Tag Archives: housing policy

What’s Andrew Cuomo’s Plan to Help New York City Renters?

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The New York Times interviewed me in a video, What’s Andrew Cuomo’s Plan to Help New York City Renters? The transcript reads,

“Can you describe rent prices in New York?” “High.” “Expensive.” ”Out of control.” ”The rent here is absolutely crazy.” “Very, very unaffordable. Two verys — yeah very, very expensive.” Median asking rent in New York City is up more than 7 percent in just the last year. It’s now about $4,000 per month. That’s made the cost of housing a key issue in the mayor’s race, with the top candidates each proposing changes to a core New York City housing policy: rent stabilization. Nearly half of the apartments in New York are currently rent stabilized, which means that their rent increases are determined by a government agency controlled by the mayor. That makes rent stabilization a hot button issue for hundreds of thousands of voters. After front-runner Zohran Mamdani revealed what he pays in rent — “$2,300 for my one bedroom in Astoria.” — rival Andrew Cuomo argued he was unfairly occupying an affordable apartment and shouldn’t qualify for rent stabilization because he makes $142,000 a year. “Rent-stabilized units, when they’re vacant, should only be rented to people who need affordable housing.”

Many rent-stabilized tenants are low income, but about 16 percent of rent-stabilized households do earn at least $150,000 a year. If elected mayor, Cuomo says you could only qualify for a rent-stabilized apartment if your rent is 30 percent or more of your income. Let’s say this couple is looking for an apartment. Their salaries are $35,000 and $45,000 a year. They find a rent-stabilized apartment for $2,000 a month. That’s 30 percent of their income. So under Cuomo’s plan, this couple will face less competition for this lease because anyone who makes more than them could not apply for the the apartment. Means-testing is popular with voters. About 65 percent supported it in a recent Times-Siena poll.

But critics argue that Cuomo’s plan reflects a misconception that rent stabilization is an affordable housing program. In fact, it’s a form of market regulation with roots in the postwar era. “After World War II, you had returning G.I.s starting families.” The rent gets too damn high and the government takes a look to say, ‘Is there something we could do about it?’” Some apartments in this period were rent-controlled. The system that eventually effectively froze 1970s rents in place like the famously low-rent apartments from “Friends” and “Sex in the City.” “You have a rent-controlled apartment? I suggest you stay there.” In reality, only about 1 percent of apartments are rent controlled today. Most are now covered by rent stabilization, which first became law in 1969. “It really was this broad-based sense that tenants needed the government to come in and kind of limit that increase in their rent. Rent stabilization was not designed to take into account the income of the tenant at all. Rent regulation was really put into place to say when the vacancy rate is so low, landlords can’t use that as an opportunity to gouge tenants for increases in rents.” Today, rent stabilization applies to most apartments in buildings with at least six units that were built before 1974. That covers about one million units and two million New Yorkers. Rent increases are set by the mayor-appointed Rent Guidelines Board. “So you’re not at the mercy of your landlord solely. They can only go according to the increased percentage rate that the Rent Guidelines Board decides.”

Joanne Grell is a tenant advocate in the Bronx. She moved into a rent-stabilized apartment nearly 25 years ago and still lives in it today. “I moved here back in 2002 with a 2-year-old and a 5-year-old, not knowing exactly how I was going to be able to be a single mom and afford to live in the city. Fast forward 23 years later, I raised my children here.” When she moved in, her rent was about $950 a month. She earned a moderate income, but if means-testing had been in place, she wouldn’t have qualified for her unit. “When I moved in here 23 years ago, it might have been 20 percent of my salary. So if Cuomo’s means-testing proposal was in place when I applied for this apartment, I would have never been able to get it.” Now, she does spend more than 30 percent of her income on rent, which has gone up to $1,750 a month. Grell plans to vote for Mamdani this election because she believes his proposal to freeze the rent would help struggling tenants like her and 69 percent of voters in the Times-Siena poll agreed. “My upstairs neighbor said to me, ‘If I get another increase, I will not be able to keep my apartment.’ That’s how serious it is.”

