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Well, economists often suggest a better way than just let the rich take over: directly subsidize people, not flats. So, if you want a neighborhood to not just attract bankers but also families with kids, pay the families for living there! The idea is to pay them only while they live there - independently of which accommodation they choose - and stop the payments when they move away. This way, the market isn't distorted, people don't get "sticky" in their ability to move to other apartments, and the whole setup is much more fair, as it's pretty easy to control who gets which benefits.

The downside, of course, is that the cost of such payments is far more transparent to the public. Many economists would argue that it's in fact much cheaper, as you it's more efficient. Still, today's subsidies are well hidden and almost never show up in household budgets. And thus it's hard to get to a system of direct payment.

Yeah, such a solution is difficult -- and costly -- to implement. For the reasons you mentioned, government tends to choose subsidization options where money isn't explicitly exchanged: i.e. rather than paying the landlord the difference between controlled and uncontrolled, they just tell him certain units are controlled and he has to deal with it.

A solution such as the one you described also makes it difficult to distinguish between who to subsidize and who not to subsidize. How do you make sure you're not giving big payments to people who don't really need the money and just want the house? What's the difference between a family making $90k/yr and wanting to live in a $5k/mo apartment and a family making $500k/yr and wanting to live in a $25k/mo apartment off central park west? Neither can afford the rent in the area, but where do you draw the line?

The subsidy shouldn't depend on the apartment, but it should depend on the renters. So you can explicitly set an income limit to exclude the $500k/yr family, but even if you don't, they don't get a bigger subsidy just because they want a more expensive apartment.

Housing shortages aren't substantially caused by people making >$500k, people making a lot of money just have an easier time dealing with a shortage.

All other things being equal, giving everybody a subsidy just bumps the rent by the same amount.

The biggest problem with the subsidy idea is deciding who gets it - and it can't be anywhere near everybody.

> people don't get "sticky"

People would get VERY sticky against moving away from a subsidised area, even if it might actually suit them better, and they could afford it - leading to sub-par allocation of resources.

Also, there's the question of how/when/if to pull back the subsidy. If you do it according to income, you create a very high marginal tax rate at the beginning of the pay scale - that's toxic to work and traps people in poverty. If you do it when the children are grown, you're suddenly kicking people of of family houses they've lived in for decades (see "Bedroom tax" in the UK). If you don't, then what started as a family neighbourhood becomes a neighbourhood of middle-agers living in large apartments - while their kids struggle to find a decent place to live.

Incentives are HARD.

Not necessarily disagreeing with you. But the practical meaning of that is that, in the case of New York, this means the entire island of Manhattan becomes a playground for the wealthy and the people who keep that playground humming are relegated to the outer boroughs.

Entire Manhattan, including 200th streets?

I can imagine that areas like this already exist, e.g. in most lower Manhattan and upper west side. Did it result in anything particularly bad, or at least measurably bad?

(Disclaimer: I live in Brooklyn and work on Manhattan; my commute is still better than in most other places I lived.)

Eventually, yeah. There is a finite supply of land on Manhattan, and demand from foreign buyers is growing. Downtown and midtown are already saturated, so the billion dollar condo buildings of 2040 will need to be built somewhere.

I don't see any particular reason that Inwood will be more desirable in 2040 than Brooklyn Heights. Being physically on the island of Manhattan just isn't that big a deal. What matters in the long run seems to be commuting time and to a lesser extent zoning and projects.

Looking at this heat map: http://project.wnyc.org/transit-time/#40.75805,-73.98571,12,...

I'd be bullish on Sunnyside / western Woodside.

I hear this often, but it doesn't jive with my impressions of Manhattan (lived there years ago, visit periodically). In particular, significant parts of the island top out at walk-up heights (5-6 stories). The economics of rent in Manhattan would change dramatically if the island were rebuilt using modern technologies (chiefly: elevators and the taller buildings they enable).

Without knowing the local politics, it seems obvious that there is some force that is preventing the low-productivity uses of land (broadly: "short buildings") from being converted into higher-productivity uses (chiefly "taller buildings"). There's only a finite supply of ground -- this does not mean there has to be a finite supply of usable indoor space. The latter is a choice that can presumably be changed when the will arises.

Historically it was partly because the later-developed parts of the city were built on less viable land (i.e. swamp/landfill)

You can't just tear down some 4-story building and put up sky scrappers. There is a maximum density capacity that a lot of Manhattan already exceeds. The trains, sewers and electrical requirements need to be thought of too. Especially the trains which are already way over capacity.

Look at what has happened in Williamsburg and the L-train. As more and more warehouses have been converted into apartments and new condo's have gone up, the L-train has become awful for large parts of the day. And the train runs as often as possible during those times.

I'm not saying you can't do these things but I do think other things need to be considered.

Did it result in anything particularly bad, or at least measurably bad?

