Rent control

It would be great if the supreme court takes the case as the arguments as laid out in the article are pretty clear for them to step-in and decide.

There have been numerous challenges over the last 50 years and not a single one successful on the exact same grounds. This is largely a ploy by attorneys and lobbying groups to generate fees by inciting easily excitable property owners with false hopes of repealing RC/RS altogether.

Among the issues, here are 2 big ones:
A) Let's say they are successful, do you think rent controls go away? I would say it is much more likely that certain provisions get struck down and the law is sent back to New York state legislators to rewrite. And most likely they will simply rewrite it in a way that the Supreme Court can live with.

2) Be careful what you wish for. 37,000 NYPD can't protect anyone from 2 million Rent Stabilized tenants about to become homeless. If you thought the nonsense after George Floyd was bad, and pretty much no one in NYC had any real skin in the game, imagine what the reactions are going to be when people are going to lose their homes. It would be an unmitigated disaster.

And enough of "these poor landlords" bullshit. They can purposely forego $6 billion a year sitting on vacant units on purpose at the same time as crying poverty. The math they are using is also fuzzy. They are trying to project the story that all the units which they are holding hostage had tenants in them for 50 years who wouldn't allow any repairs and now they all need over $75,000 in repairs, but will only get back $89/month. CHIP has already admitted that half the vacant units need minor repairs and could be essentially ready to be rented tomorrow. Also, when they are renovated and rented the owner doesn't get an additional $89. Since they are being held vacant, the difference is the base rent PLUS $89. So even if the base rent were only $1,000 (and the average base rent of the vacant units is well over 1500) that still throws off $13,000 in additional revenue. I posit that a $13,000 return on $75,000 is about as good as anyone ever gets in Real Estate. Thirdly, it's being stated that every one of these units needs costly lead paint remediation. However, experts in the field have stated this is not the case. And no rental unit "needs" $5k stoves, $4k refrigerators, etc. The only reason why these bullshit apartments enables like Bushwick are getting them is to get large increases.

And here's an important point:
No one woke up one morning and found out that secretly under the cover of night their building had been converted to Rent Stabilized without any warning. For the vast vast vast majority of owners, they were already rent stabilized when they purchased them and they received the appropriate market discount on the purchase price. So now trying to remove Rent Stabilization by crying poverty is double dipping. And for the very very few that owned them generationally so they weren't Rent Stabilized when they bought them, The gains are so large that one current year's Rent Roll covers their entire purchase price. So their claims of poverty ring hollow.

And as far as this "unconscionable" 2019 change, the vast majority of the change is simply reverting back to the way the law was originally written, taking away the 1993 changes which led to decades of tenant harassment and illegal evictions by bad actors (which was the motivation behind the 2019 changes).

Lastly, the "badness" of the 2019 changes lay squarely at the feet of the Real Estate lobbies. When it was absolutely clear that that there was a majority which was going to vote for the changes, the lobbies (being used to decades of getting their own way due to political contributions) adopted a "my way or the highway" stanse even though it was clear that they ere going to be outvoted. So if they refused to negotiate better terms when the terms which were voted in were an "opening position" then that's on them

>> For the vast vast vast majority of owners, they were already rent stabilized when they purchased them and they received the appropriate market discount on the purchase price.

In all fairness, the market price may have been set by participants engaging / planning on bad behavior. Even those engaging / planning on good behavior took a hit to market value with the 2019 changes. Such is the nature of investment in regulatory-heavy areas: people tend to discount the risk / possibility of change. Reminiscent of the taxi medallion bubble.

>>> They can purposely forego $6 billion a year sitting on vacant units on purpose at the same time as crying poverty.

Unlikely they are acting against self-interest, but whatever the reason is, it is reducing supply, increasing market rents which are sky-high (in absolute sense, not as % of property value). From citizen perspective, market rate units are subsidizing stabilized ones, and the determination of who is being subsidized by whom seems quite random.

I am also of the opinion that just because you were born or at one point moved into a neighborhood, it does not mean that you deserve to stay there for life, if you are unwilling to pay market rent. Neighborhoods change. Change is part of life.

I hear 30's arguments but at the same time the system is clearly broken, and there's no political will to fix it. I shed no tears for NY landlords, but the arguments are strong that the present system infringes far too much on private property rights for limited justification.

Why do some tenants think they have a right to live in a property that they don’t own, paying an artificially low rent? They would not lose “their” home, it was never theirs to begin with. I do agree, I don’t have too much sympathy for landlords of rent controlled units, presumably they got a discount when buying and knew what they were getting into but I’m also tired of the all too common narrative of the greedy landlord trying to take advantage of the “poor, innocent “ tenant. We all know tenants can be just as evil as landlords and many game the system. I personally know of people living in rent controlled units that own expensive vacation homes. As any economist, rent control simply does not work

+1
I shed no tears for NY landlords, but the arguments are strong that the present system infringes far too much on private property rights for limited justification.

+1

Why do some tenants think they have a right to live in a property that they don’t own, paying an artificially low rent? They would not lose “their” home, it was never theirs to begin with.

+1

Why do some tenants think they have a right to live in a property that they don’t own, paying an artificially low rent? They would not lose “their” home, it was never theirs to begin with.

