New York City politicians finding out the hard way only new housing can address the affordable housing crisis
Despite being one of the most expensive places for housing in the country, New York City has done very little, if anything, to reform its strictly regulated housing market. Instead, leaders have mostly relied on massive public spending to resolve the city’s affordable housing crisis, while at the same time attacking housing developers.
But according to the New York Times, the situation is now so dire that politicians are saying yes to more housing.
Representative Alexandria Ocasio-Cortez, who opposed the construction of an Amazon campus near her district, said recently that she would support local officials who make way for more housing, and a number of City Council members on the left have embraced new developments, even in cases where most of the units would not be affordable for working-class New Yorkers
AOC is not the only person to shift her stance on this.
Tiffany Cabán, a democratic socialist councilwoman from Queens, recently voted for a project that was slated to bring more than 1,300 apartments to a vacant waterfront lot in her district. A quarter of the units will rent at below market rates.
In central Brooklyn, Councilwoman Crystal Hudson, a member of the progressive caucus who has called the city a “developer’s playground,” cast a vote earlier this year to support two 17-story towers with more than 400 apartments in Prospect Heights, a neighborhood that has seen rapid gentrification. Previously, she shut the project down when she took office in January, saying she had not had time to review the proposal and that she worried about gentrification and other effects on the community.
Obstacles still remain
The picture is not all rosy, however. While they do support housing, some of these politicians do require new housing to include below-market-rate units, which could do harm by impeding new housing supply without delivering affordability.
A lot of evidence generally does indicate that adding new housing units to a rental market — even ones above the market rate — does have a downward pressure on rental prices. This is because increasing supply reduces competition among renters and drives prices down. Building market-rate units or above market-rate units, specifically, takes high-income renters away from lower-priced rentals. This reduces competition for those units, which in turn lowers prices for the remaining (possibly low-income renters).
One study specifically estimates that
building 100 new market-rate units opens up the equivalent of 70 units in neighborhoods earning below the area’s median income. In the poorest neighborhoods, it opens up the equivalent of 40 units.
Taking that into account, it means that even under the most conservative assumptions, new market-rate housing does more to improve housing affordability than does requiring new housing to have below-market-rate units. Take Queens, for example where a project is slated to add 1,300 new units. Even if all those units were at or above market rate, in the poorest neighborhoods, the project would still free up an estimated 520 units — which is more than the 325 below-market units that the project will construct.
A lesson for the Twin Cities: don’t be like New York City
It is certainly vindicating for the free market that places like California, and now New York, are moving aggressively to enact pro-housing policies. But it is also disheartening to see that such pro-housing policies come as a last resort after other go-to measures like spending have failed. Places like California and New York have spent massively on affordable housing, yet yielded no tangible results. In fact, in New York City, the housing crisis has merely worsened since the pandemic.
According to NYT, for example, despite the city’s past spending on housing, only 1 percent of New York’s rental vacancies are below the median rent of $1,500, according to NYT. Moreover, the city still needs hundreds of thousands of new units to deal with its housing crisis.
The fact that the housing crisis has pushed otherwise anti-housing advocates in New York City to support new housing should, however, be a lesson to leaders in the Twin Cities that Econ 101 is alive and well, even in the housing sector. Improving the housing supply, and not other measures like rent control is the only effective solution to solving the housing crisis. New York City has found out the hard way.
Luckily for the Twin Cities, there is still time to avoid the worst by enacting pro-housing policies sooner rather than later.