New York micro-appartments

[DGuller]

For owners sure.

Economic efficiency is not evaluated by segments of society.  It's evaluated for the entire society.

How is that questionable? Article made the comparison of Bloomie's bit to these micro apartments.

So what?

I get that typically they wouldn't increase like that but they would in the short term. Eventually it'd flatten out but the immediate impact would be rents rising across the board.

No, that's just not true.  Rents would not increase across the board.  That's an economically illiterate assertion.  They might increase on average, but they would go up for currently controlled apartments, and go down for free market apartments.  Nothing is stopping the rent increases for free market apartments right now, so I don't see how increased supply on the free market would lead to increased prices.

They only increase the supply because they force people to leave their homes (as they can't afford them).  Young people in general would be big winners but the young people already in New York (like myself) would generally be fucked over. Many of us already are benefiting from subsidies as we've lived in the same locations for sometime and seen market rates spiral above our heads.

I doubt that's a common situation for young people, and I further doubt that those young people who do enjoy subsidies enjoy gross subsidies.  I doubt that those people would experience much of an impact.  After all, it's not in landlords' interest to empty out a city.

[jimmy olsen]

How many "poor" people can afford $2,000 a month in rent? 

We are talking about NYC here.

Doesn't matter. It isn't poor individuals who would get these spaces. Most likely either transient Euros or kids who have their parents as guarantors. After all, typically you need about 40-50 times the monthly rent in salary to sign a lease on your own.

Whaaa???

[Admiral Yi]

I just got the impression that you're badgering Yi-style rather than asking for clarification.

Good one grumbler.

[DGuller]

Whaaa???

There are income requirements for renting an apartment.  Why is that so shocking?

[DGuller]

I just got the impression that you're badgering Yi-style rather than asking for clarification.

Good one grumbler.

I was talking go garbon, Yi.

EDIT:  Anyway, my apologies.  I didn't think you would be reading this thread.

[Eddie Teach]

How many "poor" people can afford $2,000 a month in rent? 

We are talking about NYC here.

Doesn't matter. It isn't poor individuals who would get these spaces. Most likely either transient Euros or kids who have their parents as guarantors. After all, typically you need about 40-50 times the monthly rent in salary to sign a lease on your own.

Whaaa???

Divide by 12 and it should make more sense.

[garbon]

No, that's just not true.  Rents would not increase across the board.  That's an economically illiterate assertion.  They might increase on average, but they would go up for currently controlled apartments, and go down for free market apartments.  Nothing is stopping the rent increases for free market apartments right now, so I don't see how increased supply on the free market would lead to increased prices.

Well sure that's true, as you're right I'm just talking about rent-stabilized places going up. However, when I took a quick figure check, 64% of the rental units in Manhattan are rent controlled or rent stabilized (rent control makes up 2% of that).  That's a lot of people that would be affected by removing such subsidies.

I doubt that's a common situation for young people, and I further doubt that those young people who do enjoy subsidies enjoy gross subsidies.  I doubt that those people would experience much of an impact.  After all, it's not in landlords' interest to empty out a city.

Why does it need to be a gross subsidy?  Living in New York as we've all discussed is expensive. In many cases, it is hard to have a substantial difference between income and rent (let alone the 2/3rds divide that landlords typically want you have).

Now many young people in NYC have lived in their current apartments for 1-2 years - and many of them live in units that have rent stabilization.  If we use my apartment as an example, you're looking at an increase of $200 per month (let's say each year mine goes up by $25 bucks when stabilized) if rent stabilization was removed which equals about 2400/yr increase. That could certainly be enough to cause a young person to need to leave their apartment considering that their wages likely remained flat in that intervening period.

[Admiral Yi]

EDIT:  Anyway, my apologies.  I didn't think you would be reading this thread.

That apology suggests the comment is acceptable as long as I don't see it.

[DGuller]

Well sure that's true, as you're right I'm just talking about rent-stabilized places going up. However, when I took a quick figure check, 64% of the rental units in Manhattan are rent controlled or rent stabilized (rent control makes up 2% of that).  That's a lot of people that would be affected by removing such subsidies.

Which may actually mean that the effect on individuals would not be that bad.  Subsidies help or hurt most when the number of recipients is limited.  Now, that 2% may suffer pretty badly, because rent-controlled apartments are grossly underpriced by any measure.