And the city can potentially collect higher real estate taxes from these rent stabilized units.

Government needs to decide what purpose RC is supposed to serve.
Is it a permanent lifelong subsidy based on random lottery, or is it an actual needs based rent assistance program?

If the latter, RC should be time boxed, income & asset tested, and obviously not transferable.

Some of the characters I met in UWS living in 3 bed RC apartments including free parking, paying less than the price of market rate parking for the whole lot (and cheaper than my student loan payments).

Total lifestyle subsidy for random people to live an otherwise downwardly mobile lifestyle. Boomer bloggers who were buying out of state property / rental units uptown in their kids names, etc. Probably had out of state plates on their car(s) too.

People generally shouldn't be incentivized to underachieve indefinitely. And a lifetime of cheap rent in desirable areas of Manhattan seems more quite a privilege.

Exactly. I am hoping that the Supreme Court will take the case.

A test can go something like this - At what income level is someone eligible for public housing? Add say 50% to that. Or look at median household income of the area. Anyone with more than median household income in NYC loses the rent stabilization and the apartment goes to free market. Otherwise the govt is not giving rental aid to people equitably.

>>>Or look at median household income of the area.
Works maybe as a de-stabilization criteria to avoid an avalanche of newly homeless people that 30yrs mentioned was a concern.

Generally I am against Average Median Income tests for subsidized housing, unless "area" is the whole city. If someone has a lower income than the median in a small area, maybe they should look at cheaper areas to live.

>>>I personally know of people living in rent controlled units that own expensive vacation homes. <<

Yes this is unfortunately quite common. This along with 'passing' the unit along to family by using loopholes (such as having the designated family member begin "occupying" the apartment to establish residency).

That makes sense.

>> Generally I am against Average Median Income tests for subsidized housing, unless "area" is the whole city.

"Yes this is unfortunately quite common. "

Really? Exactly how common is it? Because this Boogeyman of rich people living in 8 room apartments on Central Park West paying $3.88/month gets trotted out all the time along with the "I have black friends".... Ooops... "I actually know people who live in..." But there is ZERO evidence to it being any real percentage of RS tenants.

And of course there's been no talk of the societal benefits to stability, having housing available for artists, authors, etc to stay in certain neighborhoods. I'll note that that character has largely been sucked out of many neighborhoods as RS had been pushed out.

This discussion reminds me of 2 foxes and a chicken decided what to have for lunch. But I think most of you are living in a close to 1% bubbles.

>>> societal benefits to stability, having housing available for artists, authors, etc to stay in certain neighborhoods.

What are the benefits? And how do you know these are artists and authors?

I used to be a "starving artist" at some point. I lived in Staten Island. It was affordable to me with no subsidies.

On the other hand...

A friend who works at Google and makes 6 figures lives in a RS apartment in Manhattan...
A grad school classmate, a native New Yorker whose parents are very wealthy, kept her 2br RS Queens apartment while going to school (in another city), and now lives there with her husband (who is not an artist either). She has the same degree as I do, why does she need a subsidy?
Another friend I know was subletting a RS apartment in Hell's Kitchen for a year (at market rent level), allowing the official RS tenant to pocket the difference.
Not RS, more of a public housing abuse story, but another friend grew up in a 3br in LES as his parents had very modest income then... they since have made quite a bit of money and bought a large house (might have been in their daughter's name, although the daughter has her own large house) in Long Island, where they spend 95% of their time. But they are warehousing the Manhattan 3br for the last 20 years, paying only few hundred dollars per month, just to have a place to stay when they occasionally visit the city.
All these stories do add up to paint a certain picture.

And here is a non-abuse story: one of my former coaches (now retired) lives in a 1br RS apartment on UES west of 3rd Ave, paying $1600 a month, which he thinks is a lot. Until recently, I paid more than double that price to live in a similar apartment in a similar area, as I needed to be close to the office. And while I understand he probably cannot afford to pay more in rent as he is on fixed income, what I don't understand is why needs to be in UES necessarily? He almost never leaves his apartment and his family lives in NJ. He could just as well live in another borough and take the train when he wants to visit Manhattan. And he'd probably save quite a bit on groceries and other things.

Krolik, Good examples. If people don't have enough means, then as a minimum they shouldn't have any issue with luxury decontrol if their income is more than NYC median income across all boroughs or the cost of apartment is already more than say $2000 per month. They can certainly find some other place to rent in NYC - as in Bronx 1 bedroom or small 2 bedroom - for that price rather than occupying expensive real estate in prime areas.

Here is an example of a 2 bedroom under 2k possibly rent stabilized with legal rent close to market rent . Of couse, you have to deal with criminals who deal drugs and are involved in prostitution. There are also related gang shootings. Why can't Manhattan rent stabilized over $2k rent live there?

https://streeteasy.com/building/1050-willmohr-street-brooklyn/d10

>> Why do some tenants think they have a right to live in a property that they don’t own, paying an artificially low rent?

I imagine it’s because the law says they do, in return for prescribed rent to the owner, who has the right to the prescribed rent. Very similar to the reason you think you have a right to live in your place. The property rights in a RS apt are encumbered, to the benefit of the tenant. That’s why the tenant thinks they have the right.

