New York City's housing conditions, already inferior to those of most other American cities, are destined to get worse in the decades ahead because there are just not enough new homes or apartments being built to accommodate the housing needs of new families and offset the deterioration of existing housing units. This is New York's "housing gap" and it is growing. According to the most recent report on New York City housing conditions, in a good year New York's housing stock loses 14,000 to 19,000 dwelling units each year. At the same time, unlike other large eastern and midwestern cities, New York's household population is actually growing—by 2,000 to 5,000 households per year or more. That means New York needs to add at least 20,000 dwellings to its housing stock each year just to stay even, and twice that number to actually improve housing conditions and reduce housing prices. Any lower rate of housing development means existing housing will be more overcrowded, harder to find (which translates to higher rents) and will deteriorate more rapidly.
Yet, in 1994 just 4,010 private residential building permits were issued in New York City, a city with nearly three million dwelling units, and thirty percent of these permits were issued in Staten Island, New York's smallest and most uncharacteristic borough. Even in the best years for residential construction and rehabilitation in the mid-1980s, only 12,000 to 15,000 dwellings were added, many of them developed and subsidized publicly. Factoring in normal population growth, that leaves an annual housing gap of 12,000 homes in the best of times, and at least 16,000 today. Because New York has among the nation's oldest and most deteriorated housing, to substantially upgrade its housing quality, assuming an average dwelling unit life of 65 years (the national average is 35 years), 1.5 percent of its stock should be retired each year. Thus, New York's current "quality-adjusted" housing gap—the difference between the amount of housing being built and what should be built to maintain New York's housing conditions and prices in line with those of other contemporary American cities—rises to 40,000 per year. In a decade this shortfall amounts to 400,000 dwellings—more than the entire housing stock of Dallas, America's seventh largest city.