What would happen if New York's decades-old rent-stabilization law were allowed to expire?
Suddenly, the question is more than hypothetical: state legislators in Albany have already failed to renew the law, which officially expired June 15.
Tenants in NYC's 1.1 million rent-stabilized apartments may think they have reason to worry. In reality, however, residents in a great many neighborhoods would be unaffected should the law permanently expire; overall, NYC's housing market would also be far better off. Here's why.
First, in many parts of the five boroughs — with the exception of most of Manhattan — regulated rent is not lower than the market rent.
An analysis of Census data of current regulated rents and potentially non-regulated rents indicates that, for 26 community districts, the two rent levels are not substantially different: Households in such areas would, in other words, see little or no difference in their rent.
It's also true that the situation is different in areas such as Manhattan's Upper West Side, where many long-term tenants pay far lower rents than what the market would dictate.
In 28 other community districts analyzed, regulated rents ranged 14 to 49 percent lower. Rents, in other words, could rise in such areas.
Yet mass evictions across NYC are unlikely. The real-estate industry would fear the inevitable public backlash; ending rent regulation would not mean ending other protections that discourage eviction and allowing even a few months' vacancy would entail significant lost income for landlords.
What's more, a less-regulated NYC housing market would, over time, alleviate its constant sense of crisis and desperation.
Normal apartment turnover would gradually return to the city.
At present, NYC experiences the lowest housing turnover of America's 10 largest cities. We call this the “frozen-city” phenomenon: Regardless of their capacity to pay a higher rent, households protect their good, rent-regulated deals even if they no longer need the space.
Indeed, more turnover would open NYC's housing market to newcomers, blunting the notion that the only way to accommodate a growing population is to build more subsidized housing that few tenants ever leave.
Further, as more housing came on the market, upward pressure on market-rent costs would be reduced, as supply better adjusted to demand.
In short, deregulating NYC's housing market, notwithstanding potential disruption to some rent-regulated Manhattan tenants, would immeasurably improve it.
New York state has had rent regulation for seven decades, in bad times and in good.
Yet somehow NYC always suffers from a housing emergency. Could it be that current law is to blame?