I imagine that depends on the timescale you're looking at. A similar thing has happened in London over the past 30 years - the upshot is that schools and hospitals are now finding it practically impossible to recruit teachers and nurses in the city because they can't afford to live within a commutable distance. That's quite bad.

> are now finding it practically impossible to recruit teachers and nurses in the city because they can't afford to live within a commutable distance. That's quite bad.

Then they will pay more, all the extra money will go to rent, and things will stabilize again.

Do Hospitals located in expensive places receive extra reimbursement from the government?

That's kind of the entire point. The wealthy who use Manhattan as their playground today are just getting the public to subsidize housing for the people who keep their playground humming.

Manhattan is already far too expensive; I have a friend who commutes daily to Manhattan from Philadelphia because rents are 25% of what they are in Manhattan. It's only 90 minutes to Penn Station on the train, which is about the same time it would take from the affordable parts of Brooklyn or Queens.

Except a ride from Brooklyn or Queens is $2.75 and a ride from Philadelphia is around $80 on Amtrak. Also, you're assuming that he lives directly above 30th Street Station and works directly above Penn Station, otherwise the travel time is likely to be over 2 hours.

I complain to my friend in brooklyn it takes about as long to go from Philadelphia to Penn Station as it does from Penn Station to their door step. However yeah, those tickets can get pricey. Sometimes you luck out and get the 50$ one, but many times its 200 one way - I dont know what tickets would be commuting during the early hours to get to work though.

That being said, you are also right about living directly above Penn Station. I can get really far in 20 - 30 minutes in philadelphia, but almost nowhere in NYC because of human congestion.

not that 1.5 - 2 hour commutes leave much for a life. I did that for 2 years and while I got a lot of reading done, I didnt have any time at home. You get home 7-7:30 and make dinner. maybe you are finished eating and chores by 9 and you go to sleep between 10 and 11 (you aren't staying up very late because you are leaving early in the morning hours too).

Who commutes via Amtrak?

You can drive from Philly to Trenton or a similar station (takes ~30 minutes from NE Philly), then spend ~1 hr on NJ Transit. This makes the trip cost $15.50+gas, or $440 monthly.

i dont own a car. if owning a car was part of my every day life perhaps, but otherwise I'd have to factor in the price and costs of the car which are extreme

also the hour and a half is optimistic, parking walking overhead waiting for the train would probably again push time up

Living in Manhattan is not a right. I don't see anything wrong with a shorter commute being more expensive.

I would very happily pay more for services that get more expensive because workers demand higher wages for their longer commutes (etc.), in exchange for the drop in market-rate rent (which I pay) that would come from throwing out rent regulation.

I mean, it practically is. I live in Manhattan, and with the exception of a very few places (basically UES right on the river and then the projects) any studio apartment south of 100th (~115th on the west side) street is going to be $2000/month or more. If you find any place cheaper it is going to be borderline uninhabitable or a 6th floor walkup. Rents in Harlem are going up now, too.

Of course, there are more exceptions. Intimidating coöp applications are one.

What do you mean? Do you mean the coops that have a max income? Because those obviously don't count, they can't rent out a studio for $2k when the resident isn't allowed to make more than 75k. Or do you mean applications that make you sign away your first born and tell them your deepest darkest secrets? Because everyone I know has had to do that, it's just part of the process, mainly because of how hard it is to evict someone in NYC, and doesn't mean you get cheaper rent.

I mean that some coöp applications do have you sign away your first born and tell them your deepest darkest secrets and that there are still enough people who haven't gone through that process at one point or another that the market rent for those units is slightly lower than it would be otherwise. Of course, I only have anecdata support my claim.

That has already happened.

Most of the people that currently live in rent controlled or price stabilized apartments got them decades ago. The waiting list for any units that become available is extremely long.

That effectively means most rent control is helping the elderly. I present that without comment or judgement, it's just a fact. The elderly are generally not the people manning the counter at your local bodega. They are not your local construction workers, doormen, or bartenders.

All of those people, the ones that are the backbone of the service economy within Manhattan, already live in the outer boroughs.

So the question effectively becomes does it make sense to subsidize the rent of retired people in Manhattan? On one side you can be the assholes kicking elderly people out of the homes and neighborhoods they have lived in for 30 years. On the other side you can be the assholes forcing the working class to commute 90 minutes a day. Take your pick of the bad options.

Very interesting. According to this: http://furmancenter.org/files/publications/HVS_Rent_Stabiliz..., in Manhattan below 96th street 35% of rent-stabilized apartment dwellers moved in more than 20 years ago! (Versus 2.7% of those in non-stabilized apartments).

Another interesting fact from that paper: the median person in a rent-stabilized apartment in core Manhattan has a higher income than the median person in a non-stabilized apartment in most of the rest of NYC.

This is a slightly different PDF from the same research group [1], which is what I was looking at. A couple other statistics that stick out.

