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Landlords are Making New York’s Housing Crisis Worse [1]

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Date: 2022-11-02

According to The City , the number of vacant rent-stabilized apartments in New York, is grossly underestimated. Whereas New York State reported 61,593 vacant rent-stabilized apartments in 2021, the city’s Department of Housing Preservation and Development (HPD) estimates that the figure is actually 88,830. This is not just an accounting anomaly: it reflects a deeper, and darker reality: landlords are systematically working to warehouse rent-stabilized apartments, rather than rent them out, in order to push up rents.

If you constrain the supply of a good, that good becomes more valuable, and so, future prices become higher. That’s economics 101. That inverse relationship between supply and future returns is an important framework for understanding New York City’s housing crisis. Landlords have an incentive to take out rent-stabilized apartments from the market, because it has the effect of making their property more valuable.

Initial findings had shown that the number of vacant rent-stabilized apartments had nearly doubled between January 2020, when New York State reported 33,667 vacant rent-stabilized apartments in New York City, and January 2021, when that number jumped to 61,593.

Around that time, median rents in the city took off in 2021. The reduction in the supply of apartments made future rentals higher. Supply and demand.

This is particularly galling when you realize that the city is facing a massive homelessness problem, with New York City having 55,036 homeless people . The vacancy rate for affordable units (with rents of less than $1,500 a month) are at less than 1% .

Meanwhile, more pricey apartments have high vacancy rates. Indeed, more and more pricey apartments are being built during a crisis of affordable housing.

Source: The City

Landlords cannot be forced to rent their apartments out. Although the passing of the Housing Stability and Tenant Protection Act of 2019 gave tenants much needed protections and prevented rent-stabilized apartments from being deregulated, the act did not resolve the issue. Landlords responded with warehousing, and that campaign has grown in strength.

While all this is happening, landlords have brought two lawsuits that question the constitutionality of rent stabilization laws in New York. These landlords believe that if they can get their cases before the Supreme Court, they can win. This is because of the conservative supermajority within the court, that could look favorably on their cases. One lawsuit was brought by the Community Housing Improvement Program and the Rent Stabilization Association, while the other was brought by Dino, Dimos and Vasiliki Panagoulias and Michael Vinocur and Jack Moy.

The lawsuits argue that the 2019 law violates the Fifth Amendment's “takings clause”, which prevents the government from taking property without giving due compensation. By confining the use of a rent-stabilized apartment to just that, the landlords argue that this is tantamount to a physical taking of their property. The second argument that they make is that the law violates the 14th Amendment’s “due process clause”, given its inability to promote affordable housing. The law prevented landlords from deregulating rent-stabilized units with high income tenants. If their arguments hold, rent stabilization will be dead. In the meantime, rents will rise and rise.

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[1] Url: https://www.dailykos.com/stories/2022/11/2/2133123/-Landlords-are-Making-New-York-s-Housing-Crisis-Worse

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