Section 3: Renters and Rental Units

Transcription

1 Sectio 3: Reters ad Retal Uits About two millio New York City households roughly two-thirds ret their homes. Over the past decade retal housig has become less affordable to may New Yorkers. Give the dowtur i the real estate market i New York City i recet years, reters i the city may have expected to see their rets fially declie after years of icreases. I fact, the log-term tred of icreasig rets (ad stagatig icomes) has cotiued, ad the share of reters payig a high percetage of their icome toward ret has rise. 1. Most reters live i subsidized ad ret-regulated uits. May New York City teats are at least partially shielded 1 from ret icreases because they live i public housig 1 (8.2%), subsidized housig (8.4%), or private, usubsidized 8 retal uits govered by ret stabilizatio or ret cotrol 6 (45.4%). 1 Figure 3.1 shows that just 38 percet of reters live i uregulated, market-rate retal uits Figure 3.1: Ledig New York City Populatio Retal Housig Uits Ledig Populatio by Ret Regulatio ad Distributio Subsidy Status, Distributio Market Rate Ret Regulated Subsidized (HUD, ML, LIHTC) Public Housig Sources: New York City Housig ad Vacacy Survey, New York City Housig Authority, Furma Ceter Subsidized Housig Iformatio Project Rets are high ad growig. Retal housig has become icreasigly expesive i the city, ad icreasigly uaffordable to may teats. The media cotract ret (i.e., the amout agreed to i the lease, which may or may ot iclude utilities) paid by New York City s teats rose steadily over the past decade ad has cotiued to rise i recet years. Betwee 27 ad 211, a period whe house prices citywide fell by 2 percet, the media mothly ret citywide icreased i real terms (i costat 212 dollars) by 8.5 percet, from $999 to $1,84. Figure 3.2 shows that this icrease was particularly steep i Mahatta at 13 percet, while i State Islad the real media ret paid by teat households actually decreased slightly betwee 27 ad Of course, 25 the amout of ret a household pays varies across uit types. Figure 3.3 shows that there is wide variatio i the media gross ret (the cotract ret plus 2 the estimated 15 cost of ay utilities ot icluded i ret) paid by households livig i each of these differet types of 1 retal uits, ragig i 211 from $489 per moth for public housig to 5 $1,54 for market-rate uits. After cotrollig for iflatio, media gross ret for each type rose sigificatly betwee 28 ad 211, ad i each of the previous periods sice I 211, oly about two percet of all retal uits were ret cotrolled while 44 2 percet were ret stabilized. 2 The public housig category cosists of the New York City Housig Authority s stock of federally subsidized housig. The subsidized category cosists of privately owed housig 15 that receives fiacig or other subsidies from the U.S. Departmet of Housig ad Urba Developmet, the New York City ad New York State Mitchell-Lama programs, or the U.S. Departmet of Treasury s Low Icome Housig Tax Credit program, as documeted by the Furma Ceter s Subsidized Housig Iformatio Project 1 database (SHIP) ( The ret-regulated category cosists of ret stabilized uits other tha those that are ret stabilized because they were developed with LIHTC ad NYC property tax subsidies. 3 It is importat to highlight that the citywide media uderstates the rets paid by teats livig i market-rate uits, give that a large share of uits icluded i the calculatio of media ret are uder some type of ret regulatio. 24 THE FURMAN CENTER FOR REAL ESTATE & URBAN POLICY 8