Now, I think it’s all a crock — no individual can own the land or anything for that matter. So don’t be surprised or angry when you see me sleeping on your couch one morning.

Law doesn't say in perpetuity. Rent control was supposed to have a sun-set but that gets extended or a new law gets passed.
https://rentguidelinesboard.cityofnewyork.us/resources/faqs/rent-stabilization/

And as per the law, the rent increase approval is really a political process rather than purely economically driven formula.

Curious what you think about this Nada. They know the calcuations have significant drawbacks.

https://rentguidelinesboard.cityofnewyork.us/wp-content/uploads/2019/08/appendixj.pdf

Krolik,
You do realize that most of your examples are people illegally doing what they are doing, not the RS law?

As far as making 6 figures and living in an RS unit, if the unit rent is $2,500 or more everyone in them makes 6 figures so you point is kinda moot. Every single new renter of thousands of new leases in Stuyvesant Town/Peter Cooper Village earns 6 figures

Do you even know how the rent is calculated for public housing?

"Law doesn't say in perpetuity. Rent control was supposed to have a sun-set but that gets extended or a new law gets passed."

That's a bit insincere. There are tons of programs set up that way that no one thinks are just going to go away at the end of the term.

Or do you expect to just walk away from your Coop when the Proprietary Lease expires saying "well, I knew the term was going to be up when I bought it"?

Everyone should also realize that owners spend millions of dollars a year running background checks, skip traces, etc on RS tenants and bringing Non-Primary Residence cases. It's and entire industry. So the concept that this is some widespread endemic occurrence is pure fantasy. It's bubbemonsa... Urban Legends.

"Here is an example of a 2 bedroom under 2k possibly rent stabilized with legal rent close to market rent . Of couse, you have to deal with criminals who deal drugs and are involved in prostitution. There are also related gang shootings. Why can't Manhattan rent stabilized over $2k rent live there?"

Wow, has it been an entire month already since your last racist comment?

300, I’m not approving or disapproving the law or system. Rather, I’m pointing out that RS tenants may view themselves as having certain rights, like RS owners.

>>>As far as making 6 figures and living in an RS unit, if the unit rent is $2,500 or more everyone in them makes 6 figures so you point is kinda moot. Every single new renter of thousands of new leases in Stuyvesant Town/Peter Cooper Village earns 6 figures

Why do these people need a subsidy, and why that is preferred to them paying market rent or living in a cheaper area?

>>> You do realize that most of your examples are people illegally doing what they are doing, not the RS law?

How so? Even the sublet example is legal. And the owner may charge more than the stabilized rent if the apartment is furnished.

And suppose some examples are if behaviors that are not legal. Who is supposed to be enforcing the laws? If a landlord cannot destabilize the apartment by catching a cheating tenant, they have zero incentive to enforce the rules that are supposed to determine who “fairly” is entitled to the subsidy? At that point landlords don’t care, they are not public program administrators. It would be an extra cost for no benefit at all.

Nada, I was mererly point out that law as written does not give the rent-stabilized renters perpetuity contrary to whatever they may believe. Just like when luxury decontrol was introduced (later taken away).

--
300, I’m not approving or disapproving the law or system. Rather, I’m pointing out that RS tenants may view themselves as having certain rights, like RS owners.

No one likes that there are two different types of apartments (rent controlled and the market-based).

It's my thinking that a fair and non-disrupt way to end the rent control is to have the market to reset the rent for new leases.

All of the existing leases (regardless of the current rent stabilization status), should be guaranteed for renewal and the annual rent increase should be reasonable (say, no more than maximum of 5 percent and the CPI annual increase).

This way, it protects the existing the tenants and the landlord gets a chance to reset the rent after the current renter moves out.

I don' t think this policy will not happen in NYC in my life time.

>> Nada, I was mererly point out that law as written does not give the rent-stabilized renters perpetuity contrary to whatever they may believe

Sure. You could probably say the same thing about BK townhouse taxes.

For BK townhouses, tax law as written does provide for a cap. But the tax law can be changed and do change frequently.

And the owners know it can change even though in my opinion it is not reflected in the pricing.

I guess we can view RS tenancy as yet another “regulatory investment / hedge”, like grandfathered tax increase limits. When the economics go unexpectedly, regulatory benefits accrue to someone because of the regulatory hedge. For a time anyways, until it can no longer hold and comes crashing down. Sorta like taxi medallions.

Exactly.

Except RS tenants never paid any thing for that investment. BK townhouse people at least paid something upfront.

The RS tenants probably paid something over the years. And perhaps key money (a.k.a., an “investment” via an illegal bribe) upfront.

You mean paid less than the market rent over time and effectively got paid for RS.

