Once every three years, the New York City Department of Housing Preservation and Development (HPD) sponsors the preparation of the New York City Housing and Vacancy Survey (HVS). The survey is required by the state and city’s rent laws and its primary purpose is to determine the city’s vacancy rate. The continuation of the rent stabilization in the city is contingent on a continuing “housing emergency,” quantified with a vacancy rate of lower than 5 percent.
In addition to vacancy rates, HVS includes detailed data on rents, incomes, housing stock composition and conditions. It is a valuable tool for measuring various aspects of the city’s housing stock. In February, HPD presented the City Council with a preliminary analysis of data from the 2017 HVS. The microdata will not be available until June 2018. Community Service Society’s analysis of HPD’s summary findings point to:
- Growing market pressure on renters;
- Effectiveness of rent freezes;
- Need for stronger renter protections in the rent regulated sector;
- Growing instances of owners holding their apartments vacant for extended periods of time.
Asking rents point to an overheated rental market
The most extreme indication of the skyrocketing rental market was in the asking rents (amount of rent asked for vacant unit), which increased from $1,443 in 2014 to $1,875 in 2017, 29.9 percent above inflation. For comparison, asking rents between 2011 and 2014 went up by 2.1 percent above inflation, from $1,371 to $1,400.
Median rents show the benefit of two rent freezes
The median rent for rent stabilized apartments rose from $1,237 in 2014 (April 2017 dollars) to $1,269 in 2017, an increase in 2.6 percent above inflation. Median rents in unregulated apartments rose from $1,546 to $1,700, or 10 percent above inflation.
The Rent Guidelines Board enacted two rent freezes in 2015 and 2016, meaning that tenants renewing their leases between 10/1/15 and 9/30/17 received a reprieve from rent hikes. The rent freezes mitigated the impact of the skyrocketing rental market. Rise in rents in stabilized units was much slower than in regulated units.
Lower vacancy rate in cheaper apartments
The overall vacancy rate in 2017 was 3.63 percent. There were 79,190 non-dilapidated vacant units available for rent. However, there was a vast difference in vacancy rates among different rental tiers. Apartments that cost over $2,000 have a 7.42 percent vacancy rate, while apartments under $800 have a 1.15 percent vacancy rate.
Fewer low-rent apartments
The number of apartments renting for over $2,000 increased by 99,594 units since 2014, while the number of apartments renting for under $1,000 decreased by 87,720 units. Apartments renting for over $2,000 make up a larger share (21.8 percent) of the overall rental market than they did in 2014 (17.1 percent).
Median household incomes are rising across housing types
- The median income for rent stabilized tenants rose quicker than the rate of inflation: from $41,643 in 2013 (constant 2016 dollars) to $44,560 in 2016, a 7 percent increase above inflation.
- Incomes for rent-controlled tenants decreased from $29,745 to $28,260, a loss of 5 percent after inflation.
- Incomes for unregulated tenants rose from $59,491 to $67,000, an increase of 12.6 percent after inflation.
- We do not have enough information to say whether these increases are due to increased incomes of the same tenants or the influx of new, higher income tenants.
More competition for rent stabilized units
There is are fewer available rent stabilized units than unregulated units. In 2017, approximate net vacancy rate for rent stabilized units is much lower (2.06 percent) than the unregulated units (6.07 percent).
Rent burdens: Varied picture, depending on housing type
- The median rent to income ratio among rent-stabilized tenants is high, but did not change much between 2014 (33.1 percent) and 2017 (33.4 percent). The relative stability of the ratio is a direct result of the two rent freezes.
- Rent burdens for rent-controlled tenants rose sharply, from 30.7 percent to 40.2 percent, even though median income rents in rent-controlled units decreased.
- Rent burdens for unregulated tenants dropped from 30.0 percent to 28.9 percent, even though rents in unregulated rentals went up. This decrease may be a result of higher income tenants moving into unregulated rentals.
More crowding in the city’s lowest cost apartments
Overcrowding has declined in stabilized and unregulated units, as well as overall. The share of units with more than one person per room decreasing from 12.2 percent in 2014 to 11.5 percent in 2017.
However, overcrowding in “all other rental units”, which includes public and subsidized housing went up from 5.5 percent to 7.7 percent. This type of housing tends to be the least expensive in the city.
Housing stock gains are in units unavailable for rent
The overall housing stock has increased by approximately 69,000 units. However, the majority of that increase is in vacant units that are not available for sale or rent.
The number of rentals decreased slightly, by 1,233 units while the number of vacant units that are not available for sale or rent went up by 65,406 units
Why are units off the market?
- There is 20,181 more pied-à-terres than there were in 2014.
- There are 17,524 more units held off market for “other” reasons than there were in 2014.
New York’s rent regulation laws protect over one million households, including over 400,000 low-income households (according to 2014 HVS data). However, the law is undermined with vacancy deregulation, as well as excessive rent increases as result of the vacancy bonus and preferential rents.
The state should take action before the rent laws come up for renewal in 2019. It should repeal vacancy deregulation and the vacancy bonus, and reform the preferential rent provision this year.