Rents are skyrocketing in New York City. In the last five years rents have climbed 55 percent while wages have fallen by four percent (when adjusted for inflation). In the last six months, rents have soared twelve percent, and most New Yorkers pay over 42 percent of their income in housing. For most working-class renters this means going without adequate food and medical care. Thousands of vacant apartments are being illegally converting into Airbnb rentals. Working families are being pushed out of neighborhoods as the rich from around the world move into ordinary people’s apartments newly converted into luxury housing. And as politicians pretend to address the urgent need for affordable housing, they are actually helping landlords, developers and banks make the crisis worse.
New York City has a decades old law called “rent stabilization,” which somewhat restricts rent increases on about one million apartments. This law, inadequate as it is, has long been a target of the real estate investors. In June, Democrat and Republican legislators, led by Democratic Governor Cuomo, changed the law to exempt about 100,000 of these apartments, which can now begin to charge rents likely to be about 25 percent higher. When met with protests from angry tenants, Cuomo defended the new law as a fair compromise between renters and landlords, adding that “some people will never be satisfied.”
Democratic New York City Mayor, Bill De Blasio, was elected in 2013, and promised to create 100,000 new affordable apartments in the city. De Blasio now proposes to increase tax subsidies to developers building luxury housing if they set aside 10-15 percent of the new apartments for low and moderate income renters. At Atlantic Yards, a highly subsidized project built in a previously low-income neighborhood near downtown Brooklyn, rent for an 812 square foot unit with two bedrooms for so-called moderate income households is $3000 per month or higher.
The Atlantic Yards development explains a lot about why the housing crisis is getting worse. Atlantic Yards is one of many NYC investments by developer Bruce Ratner, a long term backer of De Blasio. Other developers have long-time alliances with powerful politicians in state government like Governor Cuomo. The most powerful lobby in state government are the big landlords, developers and the banks, which stand behind them. For funding politicians of both parties, they receive many subsidies and increasing freedom to charge whatever they can get away with for housing.
Homelessness is now at record levels. Many of the city’s overcrowded shelters continue to be leased at high rents from slumlords who provide little security or social services, many of whom helped fund De Blasio’s election campaign. De Blasio did recently announce a new program to assist the mentally ill living on the street. But his administration admits the program will help at most a few hundred people.
The enormous housing profits wouldn’t be possible without the deep connections between the financial world and both political parties. The high cost of housing in New York isn’t an accident. It’s a conscious choice by investors and landlords to squeeze out as much profit as possible.