I had a friend who was in a rent *controlled* apartment, and had been for nearly 50 years. It was a small 1 BR 6th floor walkup in a crummy building, with a tub in the kitchen (non-functioning by the time I saw it) and bathroom down the hall. Upgrades to the apartment had been, to put it kindly, minimal over the years. He never made a lot of money (editor, critic, writer), inherited very little from family, and always said that if he somehow lost the apartment he'd have to leave New York (after he died I knew the size of his estate, and that was true). He was scrupulously honest in regards to his living situation, and lived mostly in fear that he would be evicted if the building changed hands - he was the last RC tenant -- all the newer people in the building were paying closer to 10x his rent. He was able to scrape by, and if you've read much arts criticism over the last 30 years, or your kids read school textbooks, you have probably seen his work.

I have 2 other friends in that tower on W 42nd St (9th/10th ave) that is mostly (fully?) set aside for people in various arts disciplines. One of them is now retired, living off his small savings and (also small) Social Security. In both their cases, if you've seen Broadway or movies in the last 30 years, you may have seen them on stage/screen.

All of these people have made solid contributions to New York City's culture. They have behaved legally and honestly, and their only problem is that they worked in competitive fields that don't pay well but require being present in New York (can't commute in from Ohio to attend a show that you'll write about). I point out their stories to offset the scare quote hypotheticals raised by others, and to suggest that those of you with unethical friends might want to reconsider who is worthy of being in your address book.

Aaron, Shouldn't it be tax payers decision to subsidize them via taxes collected (there are plenty of subsdies like that in form of vouchers, public housings etc) rather than selected private landlords providing some form of subsidy being a part of equation?

@Aaron - thank you for offering some positive example. Seems like these people made good use of it as intended, and did not game the system / see it as a hereditary right to pass down.

The issue is more nuanced than "its a perfect system" vs "let's abolish it". The challenge is - what checks/balances/means tests/whatever can be put in place to reduce the gaming of the system. ..

No benefit program is perfect, and there is always some unavoidable % of fraud/abuse. As long as you manage the balance of keeping that % down to an acceptable enough level, then you have a working system. No system will go down to 0% fraud/abuse, and the closer you get to 0, the higher the cost to detect every incremental bit of fraud.

I think again, it's not really an abstract/hypothetical problem or "victimless crime". Given the lack of housing, high cost, and hurdles to building.. every housing benefit that is abused takes a unit off the market for someone who actually needs the benefit.

For every AirBnB subletter / out of state RE investor / working under the table / funemployed person occupying a unit there is a GenZ next generation artist who can't get affordable housing.

"How so? Even the sublet example is legal. "
I can't have a conversation when you don't have the slightest clue what the statute actually says.

Woodsidenyc,
The problem with your logic is that we saw a 26 year experiment of that and the result was an ENORMOUS amount of tenant harassment and truly terrible behavior by landlords (one of many examples: landlord stated to DOB building is vacant and gets permit to REMOVE STAIRCASE leaving RS tenants unable to access their units). That is the entire reason why HSTPA 2019 happened. Buildings were being sold where new owners HAD to harass tenants out as a business model. The new law is a fix for that. If the "poor landlords" hadn't been pulling illegal shit it wouldn't have happened. And don't try and claim it was some small rogue element - it was the biggest, most prestigious owners as well.
https://therealdeal.com/new-york/2019/08/14/uws-tenants-accuse-stellar-of-illegally-deregulating-apartments/

@Aaron 2 You summoned some fond memories - I lived with my dad for a year when he was renting such an apt (6th fl walkup) on E 80th although the shower in the kitchen was working. Living on the 6th fl of a walkup was a great incentive to remember everything you needed before walking out the door.

steve123 I think you nailed it. There's going to be some fraud and there's got to be something between 'It's the perfect system' and abolishing it. I'm sure there are sensible reforms that can be made. Means testing would help but would also add a layer of bureaucracy and expense. In any case, the city gov't won't make changes until it becomes a impossible to ignore.

It's interesting none of you remember when there was means testing.

@30yrs
You can sublet RS units, although not indefinitely:
https://rentguidelinesboard.cityofnewyork.us/resources/faqs/subletting/

The one illegal thing from my examples was the couple hiding their cash income to avoid taxes and qualify for public housing. This is an issue for IRS, not for public housing administration to address. But consider that if they had to pay market price, they would have given up the unit instead of warehousing it for their NYC visits.

My classmate or friend who works at Google living in RS apartments are perfectly legal scenarios. Even though they are not the target demographic in need of subsidies.

Please enlighten me if you think I am missing something important about these regulations.

I know plenty of people using RS as intended, some who skirt grey areas, and a few who abuse it. The thing they all have in common isn't industry, income, or some murky "contribution to local culture" -- it's age. As the Manhattan demographics in the other thread showed, what RS really amounts to is a massive transfer of socioeconomic opportunity to one particular generational cohort, taken from all the subsequent arrivals regardless of need.

As poorly regulated as our version of RS is, though, trying to "fix" it is less critical (and much more error prone!) than fixing the underlying supply crunch. If we could bring market rents down to earth -- making the RS subsidy more like 4-figures per year instead of 5 -- then we'd be a lot less inclined to fight over whether the subsidy sometimes goes to the "wrong" people at the wrong time. And most importantly, we wouldn't be losing cohort after cohort of young productive citizens with potential to enrich the city -- and who knows, maybe even its bureaucratic talent pool -- if only there was room for them.