David Reiss said that Mamdani’s rent freeze would help tenants in the short term, while Cuomo’s means-testing would be an administrative nightmare that could make life difficult for many. Ultimately though, he said neither of these policies address the root cause of high prices: that there aren’t enough apartments to go around. Both mayoral candidates have said they support building hundreds of thousands of units to help address the housing shortage. “We need more housing, a lot more.” “Get the supply up. The rents will come down.” But Reiss says neither candidate’s plans would meet the demand and don’t account for factors like population growth or apartments being demolished. “Politicians from President Trump to Andrew Cuomo to Zohran Mamdani, have all proposed policies to address housing affordability. But it can’t just be doing what we’re doing now, but a little bit better. Fundamentally, if you want to increase affordability, you have to build more housing.”

The FHFA’s @Pulte Acts on X Alone

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Business Insider quoted me in Mortgage Regulator Bill Pulte Has Posted at Least 13 Agency Orders on His Personal X Account (behind a paywall). The story reads, in part,

Until he became the head of the Federal Housing Finance Agency and a warrior in President Trump’s fight with the Federal Reserve, Bill Pulte was mostly known for posting on X. Under the handle @pulte, the businessman frequently sent groceries and gas money to people in need.

In his governmental role, which he assumed in March, Pulte has continued to use X as a megaphone. Over the last six months, he has posted at least 13 official orders on his personal account — and they don’t appear to be posted publicly anywhere else.

The practice is unusual for the head of an agency that regulates Fannie Mae and Freddie Mac, the two housing-finance companies under federal conservatorship central to the $21 trillion residential mortgage market.

*    *     *

“This is very abnormal,” said David Reiss, a law professor at Cornell University who focuses on housing policy and real-estate finance. “I don’t know what a court would do if someone sued based on an order that he only posted on X.” He added by email that impacted parties might argue that carrying out official acts by an X post doesn’t comply with the Administrative Procedure Act.

The FHFA did not respond to questions about Pulte’s posts. Pulte didn’t respond to a request for comment.

Best & Worst Places to Rent in America

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I was interviewed as part of WalletHub’s Best & Worst Places to Rent in America, 2024 edition. The interview reads,

What tips do you have for a person looking to get the best value in an apartment?

The smartest thing to do is do your homework. Start online to get a sense of the broad range of options. Then visit as many as you have the time for. Not only does it give you a sense of the surroundings (neighbors, neighborhood, shopping, etc.), but it also gives you a sense of the quality of the apartment. Do the appliances look well-maintained? Is there any water damage that may be a harbinger of bad things to come?

What are the most common mistakes that renters make when searching for a new apartment?

It is also smart to ask existing tenants about the landlord. Is it (or he or she) responsive to concerns? You should also search them on the internet to see what others have to say about them.

How can local policymakers make housing more affordable for renters without upsetting homeowners?

Local policymakers need to focus on expanding the supply of new housing. Restrictive zoning (for example, zoning that only allows the construction of single-family homes) keeps housing expensive in many communities. Various forms of restrictive zoning are a big problem in hot markets like the Bay Area in California and the New York Metropolitan Area. Housing takes too long to build, we do not build enough of it, and it costs too much. Local, State, and Federal policymakers all have to work together to increase the supply of housing so that costs go down across the board.

Housing Problems and Federal Assistance

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Family living in a one-room tenement. New York, NY, USA (1890) by Jacob Riis. This version was colorized by Kelly Short.

The Urban Institute’s G. Thomas Kingsley has posted a brief, Trends in Housing Problems and Federal Housing Assistance. It opens,

In the 1930s, many American families lived in seriously deficient housing. To address that challenge, the federal government began building subsidized housing, and in the decades that followed, a complex array of federal programs evolved to tackle the continuing housing problems of low-income renters. Almost 10 years ago, the Urban Institute prepared a “primer”to assess this evolution. This brief is an update of major sections of that report, focusing on trends in national housing problems and federal housing assistance over the past decade. It shows that renter housing needs have grown substantially—almost totally because of unaffordably high rents rather than physical deficiencies—and federal housing assistance is not keeping up. The number of low-income renters that actually receive federal housing assistance has dropped notably as a fraction of the low-income households that need it. Evidence indicates that this gap will worsen.