2 Who lives i differet kids of retal housig? Demographics 6, of New York City Reter Households, 211 Ret Regulated All Households 6, 5, Market (ret stabilized (both reters % of uit type occupied by: Rate ad ret cotrolled) Public 5, Housig Other Subsidized * ad owers) 4, White householder 43% 35% 2 41% 4, Black 3, householder 2 22% 45% 32% 22% Hispaic householder 23% 32% 44% 3, 31% 24% 2, Asia householder 13% 9% 4% 9% 11% 2, 1, Householder over 65 8% 17% 28% 1, 37% 19% Households 24 with childre 25 uder % % % 3 Media household icome (212$) $53,287 $37,32 $17,36 24 $2, $48, Source: New York City Housig ad Vacacy Survey The table above shows that there is sigificat variatio i the demographics of the households that occupy differet types of retal 6, uits i New York City. For example, households headed by idividuals over the age of 65 occupy oly eight percet of market- rate retal uits but occupy more tha a quarter of public housig uits ad more tha a third of uits i other subsidized housig programs. Despite makig up oly 41 percet of all New York City households, those households headed by whites occupy oly 5, 4, six percet of public housig uits. Households headed by whites occupy a much higher percetage more tha a quarter of other subsidized housig uits. 3, * Other subsidized icludes retal housig that the Housig ad Vacacy Survey describes as ot subject to ret cotrol or ret stabilizatio ad may iclude a wide 2, variety of local ad federal subsidies or fiacig. This category icludes some properties tracked i the Subsidized Housig Iformatio Project (SHIP) but also icludes properties that received subsidies through programs ot catalogued i SHIP. Data from this category should ot be directly compared to data o SHIP properties aloe. 1, SECTION 3: RENTERS AND RENTAL UNITS Figure 3.2: Chage i Media Cotract Ret, % 12% 9% Figure 3.4: Media Gross Ret (212$) for All New York City Reters Versus Recet.15Movers,* All Reters Recet Movers.12 $1,5.9 3% $1, % BRONX BROOKLYN MANHATTAN QUEENS STATEN ISLAND Sources: America Commuity PUBLIC HOUSING Survey, Bureau OTHER of Labor SUBSIDIZED Statistics Figure 3.3: Media Gross Ret* (212$) for New York City Reters by Ret Regulatio ad Subsidy Status i New York City, , 1,5 1, 5 MARKET RATE RENT REGULATED PUBLIC HOUSING OTHER SUBSIDIZED Sources: New York City Housig ad Vacacy Survey, Bureau of Labor Statistics *Excludes teats payig o ret. $ Sources: America Commuity Survey, Bureau of Labor Statistics *Reters who have lived i their curret uit for five years or less. Furthermore, the rets paid by households i occupied uits may mask the higher askig rets i vacat uits. Eve for market-rate uits, ladlords ofte raise rets more substatially whe a uit turs over. As Figure 3.4 shows, households who have recetly moved pay higher rets tha those who have lived i their curret uits loger. I additio, the media gross ret paid by recet movers has icreased more tha the media ret paid by reters as a whole. 2 STATE OF S HOUSING & NEIGHBORHOODS

3 Despite the fact that oly about 37 percet of New York City s retal housig cosists of uregulated, market-rate uits, the city s recet icrease i media gross ret outpaced each of the four ext largest cities. Figure 3.5 shows the chage i media gross ret for each city, adjusted for iflatio ad idexed to 27. New York City ad Los Ageles experieced the largest icreases i media gross ret betwee 27 ad 211 at about ie ad eight percet, respectively. Chicago ad Philadelphia each experieced a sharp icrease i 29, but media rets declied slightly i real terms i the subsequet two years. I Housto, media gross ret was lower i 211 tha i Ret burdes are icreasig. Ret burde is the share of a reter s icome spet o gross ret (which, as explaied above, icludes ot oly the cotract ret paid to the ladlord, but also utility paymets ot icluded i the ret). Figure 3.6 shows that New York City s media household icome has ot kept up with icreases i ret levels sice the oset of the Great Recessio. Betwee 25 ad 28 (the recessio officially bega i late 27), the media gross ret i the city icreased, but media household icome rose at a eve faster rate (i each case, i costat, iflatio-adjusted dollars). Betwee 28 ad 211, however, media gross ret cotiued to rise, but real household icome dropped sharply. As a result, media gross ret icreased 1 percet betwee 25 ad 211, while media household icome actually decreased. As a result of the diverget treds i icome ad ret sice the begiig of the recessio, New Yorkers media ret burde icreased from 29.9 percet i 27 to 32.5 percet i 211. Accordig