This is exactly right and detrimental economically:
As the Manhattan demographics in the other thread showed, what RS really amounts to is a massive transfer of socioeconomic opportunity to one particular generational cohort, taken from all the subsequent arrivals regardless of need.

Seperalely, supply is very complex issue as basic good quality development in NYC is costly. A few reasons for cost - A lack of developable empty land in the areas people want live (subway connection and schools a must), Long DOB wait time for approvals of new buildings, building in congested areas is costly (think parking, delivery costs), your neighbor can hold up your project as you likely need access to their property to build. Then the real estate taxes on new development are much higher than existing building meaning the buyers or renters are shelling out more in monthly carry.

A perfect example of expensive supply is unsold condos in NYC many of which have taken enough price cuts so that it is well below cost to the developer. In my opinion, the govt efforts to increase supply are better spent improving less desirable neighborhoods by better schools including more charter schools, transportation, and public safety.

You can only sublet for 2 out of 4 years and you can't make ANY profit (with the caveat that you can charge 10% over for furnished).

So, moving to another city and subletting continuously? No

Subletting "at market"? No.

Subletting public housing at all? No.

So:
- Friend who works at Google - nothing burger

- Grad school classmate - illegal

- Hell's kitchen - illegal

- Public Housing - illegal

And as far as your contention "This is an issue for IRS, not for public housing administration to address" it's just too insane to even argue

But why don't you post exactly what the Google employee's income is and exactly what rent they are paying so we can see exactly what their unjust enrichment is?

Because the Google employee who lives a couple of floors below me and makes just north of $200k is paying about $4,600/month for their RS 1 Br. How much of a "subsidy" are taxpayers or anyone else giving them?

For quite a while now Real Estate souteneurs like CHIP, RSA, Alexander Lycoyannis, Sherwin Belkin, etc have been playing on the pipe dreams of Rent Stabilized owners and filling their heads with visions of Sugar Plum Fairies and The Supreme Court striking down rent regulations as "takings."

Meanwhile back in the real world we are actually seeing those regulations being strengthened. But rather than bargaining in good faith and potentially reaching reasonable outcomes for their clients, the war mongers keep sounding the Clarion call to battle while the clients keep getting kicked in the teeth. Take a gander at the bills getting signed into law by Governor Kathy Hochul.

https://therealdeal.com/new-york/2023/08/18/new-york-landlords-prepare-for-rent-law-expansion/

My first apartment in New York was rent-stabilized, and I think I had a fairly middle-of-the-road experience: I paid a little bit of key money/higher-than-usual broker's fee; I then had a studio to live in where I paid $800/mo. on a salary of $35,000 (magazine journalism); the tenants had to get together and withhold rent and sue the landlord for withholding heat; it was impossible to improve the apartment because of capital improvement regulations; the ceiling fell in in the bathroom, and I had a hella time getting it fixed.

I stayed in that apartment for six years, making connections in my profession and helping to gentrify the edge of Chelsea from "I'd check in with the guys at the late night restaurant across the street to get them to watch me walk home" to "upper middle class neighborhood." When I started making more money, I moved out and bought a co-op on a nicer block with a doorman.

Sure, I would meet people on the beach in East Hampton who had arrived in New York before I did, had huge RS places, and would massage their income to stay under the "every other year" threshold that existed at the time for luxury decontrol. (30, I remember means testing! I do! Perhaps I should change the name of my firm to "Arthritis Realty?") But I knew many more people whose experience was similar to mine, who stayed in subsidized units for a few years while getting established, and, in exchange, provided a kind of taxpaying stability to edge neighborhoods.

Further, what I find most interesting in this thread is the extent to which many of you with money are punching down. I see this often in finance; I have a college classmate who has amassed a nine-figure fortune who routinely rails against food stamps.

Is there really *that* much value trapped in the RS housing stock that would, if released, accrue directly to *you* and would it profoundly change *your* life? Honestly?

ali r.

People are not necessarily thinking only of their own interest, and have not always have been “rich” (and therefore unable to imagine what majority of city inhabitants experience). Personally, I was in few different profession(s) before, and am only making a lot of money recently. I did not make 6 figures at any point in my 20s.

Almost everyone I know in a rent regulated apartment has been a tenant since early 2000s or earlier. I think it is not so much a handout to poor people, but more of a wealth transfer to randomly selected members of a specific prior generation/earlier arrivals, as RichardBerg pointed out.

I don’t think this if an efficient way to run the housing market, and i think it is a contributing cause of housing supply issues.

Direct assistance in the form of housing vouchers or food stamps for qualified recipients are much better programs. Also would like to see universal day care and enrichment programs for kids who should all get a fair chance regardless of parents’ means and background.

Krolik, do you ever think about random wealth transfers you’ve been the beneficiary, and how little mindshare it gets, if any, from your posts?

For example, the govt kinda randomly & disastrously underwrote 3% mortgages, via the Fed’s rates & QE buying, and the banking system backstopping. These have cost the taxpayers approximately $1T directly (via Fed balance sheet) at this point, plus an implicit backstop on the other $1T of losses so far. The main beneficiaries of the largess were wealthy people, like you. Those who come after you are now saddled with 7% mortgage rates, which would undoubtedly be lower today had 3% not happened.

