New York

New York is regarded as one of the world's largest cities, not just in the United States of America. It is the largest city in the USA and is home to more than 8 million people of various racial, ethnic, and cultural backgrounds. The high cost of rent or the affordability of housing is the main issue facing this neighborhood. Over the past few decades, rents have risen steadily throughout New York City while wages have either decreased or remained constant. It is necessary to face the problem of the rent rise head-on and with rapid impact. The issue has been worsened with the decline in federal support and the influx of real estate market.
 New York City have continued to increase while incomes have either fallen or are stagnant. The challenge of addressing the rent increase has to be taken head on and with immediate effect. The issue has been worsened with the decline in federal support and the influx of real estate market.

New York is facing a major shortage of affordable housing. As shown by several and different trends. The total number of households that are finding it hard or are struggling to afford rental housing has grown at an alarming rate between the year 2002 and the year 2016. Median rents have increased by 19% in terms of dollars while the median income rates have declined slightly (McClure, Kirk). The combination of an increase in rent and decrease in incomes suggests that an average New York resident spent a lion share of his or her income on rent proving that the residents are paying more in terms of rent in the year 2016 than in the year 2002 (Anglin, Paul M).

Most New Yorkers are rent burdened. A study which was recently done shows that over half of them spend 30% of their income on rent (McClure, Kirk). The rent increase varies with the level of income

• Low-income households. They are more likely to be paying or renting unaffordable rents than the high-income households. By the year 2012, almost 80% of the low-income households were rent burdened (Anglin, Paul M). They were and still paying over 30% of their gross monthly income to rents and also utilities.

• Moderate income households. They are slightly rent burdened with close to 26% of their monthly gross income going to utilities and rent (Hatt, Christine).

• High-income households. With less than 2% of their monthly gross income covering rent and utilities, they do not feel the pinch of the current critical problem in the city (Hatt, Christine).

It is important to understand why the rent prices in New York City are high. It is because there are several factors that are promoting this, they include:

1. Government Regulation. Affordable housing mandates which consist of a certain percentage of units being set aside by the developer. However, they in most cases pass the burden to other residents thereby causing the increase in the market rate rents (Anglin, Paul M). Height regulations which forbid developers or builders from exceeding a certain height make it easier to add more units and buildings and therefore people scramble for the little that is available thus driving the price up. Rent control measures are also not keenly followed in New York City.

2. New mortgage rules. Due to the financial crash, rules and regulations were formatted to make it harder for lending. This has been a major stumbling block for people with low or medium income to afford to buy homes (Anglin, Paul M). Therefore the majority of people can only afford to rent.

3. Less Crime. With the drop in crime rates in New York City, many people find it suitable to live there, this causes a high demand for houses and therefore skyrocketing the costs of houses and rents.

4. Market Speculation. What is referred as big investors usually purchase a lot of homes at ago, even if it is tight credit markets? Then they, in turn, manipulate the prices of rent to their favor, ensuring maximum profits (Hatt, Christine).

5. Race. Known for its vibrant lifestyle and various cultures, the all-welcoming atmosphere encourages different races to move there and thus increasing population and in turn high rent rates.

6. Famous people like to live there. It is known that celebrities bring a lot of attention to wherever they go and New York is one city that they prefer to live in. they, in turn, encourage a lot of people, especially their fans to follow them.

The owner and the tenant negotiate apartment rental rates and lease terms. The rent increases in New York City are determined by the New York City Rent Guidelines (NYCRGB). This also stretches to increase for lease and renewals, hotels, lofts and even stabilized apartments (Hatt, Christine). However, it does not send the increase in rent for leases that are vacant, apartments that are rent controlled, apartments which are non-regulated and finally, houses that are subsidized. Percentages in rent increase are adjusted annually (Scanlon, Kath).

There are several solutions and recommendations that can be put in place to remedy the situation. First, committing to building and rehabilitation of more units regarding affordable housing can be a solution to the high rate and housing problem. This can only be done by increasing the city’s financial power to preserving and also creating units which are relatively affordable (Solovay, Norman). The expansion and the creation of houses which are affordable will help to increase the supply and in turn, reduce the rent burden which is affecting many New York residents.

Developers are required to maintain the affordability of the new plus renovated units permanently with public subsidies. This is possible by the subsidy of development and rehabilitation. Now, developers who are utilizing these subsidies should ensure the provision of current and also the rehabilitated units for a period of time (Scanlon, Kath). After the period is exhausted, they can choose to opt out of it. Changes to these programs should be put into place that would require or put in place the various developers make the units affordable permanently as part of the whole agreement. Alternatively, the developers can also grant the New York City the unilateral right to pay for an extension when the first period is over. Currently, there are over 180,000 units of housing which are relatively affordable in New York, owned by either for-profit or nonprofit.

With any public policy, the terms of affordability which is permanent will matter. In one phase, housing would be made affordable permanently when it is initially built or rehabilitated and the owners cannot opt out of the contract when the period expires. Alternatively, a policy that gives the New York City a way to unilaterally extend the affordability contract after the initial period is over (Carroll, Myka). This policy will enable the city the power to preserve units in the future for the right price and also providing them with an option to either pay or not. It is important to decide on which model if not all are suitable for the city.