Why does it need to be a gross subsidy?  Living in New York as we've all discussed is expensive. In many cases, it is hard to have a substantial difference between income and rent (let alone the 2/3rds divide that landlords typically want you have).

Now many young people in NYC have lived in their current apartments for 1-2 years - and many of them live in units that have rent stabilization.  If we use my apartment as an example, you're looking at an increase of $200 per month (let's say each year mine goes up by $25 bucks when stabilized) if rent stabilization was removed which equals about 2400/yr increase. That could certainly be enough to cause a young person to need to leave their apartment considering that their wages likely remained flat in that intervening period.

Removing economic idiocies causes dislocations at the end of the day.  It doesn't mean that it shouldn't be done regardless.  That said, I doubt that the result of dislocation would be two thirds of the city moving out, and a reduction of NYC population to 3 million.  At the end of the day, on average, landlords would charge what tenants would be able and willing to pay, because empty apartments don't bring any income.

[DGuller]

EDIT:  Anyway, my apologies.  I didn't think you would be reading this thread.

That apology suggests the comment is acceptable as long as I don't see it.

No amount of backhanded apologies would satisfy you, it seems. 

[garbon]

Which may actually mean that the effect on individuals would not be that bad.  Subsidies help or hurt most when the number of recipients is limited.  Now, that 2% may suffer pretty badly, because rent-controlled apartments are grossly underpriced by any measure.

The rent control units are all the type that have stuck within families as rent control only applies to apartments continuously held from a long time ago (forget the date off the top of my head)...so I was only thinking about rent stabilization throughout the thread as I know that's the only thing that is actually fairly rampant in NYC.

Removing economic idiocies causes dislocations at the end of the day.  It doesn't mean that it shouldn't be done regardless.  That said, I doubt that the result of dislocation would be two thirds of the city moving out, and a reduction of NYC population to 3 million.  At the end of the day, on average, landlords would charge what tenants would be able and willing to pay, because empty apartments don't bring any income.

I don't think I was suggesting 2/3rds of the city would move out. There is a middle ground.  I was saying that it would have a terrible effect on the current youth population in the city which you said wasn't the case.  I don't see why landlords would have an issue because certainly there are individuals above what we are calling "youth" that could afford to and would be willing to swoop in on these higher priced apartments.

[DGuller]

The rent control units are all the type that have stuck within families as rent control only applies to apartments continuously held from a long time ago (forget the date off the top of my head)...so I was only thinking about rent stabilization throughout the thread as I know that's the only thing that is actually fairly rampant in NYC.

Rent stabilized apartments can still be grossly under-priced, since it works as a one-way ratchet.  At best, the landlord can raise the rent to match inflation, or maybe not even that much.  They also can only raise the rent so much when the tenant moves out. 

When my uncle came to US, he found a 2-bedroom apartment for $330 a month in a not-bad section of Brooklyn.  Even 20 years ago that was a laughably low amount, he should've paid at the very least twice that amount.  How did he get it?  The previous tenant died after living there for a couple of decades, and his rent was 200-something.  My uncle bribed the super with $5,000 to get to the front of the line to that apartment.

I don't think I was suggesting 2/3rds of the city would move out. There is a middle ground.  I was saying that it would have a terrible effect on the current youth population in the city which you said wasn't the case.  I don't see why landlords would have an issue because certainly there are individuals above what we are calling "youth" that could afford to and would be willing to swoop in on these higher priced apartments.

Where would they be swooping in from, ether?  They would probably be vacating some other apartment in order to swoop in, wouldn't they?

[garbon]

I agree that rent stabilized apartments can be quite under-priced and why this could also hurt a lot of youth, not just the elderly (whom of course, I don't really want to see out on their butts either).

Where would they be swooping in from, ether?  They would probably be vacating some other apartment in order to swoop in, wouldn't they?

Quite easily parts of Jersey or Long Island where they settled because vacancy of rent-stabilized places was near 2%. Not sure if those new vacancies on the periphery are ideal for the city, itself.

[viper37]

OTOH that doesn't mean that the typical person will rent a place when they first move out on their own and stay there for the next 50 years, either.

most people don't stay in the same house for the next 50 year.  Many people I know move every year or two.  Yet, I still consider that "permanent" housing.

[garbon]

Interesting book review.

http://nplusonemag.com/berman-s-children

Also found out I know someone who had property that was seized/destroyed for the navy yards project.