What do you think should be done about that now? Should the govt rip up the 3% mortgages, thereby increasing capacity to use the balance sheet to issue fresh mortgages to everybody at the same mortgage rate?

Nada,

While it is really a separate convo from rent control probably not beloinging to the board, I have to ask your opinion on this. Any articles or research on this much appreciated.

1. How much of this 1T loss by Fed is offset roughly by US Treasury issuing debt cheaper than they otherwise would have been able to issue?

2. Whatever is not offset is funded mostly by the wealthy given progressive Federal tax structure. So wealthy got wealthier by the purchase if they had stocks and bonds (bond savings more than puked since), but they are/will paying for it via taxes. If one were to be a high-earning person with no savings yet in stocks and bonds, you will just pay for it withour getting much direct benefit except for better economy the effect of which is hard to calcuate for such a small sub-section of population. So there is a transfer from wealthy in "10-15" years to already wealthy. So which section of population by income or wealth was net loser from Fed's actions?

3. Where did all the excess Federal spending (essenstially funded by Fed buying) go during this time? Wealthy and likely wealth in 10-15 years, who will be disproportionately paying for it via progressive tax system? Direct distribution heavily skewed towards working poor and middle classs. The bottom 5-10% were already funded by the govt; I am using top 5% by assets as wealthy which clearly has a skew to older population.

My view on this is just transfer of wealth from older already wealthy (mostly 50 plus) to younger W2 population who make or would make $150-200k plus via future increase in taxes . Many of them would get the wealth back via their wealthy parents.

So Tax payment data by income.
https://www.businessinsider.com/personal-finance/average-federal-income-tax-payment-by-income

Top 10% pay 74% of Federal Taxes.

https://taxfoundation.org/data/all/federal/summary-latest-federal-income-tax-data-2023-update/

Correction: My view on this is just transfer of wealth TO older already wealthy (mostly 50 plus) FROM younger W2 population who make or would make $150-200k plus via future increase in taxes . Many of them would get the wealth back via their wealthy parents.

>> 1. How much of this 1T loss by Fed is offset roughly by US Treasury issuing debt cheaper than they otherwise would have been able to issue?

Debt issuance runs around $1T/mo in the form of T-bills mostly. Let’s say $12T issued lower by 1% than it would have otherwise been, with a 1.67 year average duration => $200B. On the flip side is that future issuance rates increased by 1% because of ensuing raising of rates, higher than it would otherwise needed to have been, because of the inflation the Fed buying stoked. I’d guess that lasts at least a year, probably more, at a cost of $250B/yr. So the mistake will by net negative, IMO.

>> My view on this is just transfer of wealth TO older already wealthy (mostly 50 plus) FROM younger W2 population who make or would make $150-200k plus via future increase in taxes . Many of them would get the wealth back via their wealthy parents.

Future wealthy => current wealthy is one effect. Another effect is renters => owners. A third is pay-down-ers => lever-ers.

Mainly pointing out the discrepancy between animated observations of “Why do X set of less-wealthy people deserve a housing subsidy (via RS), as opposed to something even-handed?” and lack of similar observations of “Why do Y set of more-wealthy people deserve a housing subsidy (via Fed QE, mortgage tax deduction, etc.), as opposed to something even-handed?” by members of Y.

I get the sense that said members of Y feel like they are savvy respondents to govt policy, whose actions are justified by intent of govt policy even though it may not be even-handed across the target population, across generations, etc. But when it comes to members of X, those people are seen to have been arbitrary beneficiaries of unjust govt policies that are not even-handed across the target population, generations, etc.

To be clear, I certainly take advantage of my share of govt policies that are ostensibly available widely, but in reality I get an oversized share because whatever it is doesn’t fit other’ circumstances. Sometimes I agree with the policy, other times I feel them to be random. I.e., if I were designing the policy, I’d never design it that way. But I have limited control over the design (1 vote in a sea of 100M+), so the policy is what it is.

Very often, I don’t even think about the policy design aspect, I just simply respond. Do I qualify for X? Nope, move in. Do I qualify for Y? Yep, but it requires me doing stuff that isn’t a good idea for me. Do I qualify for Z? Absolutely — back up the truck and load me up!

That’s why I don’t resent the X’s or Y’s of the world — life’s too short to be resentful of people taking fair advantage of what is their right — and besides, I do the exact same on Z. Glass houses and all that.

Okay, if you want to pick on me personally, of course i have gotten lucky a few times, and benefitted from some policies here and there, but mostly as just a W2 worker, I am just a net donor to the system and have been unlucky with the timing.
In terms of getting lucky, I got pell grants in college (plus a small scholarship and govt student loans), went to grad school with a huge reputation and endowment (but i paid full tuition via loans, while a couple of legacy friends got scholarships), and yes, purchased a home with a 3% mortgage in 2021. Biggest lucky breaks are good genetics, being located in the US, the center of the universe and world’s economy, and recently picking an industry which pays really well.