There are more rent stabilized apartments in NYC than market rate apartments. Over 20% of all rent stablized apartments in Manhattan go to people over 65. Less than 5% of people in market rate apartments are over 65 years old.Over 65% of people in a rent stabilized apartment in Manhattan are white.

I think people have a picture of rent stabilized apartments as the place where your local bodega employee lives. The fact is the neighborhood rent stabilized apartments are where retired people live.

[1] http://furmancenter.org/files/FurmanCenter_FactBrief_RentSta....

I don't know how prevalent this is but from my experience, rent stabilization is largely gamed by many landlords.

My lease in Manhattan is for about 60% higher than what we are paying. We are then given a "preferential rent" rider which allows us to pay what we pay... This I assume is so the landlord keeps the building at his rent stabilization maximum which are about $3k higher than market rate. This is probably happening everywhere (at least in my last 3 apis) and it really amounts to no stabilization at all...

There are many many problems with the current system:

- It locks people into poor locations. Someone that is unemployed lives in a massively subsidized apartment in the Bronx. A job opens up in South Brooklyn. Would they move and take it? Not when their rent will go up 4X.

- It helps long term residents at the expense of shorter term residents, and companies who hire them.

- It only helps the small subset of the needy who can get in, and leaves the others out in the lurch.

- It discourages investment in the housing infrastructure.

I can keep going, but it would take me an hour to finish venting.

The type of "price controls" that you are railing against do not exist in New York City and to the best of my knowledge have never existed there. Maybe during World War II.

Here you go: http://www.nycrgb.org/html/resources/faq/rentstab.html

Urgh, when I saw the downvotes I figured it would be people who knew nothing about NYC's rent laws except had heard the phrase "rent stabilized" and decided for themselves what it meant. And I was right.

Every vacant apartment in the city can be rented by the landlord at market rates. The price controls complained of by the top commenter do not exist. There is no such thing as a law saying "This vacant apartment? You can only charge $1000 for it, even though it would normally rent for $3000."

Is that clear? Or would you rather just downvote, despite not knowing anything about the city's rent laws?

This seems to explain the rules determining the rent you can charge for a vacant rent-stabilized apartment: http://www.nycrgb.org/html/guidelines/vacancy.html. Am I misunderstanding this page?

That's simply not true. Vacancy decontrol for a rent stabilized apartment only kicks in if the legal rent for an apartment has reached $2500. So it is very much the case that a vacant apartment can be subject to rent stabilization and cannot be rented for whatever the market will bear.

See this page for worked examples: http://www.nycrgb.org/html/guidelines/vacancy.html

That's completely untrue. I live in a rent-stabilized apartment I rented at (moderately) below-market rates three years ago. Had the landlord not done what they claim are $40,000 worth of renovations, they would have had to rent it to me at something like half the market rate.

I don't think that's entirely true. Almost every new building has to have 20% of the capacity rented to "Affordable living" standards - far below market rate.

I'm not sure what you are referring to, but New York definitely has two levels of rent pricing controls: rent control and rent stabilization.

With rent control, the rent never increases, it is fixed for the duration of tenancy, and can even be handed down (once) to a family member. Once that tenant or their heir vacates the apartment, then the rent goes to market rate with no further regulation.

With rent stabilization, the city sets an annual percentage increase for the rent, which is typically not as high as the market-rate appreciation rate. When a tenant moves out, the landlord can raise the rent by a vacancy allowance, as well as an adder of 1/40th of any improvements made to the unit. Once the annual rent exceeds $2,500 per month, the unit is considered market-rate, and becomes unregulated (however, regulation continues until the current tenant moves out).

SOURCE: I was a landlord in NYC. In my building, I had one rent-controlled unit occupied by a senior citizen who never paid rent (she needed the $100/mo more than I did), and 80% of the other units were rent-stabilized.

Hmm...from that description it sounds like eventually every unit will end up unregulated.

Is there any mechanism that creates new rent controlled or rent stabilized units, or converts an unregulated unit into a rent stabilized or rent controlled unit?

The mechanism for new rent stabilized units are set asides in exchange for tax credits and/or zoning variances in new buildings. They end up costing the city a lot more in forgone property taxes than residents save in rent, but nonetheless seem to keep getting renewed.

> Is it fair?

Absolutely. You can't dictate to the owner of private property how much it should sell or rent for. (Unless maybe your surname is Lenin or Zedong.)

What's next? Why not have the government step in if someone dares ask $300 on Craiglist for a bicycle that's only worth $50 and make him or her sell it for $30? If someone forks up $300 let that be. If nobody buys it, let the message slowly dawn upon the seller.

> desirable areas of certain cities end up effectively "off limits" to lower income renters.

Speaking of desirable: It is an undeniable fact, also that a lack of lower income renters is part of what makes those areas desirable. It's not just the views, quality of the suites or city convenience. It's also the fact that poor people aren't there. Same as country clubs, private schools, and all that.