity, it says, ''is a problem of incomes, not a rent problem.''

''Households in rent-regulated housing who pay above 40 percent of their incomes for rent pay virtually the same monthly rent - about $285 - as those households paying 25 percent or less of their incomes for rent,'' the study said. ''The differences in their rent burdens are related to their respective incomes, not to any specific rent level.''

I N fact, the underlying census data describe a city of decidedly modest means.

According to the census, 50.1 percent of all tenants have incomes of less than $10,000 a year, and 74.6 percent have incomes below $20,000. Among rent-stabilized tenants, 38.5 percent have incomes below $10,000, and 65.6 percent earm less than $20,000.

Rent regulation began as a ''temporary'' wartime measure 42 years ago and has been renewed and expanded by the city and state periodically since then. Most of the key regulatory legislation is up for renewal this year. Although the study does not make specific recommendations to the legislators, New York City landlords have long sought decontrol, if not of tenants in place then at least as current tenants die or relocate.

Tenant advocates contend that such ''vacancy decontrol'' would lead to harassment of tenants, and that removing controls would allow owners to exploit the housing shortage to the tenants' disadvantage.

One of the key findings of the Little report was that the quality of housing - as measured by heating-system breakdowns, holes in the walls, ceilings or floors, broken plaster or peeling paint, or rodent infestation - is diminishing, particularly in rent-stabilized buildings built after 1947. Landlords attribute the problem to rents inadequate to cover maintenance expenses. But the Little study also found that there was no improvement in housing quality for units that changed status. Since 1974, when a tenant leaves an apartment under rent control, the rent is permitted to rise to market levels and thereafter the apartment is switched to the less-restrictive rent-stabilization system. Despite the higher rents, those apartments generally show no improvement in quality.

Housing quality, however, is higher in unregulated units, among both low- and high-income tenants.

Relative to inflation, rents have risen only slightly in the last few years. For rent-controlled apartments, the real rent increase between 1978 and 1984, after adjusting for inflation, was 0.9 percent; for stabilized apartments it averaged 0.6 percent. But for stabilized apartments in which the tenant did not move, rents actually declined 2.1 percent since 1978. For tenants in the upper income group who did not change apartments during the period, rent fell from 16.1 percent of income to 13.6 percent of income.

Despite the easing of rents, the rent paid by the average city household in 1984 was 32.6 percent of income, up from 28.0 percent in 1975. This contradiction was explained by several factors.

First, according to the report, the city has more poor people, which pulled down average income. Also, some of the lowest-rent units have been abandoned, meaning that the average rent would have risen even if the rent on a given apartment did not. In addition, in the last few years rent regulators have allowed higher percentage increases on rent-controlled apartments, which generally rent for less, than on stabilized apartments. And for stabilized apartments renting for under $300, the regulators have allowed increases in flat dollar amounts which are large in percentage terms, again raising the proportion of income paid by the poor for rent.

T HE study also attempts to put a dollar value on the benefits received by tenants under rent control and rent stabilization, by comparing regulated rentals at each of four income levels with the rents charged for unregulated apartments.

In apartments rented by persons in the lowest income category, the study found that average monthly rents in regulated units were 17 to 18 percent lower than in unregulated units, a difference of $500 a year, or about $110 million citywide. In contrast, the study found that the benefit for slightly less-poor tenants, the lower-middle income group, was $540 per year or $130 million citywide. For the upper-middle income group, it was $336 a year, or $201 million.

But, the study found, the combined subsidy for the three lower groups, $441 million, was smaller than the subsidy given to the high-income group alone, which received a benefit of about $2,172 per household, or $500 million citywide. The calculation for the highest income group, however, was done on a slightly different basis.

While the regulated housing of lower-income groups was compared to unregulated housing occupied by the same income classes and the difference computed as savings, the higher-income group living in unregulated housing actually paid less than those living in regulated apartments.

The difference is presumably attributable to the nature of the housing, with the unregulated units - in buildings of six units or fewer - commanding a lower price than regulated units in high-rise buildings with doormen and other amenities.

According to the study, the appropriate comparison to regulated apartments for the upper-income group would not be unregulated apartments, but owner-occupied housing. However, Little said, it could not determine the costs of such housing.

Instead, the study calculated the difference between average rent paid, $460 per month, and 20 percent of income, or $641 per month, a figure below even the 25 percent rule of thumb. That difference comes to $500 million.

''Are any of these better-off households really contributing what they should to the maintenance of the city's housing stock under this regulatory system?'' asked the report.