However, I bought this home at peak prices thanks to decades of real estate price inflation via easy monetary policy, and it is likely to fall in price over the next decade as per predictions in this forum (it is already below its 2022 peak zestimate). Unfortunately I was not a candidate to buy a house or invest in the stock market much earlier due to timing of grad school graduation and large student loans which I (irrationally but prudently) paid off first. My first sizeable stock market investments (aside from 401ks/IRAs) were made in 2021 at peak prices, and are currently flat or down. My parents, who immigrated in the middle age and started saving from scratch then, aren’t wealthy and I expect to get nothing from them. I just hope they don’t outlive their savings. A w2 worker that might be wealthy in the future, social security will probably run out by the time I retire, but taxes will be higher. And i am buying overpriced assets with my earnings, while expecting low returns. My biggest disappointment is that I got squeezed out from prior occupation, where I had all the drive and talent, because i was being outspent by generationally rich people with wealthy parents.

My personal situation has nothing to do with the RS/RC policy which is overall poorly implemented, contributes to lack of mobility and underperformance by certain members of society, contributes to housing shortage and high market rents, and interferes with the abstract, man-made notion of property rights. Just because there exist other bad policies does mean I should like this one.
Discussing a policy on an online forum, we can just express opinions on whether it is good or bad and why, and clearly no one responding in this thread can do anything about it directly. I am still enjoying reading the arguments which help me refine my understanding.

This is certainly a good way to be peaceful. Most of us don't have an ability to change the policy. Even Ken Griffin couldn't get the local govt to improve crime situation in Chicago despite him and his firm's employees paying a lot of taxes.

>>Very often, I don’t even think about the policy design aspect, I just simply respond. Do I qualify for X? Nope, move in. Do I qualify for Y? Yep, but it requires me doing stuff that isn’t a good idea for me. Do I qualify for Z? Absolutely — back up the truck and load me up!

Here is good summary of the Supreme Court filing to consider taking the case. The case is clearly about fundamental property rights.
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And in the hope that a majority of the court now agrees with Scalia and O’Connor, the landlords renew their contention that the law’s limits on rent increases are an unconstitutional regulatory taking. “Subsidizing needy tenants,” they write, “is a public good that should be paid for with public funds.”
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https://www.scotusblog.com/2023/07/landlords-challenge-new-yorks-longstanding-rent-stabilization-regime/

>> This is certainly a good way to be peaceful.

In any given year, I “pay more into the system” than nearly everyone complaining about “paying more into the system” will in a lifetime. Some of my grandparents were illiterate. My father went to night school because he had to work during the day as a teenager. From illiterate to where I am in 2 generations. That’s fantastic, what grievance could I possibly have? I look at the amount I pay, and I feel it an honor, not a burden. I am in awe of the amount, even when it was less. I look at people who “take more from the system than they pay”, and I don’t feel resentment. Mostly, I feel “Why me?”

I think that’s what FP was reacting to. If you’ve made it, why do you gotta get all wound up about people who haven’t and use what they can to get by? For those of us who were not born wealthy, there is a tendency to feel like “one of the people” long after we are no longer “one of the people” and say cringe-worthy things. I’ve certain said my share, after which good friends will put me in my place and remind me that I’m no longer allowed to say shit like that no matter what I feel like on the inside.

When's the drop dead date?

Nada, A commendable way to live your life which leads to more happiness.

>>> I look at the amount I pay, and I feel it an honor, not a burden

I feel the same.

Although I only made it as long as I keep working. When I take my unpaid parental leave (company policy) that will set me back a few months.

But rent regulation is just a dumb policy that makes little sense. Its not a policy for me to take advantage of, but I would rather this aid went to individuals that need it most based on some direct determination, rather than distributed in this way where a lot of the time it goes to those that “got there first”. Also, rent regulated apartments are costing the city lots of direct dollars from 421a abatements. Dollars that could be used much more effectively. The targeting of rent regulation program is below thresholds that a lot of people find acceptable.

"Also, rent regulated apartments are costing the city lots of direct dollars from 421a abatements. "
Could you explain how this works?

It is explained here:

https://www.thecity.nyc/housing/2022/2/10/22925482/a-tenants-guide-to-421-a-the-citys-biggest-tax-break-for-developers-and-landlords

I must have a reading comprehension issue because I don't see anything in the article supporting the thesis "Also, rent regulated apartments are costing the city lots of direct dollars from 421a abatements. "

But let's be clear, 421a is a subsidy to DEVELOPERS. The City claws back that apartments built under the program need to be Rent Stabilized while the developer is receiving the subsidy. It seems like you are claiming Rent Stabilization causes 421a subsidies. But that would be very far from the actual case.

Also, to everyone slinging around the concept that "And in the hope that a majority of the court now agrees with Scalia and O’Connor, the landlords renew their contention that the law’s limits on rent increases are an unconstitutional regulatory taking"

Here's what actually happened in the case, Pennell v. San Jose:

In a strong dissent, Justice Antonin Scalia said that while he agreed the statute, on its face, did not violate due process or equal protection of the law, it was an unconstitutional ''taking of private property without just compensation.'' Joined by Justice Sandra Day O'Connor, he faulted the somewhat unusual provision of the San Jose law under which landlords might be denied rent increases for which they would otherwise qualify because of the hardship of particular tenants.