. . . this brief explains the basics of US housing assistance to those unfamiliar with the field. After a summary, it (1) reviews recent changes in the number of US households by tenure and the nature of the housing problems renters face, (2) identifies the nation’s major federal housing assistance programs and explains how they work, (3) examines changes in the scale and spatial patterns of federal housing assistance and the characteristics of assisted households, and (4) identifies recent policy shifts and issues affecting future directions for these programs and pointing out literature offering fuller explanations. (1)

Its main findings include,

  • Household formation has slowed, and the renter share has significantly increased (mostly among the lowest-income groups).
  • Physical housing problems decline as the affordability challenge increases.
  • There are many more households with housing needs.
  • Since 2007, the number of households receiving HUD project-based assistance (in public housing or in privately owned subsidized projects) remained stable, while the number receiving housing vouchers increased.
  • But the modest increase in HUD deep-subsidy assistance has been overshadowed by growth in the need; the housing assistance gap has widened significantly.
  • The beneficiaries served by HUD programs is shifting away from families with children and toward the elderly and disabled.
  • The Low-Income Housing Tax Credit has been the fastest-growing US housing program over the past two decades. It does not necessarily add to the number of households receiving assistance, but it allows deep-subsidy resources to be spread among more households than would be possible without it.
  • Given forces at play, the housing assistance gap will likely worsen. (2-3)

There’s a lot more in the brief for those who want an overview of where we are with housing in the early 21st century.

Rental Housing Landscape

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A Row of Tenements, by Robert Spencer (1915)

NYU’s Furman Center released its 2017 National Rental Housing Landscape. My two takeaways are that, compared to the years before the financial crisis, (1) many tenants remain rent burdened and (2) higher income households are renting more. These takeaways have a lot of consequences for housing policymakers. We should keep these developments in mind as we debate tax reform proposals regarding the mortgage interest deduction and the deduction of property taxes. When it comes to housing, who should the tax code be helping more — homeowners or renters?

The Executive Summary of the report reads,

This study examines rental housing trends from 2006 to 2015 in the 53 metropolitan areas of the U.S. that had populations of over one million in 2015 (“metros”), with a particular focus on the economic recovery period beginning in 2012.

Median rents grew faster than inflation in virtually every metro between 2012 and 2015, especially in already high rent metros.

Despite rising rents, the share of renters spending more than 30 percent of their income on rent (defined as rent burdened households) fell slightly between 2012 and 2015, as did the share spending more than 50 percent (defined as severely rent burdened households). Still, these shares were higher in 2015 than in 2006, and far higher than in earlier decades.

The number and share of renters has increased considerably since 2006 and continued to rise in virtually every metro from 2012 to 2015. Within that period, the increase in renter share was relatively larger for high socioeconomic status households. That said, the typical renter household still has lower income and less educational attainment than the typical non-renter household.

Following years of decline during the Great Recession, the real median income of renters grew between 2012 and 2015, but this was primarily driven by the larger numbers of higher income households that are renting and the increasing incomes of renter households with at least one member holding a bachelor’s degree or higher. The real median income of renter households with members with just a high school degree or some college grew more modestly and remained below 2006 levels in 2015.

Thus, the recent decline in the share of rent burdened households should be cautiously interpreted. The income of the typical renter household increased as the economy recovered, but part of this increase came from a change in the composition of the renter population as more high socioeconomic status households chose to rent their homes.

For almost every metro, the median rent in 2015 for units that had been on the market within the previous year was higher than that for other units, suggesting that renters would likely face a rent hike if they moved. The share of recently available rental units that were affordable to households earning their metro’s median income fell between 2012 and 2015. And in 2015, only a small share of recently available rental units were affordable to households earning half of their metro’s median income. (3, footnote omitted)

Framing Bipartisan Housing Finance Reform

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photo by Jan Tik

The Bipartisan Policy Center has issued A Framework for Improving Access and Affordability in a Reformed Housing Finance System. The brief was written by Michael Stegman who had served as the Obama Administration’s top advisor on housing policy. It opens,

With policymakers gearing up to reform the housing finance system, it is worth revisiting one of the issues that stymied negotiators in the reform effort of 2014: how to ensure adequate access to credit in the new system. The political landscape has changed substantially since 2014. For those who are focused on financing affordable housing and promoting access to mortgage credit, the status quo—the continued conservatorship of Fannie Mae and Freddie Mac—may no longer be as appealing as it was during those negotiations. This brief draws upon the lessons learned from that experience to outline a framework for bipartisan consensus in this transformed political environment.