BIG AND LITTLE LANDLORDS

In most parts of the economy, prices are set by the laws of supply and demand, not according to the income and ethnicity of the producers. In New York City rental housing, however, profitability depends in large measure on politics, and an image of wealth - projected by either housing suppliers or housing consumers - is a disadvantage in such situations.

The relative strength of landlords and tenants is being weighed now in Albany, where the Legislature is reconsidering the soon-to-expire rent-regulation laws. In its contribution to the debate over how well the system meets its objectives, the Rent Stabilization Association commissioned a second study by Arthur D. Little of who owns rental housing in New York City and how profitable an investment it is. The findings, according to Little, ''must give pause to any legislator or planner considering the future of rent regulation and rental housing.''

Unlike the data Little used for its larger study on rents and housing, which were drawn from Bureau of the Census material, the profile of landlords was created from a survey done by Little itself, asking detailed questions of a sample of 730 of the association's list of 20,800 New York City property owners. In the study's findings, owners look, by and large, to be weak and struggling, if not actually downtrodden. The first point made is that most owners are small, with 75 percent holding only one building and 44 percent owning 10 apartments or fewer.

But a superlandlord class also emerges from the findings. Only 4.7 percent of the owners - about 975 persons or families -own more than five buildings, but together hold 56.4 percent of the stabilized units.

GO NO FURTHER: May 12, 1985!

I was 25, and I had hair, and I weighed 50# less than I do today.

COME UP WITH SOMETHING MORE RELEVANT THAN TYRANNOSAURUS REX, PLEASE!

Because my balding gray hair, fat ass, man tits, and hair coming out of my ears are all laughing.

stevjhx you little hypocritical piece of crap look who's talking . How many freaking times do we all have to read your 350 year old yes I believe 350 year historical owner occupied real estate appreciation average of .07%. I go back 20 years ago and you think it's ancient but you go back 350 years ago and feel that relevant.

GO NO FURTHER: May 12, 1985!

Actually I think your model of .07% appreciation only goes back 150 years. Wonder what you looked like back then.

Go back 2 end of ww2.

kma

Actually, it wouldn't surprise me to learn that regulated tenants have a lot of wealth, compared to unregulated tenants. Why? Because they are, on average, much older. They have typically benefitted from many years of below-market rent and, if they've had any discretionary income, the consequent opportunity to save and invest.

Homeowners are probably the wealthiest group of Manahattan residents (they have to be), followed - distantly - by regulated and unregulated tenants. Unregulated tenants need a lot of INCOME to rent here at market rates, but they don't need much wealth; in fact, if they were seriously wealthy, a lot of them would choose to own. For regulated tenants - even those who can afford to buy, the incentive to switch to ownership is much weaker, because their rent tends to be relatively cheap. So they keep renting, and they have the opportunity to keep accruing wealth.

I don't need a study to figure that much out. It's just common sense, and requires an understanding of the difference between wealthy people and people with high incomes. The groups overlap, but they are not the same.

By the way, regulated rents aren't as cheap as a lot of people seem to think. Ours is about 70% of market, and upcoming MCIs will probably push it closer to 75%. It's a good deal, and we feel very fortunate to have it. But we're not exactly living here for free. And if the system were abolished tomorrow, we'd move on knowing that we had a good run, not feeling that we were cheated out of anything to which we were entitled. We take the law as it is, and we happen to qualify. If it changes, we'll adapt. No biggie.

joepa, sure, a landlord with few resources (single building owner, etc.) won't be able to afford the gut reno, but there's been a trend of large companies buying RS buildings. There was an article recently about how widespread this is in Harlem. I couldn't find it, but did find this other one on the topic:

http://www.wnyc.org/news/articles/82410/

In the East Village, it has certainly been true with first Extell, then Magnum (with financing from Westbrook).

West81st, regarding the wealth of owners...it's been dawning on me lately how many owners in Manhattan are actually pretty low-income. Of course they have their equity, but the folks who bought co-op conversions or into lousy/dangerous neighborhoods (like mine was) 20+ years ago are probably carrying little more than maintenance payments every month, and able to get by on much less than the average market-renter. Just thinking of the co-op units I;ve seen where clearly little money has been spent and things are many decades old, all the HDFC buildings, the older bohos you still see in the East and West Village, the artist set that was smart enough to buy when things were cheap, etc., etc.

stevejhx, my comment was rhetorical -- we seem to be on the same page as far as an analytical approach. I am just surprised to see you expend so much energy "fighting for the cause" so to speak...I do enjoy your analysis.