to the U.S. Departmet of Housig ad Urba Developmet s (HUD) defiitios for ret burdes (which we use for this report), a moderate ret burde is defied as spedig betwee 3 ad 5 percet of household icome o gross ret, ad a severe ret burde is defied as spedig 5 percet or more of household icome o gross ret. Figure 3.7 shows that the share of New York City s reters who were severely ret burdeed jumped from 27 percet i 27 to 31 percet i 211, ad the share that was moderately ret burdeed icreased from 23 to 24 percet. The media ret burde icreased i each of the four ext largest cities as well, ad like New York City, more tha half of all reter households were moderately or severely ret burdeed i each city i 211. Figure 3.8 shows that 62 percet of all reter households i Los Ageles were severely or moderately ret burdeed, the highest percetage of ay of the five cities. However, Philadelphia had the highest share of severely ret burdeed reters at 37 percet, which was six percetage poits higher tha the share i New York City. I Housto, oly a quarter of all reters were severely ret burdeed, the lowest share of the five cities, ad its total ret-burdeed share was the lowest as well. The overall ret burde masks the tremedous ret burdes faced by low-icome households. Table 3.1 shows the share of low-icome households ad o-low-icome households who are moderately or severely ret burdeed. For this calculatio, we defie low-icome households as those earig 8 percet or less of the media icome for all households i the city s metropolita area with the same umber of household members, a defiitio commoly used by HUD. 4 Not surprisigly, a much higher share of low-icome reter households i each city had moderate or severe ret burdes tha other reter households. I Los Ageles, 81 percet of all low-icome reter households were ret burdeed (the highest share of ay of the five cities). I New York City, 78 percet of low-icome reter households were ret burdeed, the secod highest share of the five cities. 4. Vacacy rates remai very low. Oe reaso that rets are high i New York City ad have cotiued to rise is that the retal vacacy rate has remaied extremely low, eve durig the recessio. 5 I 26, the year before the recessio bega, the retal vacacy rate was 4 For example, i 211, 8 percet of the media icome for a four-perso household i the New York-Norther New Jersey-Log Islad metropolita area was $65,45. 5 There are two differet retal vacacy rates available to cosumers of New York City data: The New York City Housig ad Vacacy Survey (HVS) ad the America Commuity Survey (ACS). While both surveys are coducted by the U.S. Cesus Bureau, the HVS is sposored by the New York City Departmet of Housig Preservatio ad Developmet ad is madated by New York State ret-regulatio laws. A citywide retal vacacy rate below five percet is required to maitai ret regulatio. The 211 HVS reports a citywide retal vacacy rate of 3.12 percet durig the period betwee February ad May 211. Because the HVS is desiged to capture the overall rate i the city it is less statistically reliable at smaller geographies. Additioally, the HVS is oly performed every three years. For these reasos, the Furma Ceter uses ACS data, which are available every year ad have a larger sample size. 26 THE FURMAN CENTER FOR REAL ESTATE & URBAN POLICY

4 $1,2 $ Figure 3.5: Idex of Media Gross Ret (212$), New York Los Ageles Chicago Housto Philadelphia 11 $1,5 15 $1,2 1 $ Sources: America Commuity Survey, Bureau of Labor Statistics Figure 3.6: Idex of New York City Media Gross Ret ad Household Icome, Media 12Gross Ret Media Household Icome Sources: America Commuity Survey, Bureau of Labor Statistics 3.8 percet. By 21, it had icreased oly slightly to just over 12 four percet ad remaied at that level i 211. Figure 3.9 shows that New York City s retal vacacy rate was lower tha that i each of the four ext largest cities i the 1coutry i each of the past few years. Los Ageles was the oly other city with a retal vacacy rate of less tha six percet; the vacacy rates i Philadelphia ad