Cityview: Vacant Scare

Print More

It’s been only a year and a half since rent regulations were renewed in Albany, and tenant leaders are scrambling to figure out if the system they just saved is already back in jeopardy.

The threat this time comes in the form of a frightening number: 5 percent.

State law requires the city to conduct a Housing and Vacancy Survey (HVS) once every three years to determine how many empty apartments there are in New York. The next survey is due to come out late next year. If the city’s vacancy rate registers lower than the 5 percent threshold used to define a “housing emergency,” the rent regulation laws can be extended for another three years. If the vacancy rate exceeds that magic number, the City Council would be forced to phase out tenant protections.

It’s a scary thought. The 1996 housing survey found that 4 percent of the city’s apartments were vacant–the highest percentage recorded since the surveys began in the 1960s.

Just how the vacancy rate would get pushed over 5 percent isn’t clear. But worrying too much about it may be a classic case of fretting about the wrong thing. All the evidence actually suggests that the vacancy rate will be lower when the results are calculated in 1999. Despite Wall Street’s jitters, the housing market is tighter now than it has been in years, asking prices on apartments are still high and vacant apartments don’t sit empty for long.

Some people have suggested that demand in the luxury market will collapse, opening up thousands of vacant apartments that would then be warehoused by greedy landlords. The assumption is that if the high-end market turns soft, individual landlords will keep units empty, hoping to wait out the lull before reducing rents.

But that notion is confounded by history. The last time the luxury market faltered, during the late 1980s, owners slashed rents so that they could fill vacant units. And there’s no reason to think things would be much different this time if the market tanks. In the October 14 Real Estate Weekly, commercial real estate executive William G. Cohen gave the following advice to market-spooked landlords: “If you are concerned about the market, you give a concession [to tenants].”

So where are all these vacant apartments coming from?
Believe it or not, the lower end of the market. In a new and puzzling phenomenon, low- to middle-rent vacancies have risen at rates far outpacing those in the luxury market. This doesn’t seem to make any sense. New York is in the grip of a long-term low-income housing shortage and poor people, unable to pay even regulated rent, are doubling and tripling up just to keep a roof over their heads.

Logical or not, the spike is dramatic. In the 1996 HVS, vacancy rates for apartments renting between $400 and $500 doubled to 3.2 percent. Vacancies in apartments at the $600 to $900 range jumped well above the 5 percent rate.

Nobody’s really sure why this is happening, but there are some theories. Apartment warehousing in fast-gentrifying neighborhoods like Harlem may well have something to do with it. Ditto the possibility that the city’s policy of not taking over tax-delinquent apartment buildings has led to such deterioration in some neighborhoods that tenants would rather double up than live in a dump–no matter how cheap that dump happens to be. And there is no doubt that the mayor’s purging of the welfare rolls has forced former recipients–who can’t pay even low rents without benefits–out of their apartments.

But perhaps the most plausible theory is that landlords in poor neighborhoods, buoyed by the city’s boom, have begun to jack up rents on tenants whose income can’t support the increases. The numbers seem to support that theory: The boroughwide vacancy rate in the Bronx, the city’s poorest borough, shot up from just under 4 percent in 1993 to 5.4 percent in 1996.

What is going on in these neighborhoods is fundamentally important for tracking the city’s worsening affordable housing crisis. But before tenants lobby to redefine what vacancy rate constitutes a housing emergency, we should weigh the strategic implications.

Lobbying state legislators to change the vacancy threshold will divert valuable resources needed to fight off the landlords’ next attempts to weaken rent regulation. In the past, landlords have attempted to put this issue on the table for negotiation, trying to force use of the “gross” vacancy rate–because that rate often exceeds 5 percent. The net vacancy rate, which excludes dilapidated and warehoused units, has never exceeded 4 percent, and is the accepted standard.

Instead of spending our time watching the percentages, our real worry should be term limits in the City Council, which will prohibit 38 of the council’s 51 members from running again. For years, landlord lobbyists with close ties to the council have tried to force through amendments that weaken tenant protections. The confusion of the wholesale turnover on the council could create new opportunities for landlords to weaken rent control and rent stabilization laws when they come up for renewal in March, 2000.

In order to keep the city affordable for low- and middle-income New Yorkers, we need to be vigilant. We don’t need to be chasing phantoms.

Michael McKee is associate director of the New York State Tenants & Neighbors Coalition.