January 20, 2013

"More than 280,000 units — nearly half of Manhattan’s apartment stock — is rent-regulated in some fashion."

"These apartments are either godsends to those who occupy them, or daggers that twist in the hearts of everyone else, left to pay market rate or compete for the borough’s remaining vacancies — 2.8 percent of the housing stock, as measured in 2011."

From an article about what counts as "middle class" in Manhattan. It's not so much an amount of money you need to make as it is when you got into the real estate market.


chuck said...

In Manhatten back in 1966 I rented a room from a women, once personal secretary to one of the Vanderbilts, who paid $40/month for her rent controlled apartment. She had been living there for a long time...

Chip S. said...

Rent control tends to drive up rents on uncontrolled apts.

LarsPorsena said...

Blogger Chip S. said...

Rent control tends to drive up rents on uncontrolled apts.

1/20/13, 11:46 AM

Renters in the uncontrolled apts essentially subsidize the others.

Maguro said...

The other piece of the puzzle, briefly alluded to in the article, is the gyrations you need to go through to get your kids into a school that isn't filled with blacks and Puerto Ricans who'll beat little Joshua's ass to a pulp every day.

Chip S. said...

As the pct of rent-controlled apts falls further below half, political support for it should fall low enough at some point to make it worth campaigning against.

rehajm said...
This comment has been removed by the author.
chickelit said...

It's not so much an amount of money you need to make as it is when you got into the real estate market.

Shades of Prop 13 in California

Doc Holliday's Hat said...

Just another case of liberalism turning into a war on the young. We have to subsidize older people's healthcare (Medicare and community ratings in our own health insurance). We pay for social security, which we probably won't see a dime of ourselves. And we keep their rents down, while ours rise incredibly so between an entry level job and student loan repayment (which we took on to get that entry level job, as NYC employers wouldn't look at you twice otherwise) we can't you know, save any money and begin the transition from adolescence to adulthood. It's awesome being young now. Let me tell you.

Dust Bunny Queen said...

Rent control tends to drive up rents on uncontrolled apts.

Basic laws of supply and demand. If you limit the supply of something, apartment units by ensuring that they will never or rarely come back onto the market, then the remaining units will be more valuable because of their scarcity.

No matter how the politicians try to social engineer everything, the laws of supply and demand cannot be suspended or ignored.

The inability or refusal to think things through to their logical conclusions is also one of the main reasons our society is crumbling under our noses.

EDH said...

Amazing Video: Elizabeth Warren who repeatedly said during the campiagn that the "middle class is getting 'hammered'... Now Can't Define What Middle Class Is.

Howie Carr explains explains:

Not so many moons ago, a fake Indian named Elizabeth Warren went on the warpath, trying to rile up the “middle class.”

The middle class was getting hammered, she kept saying...

How did Granny Warren know this? Because she grew up on what she termed “the jagged edge of the middle class.” Her definition of “jagged edge” was only having three cars in the family driveway in 1965, including her own personal white MG sports car.

Now, however, the fake Indian is in the U.S. Senate, and guess what — she can no longer define what the middle class is. Won’t even take a stab at it.

We know this because Ch. 25’s Sharman Sacchetti, the reporter who plays Capt. Ahab to Warren’s Moby Dick, cornered her last week and started asking her about the middle class. The supposedly “legendary” high school debater melted yet again into a pool of non sequiturs, non-answers and nonsense.

Sacchetti’s questions always drive the fake Indian nuts because they aren’t of the “gotcha” variety. They’re totally legit, as in: “What numbers are we talking about in terms of income levels?”

“It’s not a numbers issue,” the Indian emeritus said. “I know you would expect a very wonky answer from me about the percentiles… .”

No, actually we’d expect a clumsy evasion, such as:

“When we strengthen education we make it possible for kids to go to college, then we strengthen America’s middle class, and that doesn’t mean a dollar figure.”

Will Your Honor please direct the witness to answer the question?

But of course she won’t. Because she knows taxes are going up on everybody who works. And the fake Indian is not going to allow herself to get saddled with a definition that can be thrown back against her later, as in, “Senator, I thought you said taxes were only going up on millionaires and billionaires.”