The “middle-way” approach described here is not dependent upon any one structure or future role for the government-sponsored enterprises (GSEs), though it does assume the continuation of a government guarantee of qualified mortgage-backed securities (MBS). It is this guarantee that forms the basis of the obligation to ensure that the benefits flowing from the government backstop are as broadly available as possible, consistent with safety and soundness and taxpayer protection.

In recent months, at least three such proposals have been developed that preserve a federal backstop (see Mortgage Bankers Association, Bright and DeMarco, and Parrott et al. proposals). Should the administration and Congress pursue a strict privatization approach to reform, lacking a guarantee, it’s unlikely that any affordable housing obligations would be imposed in the reformed system. (cover page, footnotes omitted)

Stegman goes on to describe “The Affordable Housing Triad:”

Over the years, Congress has made it clear that the GSEs’ public purpose includes supporting the financing of affordable housing and promoting access to mortgage credit “throughout the nation, including central cities, rural areas, and underserved areas,” even if doing so involves earning “a reasonable economic return that may be less than the return earned on other activities.” As part of this mandate, policymakers have created a triad of affordable housing and credit access requirements:

  1. Meeting annual affordable-mortgage purchase goals set by the regulator;
  2. Paying an assessment on each dollar of new business to help capitalize two different affordable housing funds; and
  3. Developing and executing targeted duty-to-serve strategies, the purpose of which is to increase liquidity in market segments underserved by primary lenders and the GSEs, defined by both geography and housing types. (1, footnote omitted)

The paper outlines three bipartisan options that would not

compromise the obligation to provide liquidity to all corners of the market at the least possible cost, consistent with taxpayer protection and safety and soundness. Each option attempts to ensure that the system as a whole provides access and affordability at least as much as the existing system; includes an explicit and transparent fee on the outstanding balance of guaranteed MBS; and includes a duty to serve the broadest possible market. (3)

The paper is intended to spark further conversation about housing finance reform while advocating for the needs of low- and moderate-income households. I hope it succeeds in pushing Congress to focus on the details of what could be a bipartisan exit strategy from the endless GSE conservatorships.

 

NYC’s Housing Supply

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The New York City Rent Guidelines Board (of which I am a member) released its 2017 Housing Supply Report. It has a lot of interesting data for housing nerds as well as those of us obsessed with NYC. Here is a taste:

  • There are a total of 3,217,521 units of housing.
  • 2,184,295 are rental units.
    • 848,721 are non-regulated rentals.
    • 1,335,574 are regulated rentals in one form or another (rent stabilized, rent controlled etc.)
  • 1,033,226 are owner units.
    • 116,134 are condos
    • 330,679 are coops
    • 586,413 are conventional homes.

Some other highlights include,

  • Permits for 16,269 new dwelling units were issued in NYC in 2016, a 71.2% decrease over the prior year and the first decrease since 2009.
  • There was a 31.3% decrease in the number of co-op or condo units accepted in 2016, to 282 plans containing 8,671 units.
  • The number of housing units newly receiving 421-a exemptions decreased 17.8% in 2016, to 4,493.
  • The number of housing units newly receiving J-51 abatements and exemptions decreased 22.5% in 2016, to 34,311.
  • The number of new housing units completed in 2016 increased 61.9% over the prior year, to 23,247.
  • Demolitions were down in 2016, decreasing by 2.0%, to 1,849 buildings.
  • City-sponsored residential construction spurred 23,408 new housing starts in FY 2016, 74% of which were rehabilitations.
  • The City-owned in rem housing stock declined 70.2% during FY 2016, to 125 units. (4)

For those who do not know the byzantine world of NYC housing policy, 421-a exemptions relate to new construction and J-51 abatements relate to renovation of existing construction. It is interesting to see how policy changes impact housing construction.

Any one year’s figures provide just a snapshot, so if you really want to get a sense of the big picture, you should check out the earlier reports too. For instance, last year’s report stated that there were permits for 56,528 new dwelling units in 2015, an increase of 176% from 2014.  This is way more than the long term trend. Permits for new dwelling units never got much higher than the low thirty thousand range but fell to a low as six thousand during the depths of the Great Recession.

When you realize that the 421-a tax abatement was set to expire at the end of 2015, this big jump in permits makes sense as developers filed a ton of permits to take advantage of the program while they could. It will be interesting to see how the new 421-a regime will impact permits for new construction going forward.