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The Rent Is Too Damn High, and It's Hurting the Poor


If you’re wondering why the rent in New York is so high, read this list compiled by Business Insider. It’s a list that every candidate for mayor of New York should read but probably won’t: it showcases eight very well-intentioned blue laws that in their actual effects disadvantage the young and reduce opportunities for the poor.

New York City, says Business Insider, is ground zero for these kinds of laws. Zoning rules meant to limit the number of skyscrapers actually inhibit supply, keeping rent prices high; rent control makes cheap apartments impossible to come by for the poor and raises the prices of non-rent controlled apartments; union monopolies raise construction costs and thus discourage new building projects, again inhibiting supply. The list goes on.

If a mayoral candidate wanted to actually help young people, minorities, and the poor in New York, he or she would take a long hard look at the way poorly designed or outdated laws and regulations drive up costs and drive away opportunity. Unfortunately, most candidates are more interested in parroting progressive platitudes and pandering to Wall Street, labor unions, and the construction industry.

America needs candidates for office with well reasoned, well researched programs to make cities like New York what they can and should be: incubators of new business and new fortunes for people other than Ivy League Wall Street hires. Reducing the cost of living in big cities would make for a better antipoverty program than all the food stamps the farm lobby can print.

Locally focused creative thinking is already helping a generation of young people in the inner cities have a shot at a better life by taking on the rigor mortis of teachers unions and the public school establishment. But there’s still room aplenty for new waves of urban civic education and activism to give future generations the same opportunities enjoyed by past ones.

[Image of Manhattan courtesy of Shutterstock]

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  • Corlyss

    “America needs candidates for office with well reasoned, well researched programs”

    Amen to that, but how do you propose to get them when the public, the voters, are dumber than a ton of rocks about public policy and the dire straights we’re in look a lot like last week, last year, and 10 years ago? The issues haven’t changed. The financial crisis was only the most recent indicator of the underlying problems that have persisted because the of the very success of the liberal-progressive platitudes you decry. The people don’t understand that the policies are corrupt and failed because they still benefit from them. Until the checks stop cold, nobodies going to get it, prof.

  • Kavanna

    I’m amazed BusinessInsider would publish such an article, especially one that cites anything from the Cato Institute.

    BusinessInsider is an outpost of Clinton and Obama cronies and routinely defends all the neo-Keynesian and Bernanke nonsense. I guess they think it’s better to feel wealthy than to actually be wealthy.

  • wigwag

    This post misses the forest for the trees. While the zoning laws mentioned are not inconsequential, their consequences are relevant only around the margins. Residential rents are high in New York because the number of people desiring to live in New York significantly exceeds the supply of housing stock. Commercial rents are high in New York because companies are clamoring to locate themselves in the City; the demand for commercial space significantly exceeds the supply. In Detroit residential and commercial real estate downtown is cheap because nobody wants to live or work there.

    Professor Mead doesn’t get it; high rents in blue New York isn’t a sign of failure, its a sign that New York continues to be an astounding success. It’s one of maybe 5-10 cities world wide that people from almost every country aspire to move to.

    I understand that New York’s success is befuddling to commentators who think ‘blue’ is in extremis, but those commentators should be honest enough not to conflate success with failure.

    • Thirdsyphon

      Amen to that. The very image of Manhattan that WRM selected for this post is all the proof that’s needed to make your point.

    • neshobanakni

      The rents are high because rent-control suppresses the supply of housing. If you can’t charge market prices, you will direct your investments elsewhere. Remove the price regulation and the supply will increase.

      • wigwag

        That’s not why rents are high. There is no rent control/stabilization on commercial real estate yet average prices in Manhattan topped $700 per square foot this past May. New construction of residential property is exempt from rent control/stabilization. New residential construction is booming in all five boroughs. Yet rents and the asking prices for coops, condos, brownstones and other private homes is reaching the stratosphere.

        The factors Professor Mead alludes to in this post might play a trivial role in driving up costs. Rent control might too. But by far the biggest factor of all is supply and demand. The demand for housing and commercial property is exploding. Supply simply can’t keep up.

        I know it causes cognitive dissonance in Peofessor Mead, but “blue” as it is, the big apple is booming.

    • BrianFrankie

      >> While the zoning laws mentioned are not inconsequential, their consequences are relevant only around the margins. <<

      Yes. And the margins are exactly where prices are set. These laws and regulations are extremely important in determining the overall costs of living in New York.

      Your point that fundamentally there is high demand in New York is, obviously, valid. But demand is only half the equation, which you seem to ignore. There are cities, many of them, with demand and growth substantially higher than New York. Some of them manage their demand by unleashing the ability to produce more housing, and thus keep housing costs in check with a reasonable supply/demand balance *at the margin*.

      And the point VM is trying to make is not that high rents are contra-indicative of success, but rather that they disproportionally hurt the less wealthy denizens of the city. Hard to argue with that point, regardless of how successful your city is. And it is particularly sad because the stated intent of many of the "blue" policies is to help the disadvantaged.

      So the question is not your strawman, "Do high rents indicate the failure of New York City?" The question is, "What policies hinder the success of the younger and less wealthy residents of New York?" And the answer is that many of these policies are outlined in BusinessInsider article, and getting rid of them would help the younger and less wealthy portion of the NYC population.

      I know it causes cognitive dissonance in wigwag, but "blue" as they are, the favoured policies of NYC have the largest negative impact on the young, poor, and disadvantaged.

      • wigwag

        New residential construction is exploding throughout New York City; its true in Manhattan and the other four boroughs. New construction is not subject to either of New York’s two forms of rent regulation; rent control or rent stabilization. All new residential properties become available at market prices. Rents and purchase prices remain subject to market conditions. To say that New York’s rent regulations impede supply is simply inaccurate.

        • BrianFrankie

          Did you actually read the BusinessInsider article? Rent control is one of the eight regulatory impediments to new construction and supply expansion. Other regulations range from zoning restrictions to union rules to construction regulations.
          To say NYC regulations do not impede supply is simply delusional.

    • Jim__L

      Wigwag, don’t you see any disadvantages to rent-collectors sucking money out of New York?

  • USNK2

    Mr. Mead does not realize that Real Estate, not Wall Street, runs New York City?
    When the crime was high, and population dropping, it was easy to find an affordable apartment in Manhattan, as many of us did in the 1970’s. I gave up in 1991, never imagining that the crime could drop (the Central Park 5 were arrested in front of my building in 1989), and population would soar.
    btw, geology plays a big role in where you can build tall buildings in NYC.

  • bigfire

    If there are no regulations, how can the rent seekers get their grievance redressed?

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