- REAL ESTATE EDUCATION
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Affordable Housing Crisis: The Problem We Need to Solve
January 29, 2020
There were a lot of positives for New York City in the last 10 years.
Population rose as citizens from around the world flocked to our city; attracted to low levels of crime, an innovative spirit, and steady job growth. Between 2005 and 2016 alone, the City added over a half million people and since the end of the 2008 recession, added over 858,000 jobs.
However, during this same period, New York has experienced growing pains; only 125,000 housing units were constructed between 2005 and 2016 – that amounts to 0.15 units per job.
The task of addressing New York’s affordable housing crisis is daunting.
Let’s review some basic facts. New York City is a city of renters. Of the approximately 3.2 million units of housing in NYC, 68 percent are rental units.
The vacancy rate of New York’s rental housing stock — the standard against which housing emergencies are judged — is quite revealing of the actual crisis.
Apartments that cost about $2,775 a month to rent, are considered affordable roughly for a household earning $100,000 a year. These apartments have a vacancy rate of 7.5 percent, well above the five percent needed for an emergency.
Apartments listed at a lower rent, are much harder to come by. For these apartments, we are looking at a vacancy rate below two percent, well below the five percent threshold.
Low-income or very low-income households face two primary challenges: 1) They do not have enough income to meet their rent, and 2) Do not have many apartments available to them at an affordable price.
In fact, 50 percent of households are rent burdened, with most lower income households severely rent burdened, even when paying lower rents.
Additionally, within the region, NYC has the largest housing production to job growth deficit, adding 363,000 more jobs than units produced in the last two decades.
To keep up with projected job and population growth, the City will need to add 20,000 of new units of housing per year.
With the city’s population on track to reach over nine million residents by 2040, an additional 400,000 units are needed to meet demand. To put that in perspective, that is more than double the amount of housing units in Staten Island today.
The new rent laws passed in 2019 do little to address the City’s affordable housing crisis. The changes may be successful at slowing the rate of rent growth, but it will not make it easier for those families to pay that rent, nor will it result in more housing units for those families from which to choose. All of this raises a key question: what is the problem we are trying to solve? We believe the goal is to create a housing market robust enough to afford every New Yorker — no matter their income level — to have the ability to have options as to where they can live at a price they can afford. The focus should be on constructing more multi-family rental housing overall, especially units that can rent for lower prices.
There is much work to be done to achieve this goal, and unfortunately, recent changes did not advance our efforts.
But that just means that moving forward we must all work together to provide creative solutions New Yorkers desperately need and deserve.