Why some of the rent has gone down in the US, it won’t go up again


Me in my new living room.

Source: Janna McPartland

When I was 25 years old and knew nothing about pandemics, I made a list in a small notebook of the things I hoped to accomplish in my life. One of those goals was “To live in my own apartment at 37.”

Some people may wonder: Why did I think it would take me so long to get my own place? The answer: Manhattan rents.

Just before the pandemic, the median rent for a one-bedroom apartment in the United States was $ 968, according to The Apartment List. In the heart of the Big Apple, it cost $ 2,703.

As a result, throughout my 20s, my friends and I needed to live with roommates, some of whom were in their 30s and 40s.

Living with strangers, eating with each other, passing them on my bath towel, I longed to have an apartment of my own, but I was also resigned to the fact that I couldn’t do it for many years.

More from Personal Finance:
Using Tax Deferred Savings Can Help You Get That $ 1,400 Stimulus Check
How to Make Sure You Don’t Miss $ 1,400 Stimulus Checks in the Mail
Stimulus checks of $ 1,400 could be garnished for unpaid private debt

When the pandemic hit New York City in March and rents started to drop, I didn’t take it too seriously. Then they kept falling. In December, I realized that I could live on my own for a little more than what I was paying to live with three people.

Still, I told myself not to look at the listings. I didn’t want to get my hopes up. I knew these reduced rates were temporary.

And the thought of finally moving into my own place in my late 20s, only to have to move in 12 months when the rent picked up seemed horrible. Like many New Yorkers (and Americans), I have seen family and friends forced to leave the apartments they had lived in for years and loved when they could no longer afford them.

With rents in many US cities falling over the last year, I imagine many people are faced with the same stressful question: Are you taking advantage of lower costs to move to a place that you previously couldn’t afford, but are taking a risk? What will you have to quit when the pandemic dies down and rents are likely to go up again?

Fortunately, my little sister, Janna, was not so overwhelmed by those questions. She graduated from college in the pandemic and that experience has educated her in flexibility. She started working as a freelance video editor and soon found that she was earning enough, with falling rents, to pay for a studio in Manhattan. When she asked if I would look for places with her, I said yes.

When the broker showed us various apartments on a Saturday morning in February, I felt those mixed feelings, longing and anxiety. Then the broker mentioned that the units were rent stabilized.

Was he listening correctly? I asked him to repeat himself.

In all of the roughly 1 million rent-stabilized apartments in New York’s five boroughs, landlords are limited in how much they can raise their rent each year. Every June, the Rental Guidelines Board votes on a permitted increase. Last year, in part because of the pandemic, the board decided that landlords couldn’t increase rents at all. Other years, the increases have been 1% or 2%.

As a result, the value of these apartments only increases over time. When someone moves into an income stabilized unit in New York, the cost is typically about 7% cheaper than market rent, according to the findings of Stijn G. Van Nieuwerburgh, a finance professor at Columbia Business. School. The same person who lives in that apartment 20 years later will pay about 45% below the market rental price, on average.

As a result, rent-stabilized apartment renters are reluctant to leave, making the units nearly impossible to find.

My sister, Janna, unpacking in her new studio.

Source: Janna McPartland

“A year and a half ago, a broker would have laughed in his face if he had asked for a rent stabilized apartment,” said Mike McKee, treasurer of TenantsPAC, an advocacy organization in New York.

The pandemic has changed that.

There is no current data on the availability of rent stabilized apartments citywide, but there are some revealing numbers from the StreetEasy apartment listing aggregator. They found more than 2,400 rent-stabilized units in the New York market between January and February 2020, compared to 780 during those same months in 2019. (You can search for these units in the app by adding the keyword “stabilized.”)

“Overall, we continue to see a large build-up of rental inventory in New York City as the rental market recovers from last year’s hiatus amid the pandemic,” said StreetEasy economist Nancy Wu. . “This means more options for tenants to choose from across all apartment types across the city, including the rare and coveted rent stabilized unit.”

That Saturday night, Janna and I requested two rent stabilized apartments, a one-bedroom for me and a studio for her. It took us 48 hours to receive news from the broker, during which I had a good amount of wine.

A year and a half ago, a broker would have laughed in his face if he had asked for a rent-stabilized apartment.

Mike mckee

TenantsPAC treasurer

Most renters in the US are not covered by rent regulation laws, and dozens of states effectively prohibit the rent control policy. That means many tenants can face unlimited increases from one year to the next.

But there is a growing movement across the country to regulate rents.

In 2019, Oregon became the first state to impose a statewide rent control. Most California cities now have some kind of limits on rent increases, while many other areas, such as Minneapolis, are currently moving to institute similar regulations. Rent control was approved this month in Ashbury Park, NJ. Albany and Rochester in New York have considered adopting an income stabilized policy like the one that exists in all five boroughs.

Rentals have also been temporarily frozen in response to the pandemic, including in Washington state, Washington, DC, and some cities in the San Francisco Bay area.

“There are tenants all over the country who are organizing to control rents,” McKee said.

Homeowner groups and some economists criticize rent control policies, saying they help some renters stay in their homes but also discourage new construction, slowing the supply of units and ultimately reducing affordability. of the house.

Proponents say the policy should be part of a broader strategy to keep rents affordable, along with incentives for construction, but such regulation is necessary with rates rising at an unsustainable rate.

In 2015, more than a third of renter households in the US were “rent burdened,” meaning more than 30% of their income went to rent each month, according to Pew. That’s a 19% increase from 2001. And nearly half of African-American-headed renter households are considered to be rent-burdened.

“Rent control, particularly when combined with other tenant protections, is the only policy tool that can provide immediate relief to tenants facing unaffordable rent increases,” said Chris Schildt, senior associate at the research institute and PolicyLink defense.

“Rent control especially benefits people of color, low-income communities, seniors, women and families with children, who make up the majority of the rent-burdened and renter population,” said Schildt.

After another restless night’s sleep, I woke up Monday morning to an email from the broker: Janna and I had been approved for the apartments.

Within a week, I met with the superintendent who gave me the keys. For the first time at 27, I had my own apartment.

I got here exactly a decade earlier than planned, and the best part is knowing that I could still be here a decade later.

.

Source link