Justice Scalia said the effect of this provision was ''to establish a welfare program privately funded by those landlords who happen to have 'hardship' tenants.''

Neither the dissenters nor the San Jose landlords who appealed to the Court argued that rent control laws generally are unconstitutional, although the Washington Legal Foundation, a conservative group, made such an argument in a brief filed as a friend of the court.

So even your great Right Wing Hopes never ruled the way you are claiming.

So what the 2 Supreme Court Justices actually opined is that what everyone in this thread is proposing - means testing - is unconstitutional, not universal Rent Stabilization. And since no such clause is in the New York statute, it really puts a fine point on how much bullshit is being spun here.

I don't know why people who live in NYC who aren't a landlord and so focused on this issue. This feels like that read bearded guy south of Richmond complaining about the 5'3" 300lb person who eats "fudge rounds".

421a is a discount property-tax based inducement by the State? City? for developers to build residential development that they wouldn't otherwise and include opportunities for lower-income folks. That seems like a good thing and also seems like a totally different topic than the rent regulated apartments created by the original system for then existing housing.

While I'm here, what does it mean when a property owner charges a 421a surcharge to a new tenant? Like Equity Residential / one example listing https://streeteasy.com/building/prism-at-park-ave-south/18g. Who is the direct beneficiary of this surcharge, why would they not include it in the listed rent?

>> But rent regulation is just a dumb policy that makes little sense.

I understand your perspective on that. But how do you feel about policies where you’re the beneficiary, such as mortgage subsidies for the wealthy via tax deductions and Fed losses that will be covered by taxpayers? You never answered that. I haven’t thought about it very deeply, but on the surface that seems “dumber” than rent stabilization, no?

How about discount capital gains taxes?

Or subsidies for expensive cars!

Or mortgage tax deductions.

Or 1031 exchanges.

https://subsidytracker.goodjobsfirst.org/top-100-parents

I think the fed massively overshot during COVID emergency, and is now trying to correct this mistake. I thought it was dumb as it was happening in real time (though in real time it was probably hard to tell, and they probably thought it was better to overshoot than undershoot, and I also have not studied it very deeply), and I am aware of enormous amounts of fraud around some covid relief programs, which I view as very problematic as well. And I think national debt is a huge issue. We are putting young adults and children into a bad situation.
Like I said above, I personally did not benefit much from that monetary policy, because I did not have much money to put to work in early 2020 and prior. So I just got the downside of most assets being too expensive after the bull run, partially cushioned by my 3% mortgage.

There is a cap on mortgage interest deduction, so I believe it does not help the very wealthy that much, which I think is okay. Interest expense deduction in general is mostly dumb and random. And why do we have it for mortgages, but not for student loans (for people with incomes above a fairly low cap, with people that have largest loans, lawyers and doctors, being over the cap)? Some countries don’t have any interest deduction, for individuals or businesses, and that might be a better policy, though I have not studied all facts on this either.

Subsidies to companies are a complex issue. Companies are not people, and owners for public companies include widows, orphans and retirees. In general I think a subsidy to an industry sector to accelerate development of a key industry is smart policy (case in point, Taiwan and semiconductors, or Israel and tech startups/VCs). While advantaging a specific company over competitors is unfair and really is a race to the bottom (case in point, Amazon and LIC “headquarters”, why would Amazon get a break not afforded to mom in pop shops or other large retailers?).

Car subsidies are a “key industry” subsidy, so in my view it is an okay policy in principle. And the latest subsidy in the IRA has an income cap. (But to be honest I don’t know that much about cars as I have never owned one.)

Capital gains tax is probably an unfortunate necessity, but carried interest loophole is dumb and unfair policy in my opinion.

There's always a great excuse why rich people's subsidies are "necessary" and poor people's are "entitlements."

About a decade ago I was hanging out with some Wall Street guys and they were bitching about Food Stamps, Welfare Mothers, etc. So I chimed in "Yeah, these people need to take some personal responsibility!" and they all agreed.

So next I brought up GFC and the financial collapse and asked "how much of that was Wall Street's fault" and they all said "zero."

So much for personal responsibility.

Re: cars, Chrysler got a $12.5 billion bailout and kept $1.3 billion of it. Tesla has gotten like $3 billion in benefits. Some talking head claims fossil fuels get $646 billion A YEAR in subsidies, etc

I don’t think bailouts for companies make sense to compare to tax breaks for individuals. Some of the car bailouts are efforts to save working class and middle class jobs and help domestic car manufacturers compete globally. Tesla is not a person. It’s a meme stock owned by lots of little guys from reddit and by anyone who owns major index ETFs.

I also don’t think anyone in this thread suggested food stamps or welfare were undesirable programs. My personal opinion is that a lot more needs to be done for mothers (parents) in general, because raising a child is a lot of unpaid labor that benefits society as a whole + all children need to have basic needs covered and deserve an opportunity in life.

People that responded don’t have any problem with housing and other subsidies for the poor.

But for many people stories like this are highly objectionable:
https://www.celebritynetworth.com/articles/entertainment-articles/stubborn-tenant-holds-absolutely-insane-amount-money-finally-leave-rent-controlled-nyc-apartment/