Another solution is the adoption of mandatory inclusionary zoning program. This should require developers to build and preserve affordable housing any time they build what is known as market rate housing. Implementation of the policy of mandatory inclusionary zoning, as a method to expand development of units of houses which are affordable is also a solution and a strategy to alleviate the problem.

This policy will aid in meeting the need of housing in the city, especially for the middle and low-income earners. The city first adopted this concept back in the year 1987 when they started legalizing developers to exceed the required building size.

The affordable units can either be rentals or homes provided that it is affordable for the middle and low-income earners (McClure, Kirk). However, this might lead to higher density development in most neighborhoods in the city.

Also, use of city pension fund to expand and develop affordable housing can be another solution to the housing issue. Using the city pension funds can be used as an alternative to increasing the funding available for the affordable housing program for the city. However, the law strictly limits the use of these funds and therefore it might be difficult (Carroll, Myka).

In assets, the pension holds about $136 billion and can be a major source of funding for the affordable house units. One thing is for sure, real estate projects in New York is a booming business, if the pension funds can be injected into the affordable housing project as an investment, it will bring about profit.

Through this program, the city pension funds can alternatively provide long-term or fixed mortgages at rates which were set before the beginning of the construction. The mix of both mortgage insurance and the power to invest long term gives the pension funds ability to provide fixed mortgage rates which also allows the city affordable housing programs to expand their subsidies much more (Carroll, Myka). Even though the interest rates cannot be under market rates, the power to lock in an interest rate before the beginning of the construction makes it possible for the rise or increase in the predictability of the finance involved in the project. It also stretches further by making it easier to secure the finances required and needed.

However, they are not sufficient to their own 9pension financing power) to provide enough profit as there are a lot of subsidies needed to make the units affordable (Solovay, Norman). The power of the mayor in determining how the funds are spent is also limited.

Provision of rental subsidy for a moderate and middle-income household is another solution and strategy that can be used to tackle the high rent problem (Carroll, Myka). Housing is a huge expense in New York, in the last decades it has grown to become even more expensive. Middle and moderate-income households have seen a big leap in the share of households that were costly. As the affordability of housing becomes much harder for the moderate and middle-income houses, it is feared that they might alternatively opt to go live in another city, which in turn could negatively affect the diversity and vitality of the city (Solovay, Norman).



A major share of moderate and middle incomes are rent burdened, they are not properly served by the subsidies put in place by the government, and most of these subsidies only serve the low-income households (Scanlon, Kath). However, one disadvantage of this method is that it will disadvantage the low-income households as most of the subsidies benefitting them will be transferred or shared by the middle and the moderate households (Scanlon, Kath).

Permission of more distant transfers of unused development rights to support the development of affordable housing can also be used to curb the high rent problem in New York City (McClure, Kirk). New York is a dense city with an extensive need for an affordable housing; therefore, unused development rights are vital sources of additional houses (Carroll, Myka). The development rights can be transferred in three ways:

1. Zoning lot mergers allow the owner to shift rights of development on the same block.

2. Landmark transfers. Allows the original owner to transfer unused development rights to parcels either on the same street or block.

3. Special transfer program.

However, many communities in the region fear the increased density the transfer would cause. Some of them also fear that wider transfers might possibly overwhelm some neighborhoods.

Lastly, allowing homeless families to be pushed to the top of the waiting list for housing vouchers or even public housing can be used to alleviate the housing problem in New York (Scanlon, Kath). The number of homeless people in the city has been rising at an all-time high, and at this rate, it should be taken seriously more than ever (Carroll, Myka). Giving this group of people first priority in the home acquisition will help eradicate homeless people.

However, this might create incentives for individuals to live undesirable living conditions.

















Reference

Anglin, Paul M. "How Long Does It Take To Buy One House And Sell Another?." Journal Of Housing Economics, vol 13, no. 2, 2004, pp. 87-100. Elsevier BV, doi:10.1016/j.jhe.2004.04.001.

Carroll, Myka. New York City For Dummies. Hoboken, NJ, Wiley, 2013,.

Hatt, Christine. New York. North Mankato, Minn., Thameside Press, 2000,.

McClure, Kirk. "Are Low-Income Housing Tax Credit Developments Locating Where There Is A Shortage Of Affordable Units?." Housing Policy Debate, vol 20, no. 2, 2010, pp. 153-171. Informa UK Limited, doi:10.1080/10511481003738260.

Scanlon, Kath. "Playing Happy Families? Private Renting For Middle-Income Households With Children In London, Berlin And New York." Built Environment, vol 41, no. 2, 2015, pp. 196-210. Alexandrine Press, doi:10.2148/benv.41.2.196.

Solovay, Norman. "The Arbitration From Hell And How The New York Courts Got It Wrong." Alternatives To The High Cost Of Litigation, vol 35, no. 8, 2017, pp. 113-123. Wiley-Blackwell, doi:10.1002/alt.21699.