Chicago 8 were each ear eight percet; ad the rate i Housto was by far the highest at 13 percet. Noe of these cities has experieced a large icrease i retal vacacy sice the oset of the recessio, likely because the foreclosure crisis ad tighteed mortgage ledig requiremets have shifted some households who might otherwise be homeowers ito the retal market. This is cosistet with the chages i homeowership rates i each of the cities show i Figure 2.1. Figure 3.7: Share of New York City Reter Households with Severe ad Moderate Ret Burdes, 27 ad 211 Severely Ret Burdeed Moderately Ret Burdeed Source: America Commuity Survey Figure 3.8: Share of Reter Households with 11 Severe.5 ad Moderate Ret Burdes, Severely Ret Burdeed Moderately Ret Burdeed Source: America Commuity Survey Table 3.1: Ret Burdeed Share of Low-Icome ad Other Reter Households, 211 Low-Icome Other Reter Households Reter Households Moderately Severely Moderately Severely ret ret ret ret burdeed burdeed burdeed burdeed New York City 3 47% 13% 2% Los Ageles 31% 5 17% 2% Chicago 31% 44% 11% 1% Housto 3 39% 8% 1% Philadelphia 2 47% 1% Sources: America Commuity Survey, U.S. Departmet of Housig ad Urba Developmet, Furma Ceter.8 Figure.7 3.9: Retal Vacacy Rate.6 New York Los Ageles Chicago Housto Philadelphia % % SECTION 3: RENTERS AND RENTAL UNITS Source: America Commuity Survey STATE OF S HOUSING & NEIGHBORHOODS

5 5. More households are livig i overcrowded coditios. Households sometimes try to overcome the lack of affordable housig by doublig up with other households. About four percet of all retal households i New York City i 211 were severely overcrowded (more tha 1.5 occupats per room). 6 As Figure 3.1 shows, the share of New York City s reter households that are severely overcrowded is higher tha i Housto, Philadelphia, ad Chicago. Oly Los Ageles has a greater share of severely overcrowded reter households more tha ie percet of its reter households were severely overcrowded i The retal stock is growig ad chagig. The distributio of types of retal uits throughout the city chaged sigificatly durig the bubble ad subsequet burst of New York City s real estate market. Fueled by ew costructio ad coversios from other uses, the et stock of retal uits grew from 2.8 millio i 22 to 2.17 millio i 211, a icrease of 4.2 percet. As Figure 3.11 shows, this was primarily drive by a et icrease i market-rate uits as ew developmets came olie ad previously ret-stabilized uits became uregulated. As the umber of market-rate retal uits has icreased, New York City has also experieced a modest icrease i the umber of subsidized retal uits. Our Subsidized Housig Iformatio Project database 7 tracks early 235, affordable uits that have bee fiaced sice the 197s through the programs of HUD, the Low-Icome Housig Tax Credit program (LIHTC), ad the New York City ad New York State 6 It is likely that overcrowdig may be uderestimated by the Cesus Bureau because illegally subdivided uits are uder-sampled or omitted from couts, ad because households are reluctat to report udocumeted members. 7 Researchers at the Furma Ceter, with the cooperatio ad expertise of the city, state, ad federal housig agecies, ad the isights of kowledgeable advisory committees, combied 5 datasets with iformatio o more tha 2 uique subsidy programs. The resultig Subsidized Housig Iformatio Project (SHIP) Database maps ad cotais extesive iformatio about every affordable property ever fiaced i New York City usig HUD fiacig or isurace, HUD project-based retal assistace, Mitchell-Lama, ad LIHTC. The database icorporates reviews of legal agreemets, mortgages, ad other documets i the agecies files ad i public records. The SHIP Database is available olie at datasearch.furmaceter.org. Mitchell-Lama program. As of 211, 182, of those uits remai subject to affordability restrictios uder those programs. As Figure 3.12 shows, i the mid-2s, a perfect storm of properties comig to the ed of their required affordability periods ad the overheated real estate market eticed may owers of