As Obama’s low-information voters have discovered over the last week, they are apparently now millionaires and billionaires, because their paychecks have shrunk, thanks to the Obama increases in the Social Security payroll tax...

Actually, the term “middle class” has become somewhat obsolete in the layabout Obama regime. There are only two classes now: the working and the nonworking classes. There are shades of gray at the margins — retired people can still be working class, as are the truly disabled. But by and large it’s very easy to tell which class you’re in.

If your first paycheck of 2013 was smaller than your last of 2012, you’re working class. If your first welfare check of 2013 was the same as your last of 2012, you’re nonworking class — a Democrat, in other words.

Meanwhile, Sharman wasn’t giving up.

“The middle class,” she said, “is by definition a group of people in a certain income level.”

“No,” said the fake Indian, in an response amazing even for her. Then how do you define tax rates, if not by income? Sharman tried the old, “What if you make a million bucks a year?” question, but Granny still wasn’t biting...

“It’s a whole lot of characteristics that define the middle class,” Granny said. Let the record show, she refused to list one of them.

“It sounds a little like a dodge,” Sharman Sacchetti said.

Actually it sounds a lot like a dodge. But you get what you vote for. As the old TV show used to say, “You asked for it!”

rehajm said...

Central planning- great for the privileged few who benefit, harmful for everyone else...

The article also fails to mention the savior of middle class Manhattanites....New Jersey. Or Staten Island.

Matthew Sablan said...

Even around the Virginia area, I remember wincing when I realized I made too much money to be allowed to have rents that weren't eating nearly half of my income a month, before utilities.

Rumpletweezer said...

I feel sorry for the people who own them.

cubanbob said...

NYC rent control laws were passed during WW2 as an emergency measure. The war ended in 45. So what's the excuse for keeping rent controls in place? A question for Ann: aren't rent controls a form of emininet domain? If so, why are the owners compensated for providing a public good?

Dust Bunny Queen said...

The issue of "what is middle class" has suddenly become a concern of those who live in the upper income urban areas who are smacked in the face with the reality that they are going to be taxed up the booyang. Wait???? NOT ME!! they say.

There is the dawning realization that the government's arbitrary designation of who is middle, upper, and uber upper class and being deprived of their earnings in ever increasing levels, is really all geographically relevant and it is going to affect YOU. If you are a two earner family with incomes that would put you into the top 1% in Iowa, you are barely going to be able to make it in San Francisco or Manhattan.

Boo hoo.. Maybe you should have thought about it before you voted for Obama. Unintended consequences and the inability to think things through to their logical conclusions.

I don't feel the least bit sorry for you. You deserve everything you are going to get. Good and hard..too..I hope.

William said...

I have known several people in rent controlled and rent stabilized apartments who are net losers precisely because of their low rent apartments. Although their incomes have improved over the years they remain in cramped quarters because they're getting such a bargain. If they had taken the plunge and bought an apartment years earlier, they would have made much more in real estate appreciation than what they have saved in rent. But, hard as rent controlled apartments are to come by, they are even harder to vacate.

Sunslut7 said...

I got into the NYC rental market in August of 1976, when I rented a rent stabilized two bedroom floor through on 13th Street. the northern part of Greenwich Village for $ 450.00 per month. In 1984 I moved to Pittsburgh. I left behind a rent stabilized appartment with a going rent of $625.00 per month. The building later went co-op and my two bedroom was VALUED AT AN INSIDER PRICE OF $68,000.00 TODAY THE SAME APPARTMENT PULLS IN NORTH OF $1,500,000. This why people are moving out of Manhatten and relocating ot Texas, SC and ND.

The best thing about living inthe appartment is that every night before I went to bed I could see -from my living room window - the lizard on the roof of the Lone Star Cafe at the corner of Fifth avenue and 13th street as well as the Empire State building from my bedroom window.

I seem to recall that you lived in the village at the same time. Did you ever patronize that little cafe behind the Jefferson library near the intersection of 10th Street and Greenwich St? It was a walkup with good street views and great pastries? Your hair was a redish brown at that time (late sevenries or very early 80s). Your face seems so familar I could swear that I saw you in line at Balduccis and Famous Ray's Pizza. At least it seems so to me. Cheers.

mrs whatsit said...

Apparently NYT writers and editors are no longer required to understand subject/verb agreement. Who needs grammar, anyway?

bpm4532 said...

Rent control: "I got mine, you get yours."

The Godfather said...

The other major city with rent control is Washington DC. I'm pretty sure the first rent control in the US was the Ball Rent Act, passed by Congress (which has legislative authority over DC) at the very end of The Great War. NY came immediately after.

DC rent control ended in the mid-1920's and then was renewed during the WWII-Korean War period.

After federal rent control under President Nixon's wage and price controls expired in 1973, DC's "local" government (to which Congress had delegated its legislative authority) passed the first of a series of rent control laws that continues to this day.

It's provided a pretty decent practice for me all these years.

But its pretty bad for the people it's supposed to help.

That seems to be true of many government programs, doesn't it?

hawkeyedjb said...

It was the Swedish economist Lindbeck who noted that the most effective methods of reducing housing stock were carpet bombing and rent control.

rcocean said...

"Rent control tends to drive up rents on uncontrolled apts."

False. Landlords HATE rent control - they don't want a FAIR return on their investment they want an UNFAIR Return as in screwing the tenants to the maximum extent possible.

rcocean said...

"Get rid of rent control and housing stock will soar."

This ignores zoning laws.

CatherineM said...

Oh...New York. What makes me laugh is a lot of the people who live in rent controlled (there is rent controlled and rent stabilized, can't remember the diff) apartments that make a shit load of money. Freaking Nora Ephron, a freaking millionaire lib if there ever was one, rented a rent controlled 8 room apt worth 10,000 a month for 1,500 and was PISSED when she was forced to pay market value. Fuck her!

As to the article mentioning middle class people still "hanging on" to be cool. Well, again, these aren't exactly normal middle class people, but I worked with a woman who, as her kids grew, she had it. She had an awesome rent controlled home at 104 and West End with a great view. However, with the 3 kids now in grammar school she was sick and tired of the hassle it was just to take her kids for a bike ride (first, she has to go with them and second, you have to go to the basement, get the bikes out of the locked locker and...a big hassle...) and the expense. However, because it's so damn expensive in Manhattan, they also have no money to move.

So NYTimes, it's not just because this city is so awesome, because it's not dick weeds, it's because it is so expensive, you have no money to move.

I had this problem when I moved from the UES to Queens many years ago. I spent a whole summer - seriously - eating $7 boxes of White Rose brand cornflakes because I was so broke in my studio apt. I didn't want to live in a shitbox with 3 room mates (been there, done that) so I went into some debt to move to Queens (because moving takes money and my corn flake wealth wasn't cutting it).By the way manhattanites who think I should just buy in Queens because it's so cheap...a 3 bedroom attached house (townhouse anywhere else) is $600,000 (750,000 a couple of years ago). Manhattan people think Queens is cheap.

By the way people, awesome apts with great prices have not had any updating in the last 30 to 70 years. In the shitty apt I had with my room mates at 83rd and 3rd in the late 80's early 90s for 1400 a month (my room was the cheaper one because my room didn't have a window and you had to walk through it to get to the awesome bed room) had not been renovated since 1940. That is typical. Or you had the really super shitty studio I had in a building that was built in 1979 that in 1994 had a constant leak in the bathroom and was about 400 sq feet and often didn't have heat for $1200 a month. And they waste so much money on heat because in communist manhattan the heat has to be on oct 1 to april 1 at abou 85 degrees no matter what the temp.

I work with youngsters now who live with 3 or 4 room mates (and they make bed rooms by splitting rooms with false walls...) and say, how come you're not in Manhattan? Because I don't want to live with 3 room mates who eat my Captain Crunch all for the "privilege" of living in Manhattan.

I am so fed up you have no idea, but my family is here and I can't leave them so here I am. Bitter.