HUD-subsidized ad Mitchell-Lama properties to exit those programs at the ed of their cotracts or use restrictios. Sice the mid-2s fewer subsidized uits have opted-out upo reachig the ed of the period for which affordability restrictios were required. Figure 3.13 shows that productio of subsidized housig i the city uder the programs icluded i the SHIP Database remaied steady betwee 27 ad 211. I total, early 5, uits subsidized through the four programs tracked i SHIP were fiaced durig those years, both for ew costructio ad rehabilitatio. May programs that preserve affordable housig i New York City are ot captured i the SHIP Database (such as 8a ad the Participatio Loa Program), so the 5, figure does ot iclude all ew subsidized uits. 7. Most reters live i small- ad medium-sized buildigs; may accordigly have bee affected by the foreclosure crisis. Although the city is best kow for its icoic towers, oly about oe-third of the city s reter households live i buildigs with more tha 5 uits, as Figure 3.14 shows, while more tha a quarter live i sigle-family homes or two- to four-family buildigs. 8 Because so may live i oe- to four-family homes, may of New York City s reters have bee victims of the foreclosure crisis. Recet state ad federal laws have provided teats with icreased protectio from evictio if their ladlord suffers foreclosure, but teats are ot always aware of their legal rights ad are still vulerable to utility cut-offs ad deterioratig buildig coditios if ladlords i foreclosure walk away from their property or are uable to maitai it. I 29, the peak year for lis pedes filigs, 8 The multi-uit buildigs i Figure 3.14 iclude both apartmet buildigs ad codomiiums or co-op buildigs with retal uits. 28 THE FURMAN CENTER FOR REAL ESTATE & URBAN POLICY

6 Figure 3.1: Percetage of Reter Households that Were Severely Overcrowded, % 4% 2% Source: America Commuity Survey Figure 3.12: HUD, Mitchell-Lama, ad LIHTC Uits i New York City No Loger Subject to Affordability Restrictios Cataloged i Subsidized Housig Iformatio Project Database, by Exit Year 8, 7, 6, 5, 4, 3, 2, 1, Source: Furma Ceter Subsidized Housig Iformatio Project SECTION 3: RENTERS AND RENTAL UNITS Figure 3.11: Net Chage i New York City Retal Housig Stock, Market Rate Ret Regulated Other Subsidized (HUD, ML, LIHTC) Public Housig.8 2,5,.6 2,,.4 1,5,.2 1,, 5,. Sources: New York City Housig ad Vacacy Survey, New York City Housig Authority, Furma Ceter Subsidized Housig Iformatio Project 1 properties eterig foreclosure cotaied more tha 25, 8% retal uits. This umber has declied steeply sice, i step with the city s overall foreclosure tred, but foreclosure 4% cotiues to threate may teats: a estimated 15,379 2% retal uits were i buildigs that received a lis pedes i 212. This represets a little more tha half of all uits i properties receivig a lis pedes i Housig code violatios remai steady. 15 Despite the housig market crash ad relatively high foreclosure activity eve for large retal buildigs, the umber 1 of serious housig code violatios issued by the city has 5 remaied roughly steady over the past several years. I every year from 25 to 211, the city issued betwee 52 ad 58 ew serious housig code violatios per 1, retal uits. Figure 3.15 shows that the total umber of violatios, which icludes less serious ifractios, issued per 1, retal uits has declied steadily sice 25. Figure 3.13: Total Subsidized Uits Fiaced ad Completed i New York City Uder the Four Major Subsidy Programs 1 8, 8% 7, 6, 5, 4% 4, 3, 2% 2, 1, Source: Furma Ceter Subsidized Housig Iformatio Project Figure 3.14: Share of New York City Reter Households by Buildig Type 8 1 Sigle family house 2 4 uits 5 49 uits 5+ uits % % % Source: America Commuity Survey Figure 3.15: New Housig Code Violatios i New York City (per 1, Retal Housig Uits), Serious Violatios All Violatios 8, 7 3 7, 6 6, , 4 2 4, 3, , 2 1 1, Sources: New York City Departmet of Housig Preservatio ad Developmet, New York City Departmet of Fiace 2 15% 1 8% STATE OF NEW 4% YORK S HOUSING & NEIGHBORHOODS % 211