Chip S. said...

rcocean said...
"Rent control tends to drive up rents on uncontrolled apts."

False. Landlords HATE rent control - they don't want a FAIR return on their investment they want an UNFAIR Return as in screwing the tenants to the maximum extent possible.

I'm mildly curious to know if this type of "argument" persuades anyone you know.

Not curious enough to want to see your reply, tho.

Maguro said...

"Rent control tends to drive up rents on uncontrolled apts."

False. Landlords HATE rent control - they don't want a FAIR return on their investment they want an UNFAIR Return as in screwing the tenants to the maximum extent possible.

Nice non-sequitor. The fact that landlords hate having their own properties rent-controlled does not refute the observation that having some portion of the rental market under rent ontrol tends to drive up the price of non-controlled housing.

CatherineM said...

I also have to mention my friend who can't afford to leave with her 3 kids...it kills her to that she has to send her kids to NYC public schools. She can't afford good schools. Well, a decent school in NYC still isn't as good as an average Catholic school. My friend who has 2 boys always said, we have good schools here, I will save the money for high school and college...then she babysat her friends kids who are in the Catholic school (2 blocks from the public school) and she said, OMG they are learning grammar and real math..and they are learning real stuff not the shit that Bloomberg and the BoE keep changing their mind about. Her friends kids are learning the real building blocks. She is so sorry.

Even the "good" public schools in NYC that cost tax payers $40,000 a year suck because they are not focused on education. And then the kids who go to paraochial school also spend an additional tuition...

Jeez I am fed up, but I live in a city of democrat lib sheep led by the likes of Cynthia Nixon who will tell you "if we only had more" than 40,000k a year to spend per kid on education, we would be OK!

So fed up..

Bruce Hayden said...

False. Landlords HATE rent control - they don't want a FAIR return on their investment they want an UNFAIR Return as in screwing the tenants to the maximum extent possible.

Obviously never been a landlord, and most likely not taken an economics class.

First problem is that the value of an economic property is typically directly related to the net income for the property, which means that you multiply the difference between rents and costs by some factor. Or, you look at rents, costs, and price and determine the return on investment, or how many years of owning the property to pay for buying it. And, you compare this with other properties and most often other uses for your money.

So, when you own rent-controlled properties, and are facing increased taxes, how do you keep your rate of return up (or, just break even)? You can sell the property, but any buyer is looking at the same calculations, which reduces the value of the property. Or, you can cut expenses. And, after all these years of rent control, a lot of these owners are really looking at merely covering expenses, and not making an obscene, or even unfair, profit. Before you rail about unfair profits, you really need to see their books, to see if they might have made more money in, say, the stock market. And, yes, the cost of ownership typically also includes the cost of borrowing the money used to buy the property (and, after it is paid off, you still have a similar opportunity cost with all the equity in the property).

What is interesting to me is the perceived notion that in NYC, it is common to have to fight with your super or landlord to get basic amenities, such as heat, water, etc. maintained, and most likely other things too. We own a number of apartments in a market without rent control, and tenants are likely to go years, if not decades, without unscheduled losses of any of these things. But, we can, and do, push up rent on occasion, to cover our increased costs. But, then, our tenants expect these things to work, and they do.

Peter said...

Rent control tends to drive up rents on uncontrolled apts.

Rent control also drives up the cost of uncontrolled apartments because:

1. It's inefficient. A single woman may continue to live in a large, rent-controlled 3-bedroom apt. because, years ago, she lived there with her children and her husband but now she's divorced and the children are grown.

If she had to pay market rent she'd probably move to a smaller, cheaper place but as it is she'd pay far more for an uncontrolled studio apt. So, she stays there- and the large apt. remains unavailable to a family that could actually use the space(and is willing and able to pay for it).

2. NYC is fully built-out; thus, increasing the supply of apts requires that older, smaller buildings be replaced with newer, larger ones.

But rent control makes that very costly, as tenants in the older, smaller building have the right to remain there for the remainder of their natural lives. To get them out, the owner may offer cash or a better apt. elsewhere- but since the last tenant to leave gets the best deal, no one wants to be the first to accept an offer.