Tag Archives: Greenwich Village

Does Historic Preservation Destroy Affordable Housing?

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Spencer Means

The Real Estate Board of New York released a report about Rent Regulated Units in Landmark Districts. The report opens,

This analysis was conducted to examine the frequent assertion that landmarking helps preserve existing affordable housing. It is based on data that recently became publicly available that provides a snapshot of the number of rent-stabilized units in 2007 and again in 2014.

Contrary to statements made by advocates, affordable housing is not preserved at higher levels in NYC’s historic districts. The data shows that properties located within New York City’s historic districts showed a greater net loss of rent regulated apartments than those located in non-landmarked parts of the City.

FINDINGS

An analysis of the data found that, from 2007 to 2014, the decline in the number of rent regulated apartments located within New York City’s landmarked properties was four times higher than in non-landmarked parts of the City.

Citywide, landmarked properties showed a much greater decrease in the number of rent stabilized units (-22.5%) than non-landmarked properties (-5.1%). At the end of this seven year period, there was a net loss of nearly 10,000 rent-stabilized units in landmarked districts in the City.

The Manhattan and Brooklyn numbers are particularly startling. Manhattan landmarked properties lost 24.5% of their rent-stabilized units compared to a loss of 11.5% in nonlandmarked properties. And Brooklyn landmarked properties lost 27.1% of their rent-stabilized units compared to 3.4% in non-landmarked properties.

The historic districts that had the highest net loss of rent stabilized units were Greenwich Village (-1432 units) and the Upper West Side/Central Park West (-2730 units). Combined, these two historic districts showed a decrease of 30% in rent stabilized units during this seven-year period. (1, footnotes and references omitted)

This study has been criticized for conflating causation with correlation. I think the criticism is warranted. The relevant question appears to be whether landmarking causes an increase or decrease in the number of rent stabilized units. The REBNY study does nothing to demonstrate causation.

Intuitively, it would seem that residents of hot neighborhoods like Greenwich Village would both seek to keep out new, large developments (which landmarking would achieve) and see higher and higher rents over time (which would lead to a reduction in rent-regulated units through a variety of mechanisms). It is not obvious how landmarking itself would lead to a reduction in rent stabilized units.

It is a shame that the REBNY study is so flawed. It raises important questions, but just leaves us more confused than before. There are serious arguments that historic preservation reduces affordable housing overall. If REBNY wants to take a meaningful position in this debate, it should produce a serious study.

Airbn-Beffudled

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ox

MainStreet quoted me in Is Airbnb Making It Impossible For You To Rent That Dream Apartment?. It opens,

The accusation is blunt: Airbnb, say some, is sucking up apartment units that otherwise would be available to renters. In San Francisco, that claim is spoken so loudly – by so many politicians – a city agency just filed a report on it.

Similar claims are heard in Santa Monica, Calif., in Manhattan and some Brooklyn neighborhoods, a few areas in Seattle and also a sliver of Boston and adjacent Cambridge. True? False? Is that Airbnb host putting vacationers up in what should be your prime Greenwich Village flat?

Some think such accusations are just distracting from the main issue at hand: housing inventory shortages.

“It’s a diversion,” says Richard Green, the Lusk Chair in Real Estate at the University of Southern California. “Politicians are not dealing with what they should be dealing with to address housing unavailability so they are singling out Airbnb.” His nuanced point is that in most markets the number of Airbnb units is trivial and so whatever impact it has on apartment availability is minimal.

The San Francisco government report does not disagree: “the Budget and Legislative Analyst estimates that between 925 and 1,960 units citywide have been removed from the housing market from just Airbnb listings. At between 0.4 and 0.8%, this number of units is a small percentage of the 244,012 housing units that comprised the rental market in 2013.”

Read the San Francisco report. It said that under 1% of apartments have been removed from rental channels due to Airbnb. How important is that? What does it mean?

What is unique about San Francisco – also Manhattan and a few other places – is that apartment vacancy rates are fiercely low. In a recent survey, it stood at 4.1% in San Francisco and that means this is the type of town where would-be renters get in line early whenever a decent unit goes up for rent. Add back in those Airbnb units and, yes, that might be a happy day for some tenants. But not many.

The other unique feature: San Francisco, Manhattan and a very few other places attract large tourist populations, especially Millennials, and that has been a sweet spot for sharing economy rentals. Take tight supply, add in high hotel prices and a flood of tourists and there is the recipe for cries about any apartment that seems to be lost to the longterm tenant market.

In a lot of markets – from Phoenix to Houston – vacancy rates are already high, tourist numbers are low and nobody really thinks Airbnb is having any impact on local rentals.

But in some cities it just may be. Harry Campbell, TheRideShareGuy.com, said of Airbnb: it is “having a huge impact in coastal communities [of Los Angeles] like Venice/Santa Monica where mid level chain hotels can run upwards of $300-$400 a night. It just doesn’t make much sense for landlords to rent their apartments out traditionally when the profits are so much higher using Airbnb.” (Santa Monica, in mid May, enacted legislation banning short-term rentals such as Airbnb. Nobody knows how it will be enforced or if it will withstand legal challenges.)

At least one Portland, Ore. Airbnb host emailed Mainstreet to admit that two apartment units that had been rented to regular tenants are no longer. Explained that host: “From the point of view of a former landlord, the Airbnb experience is far superior. Airbnb guests are, on the whole, responsible, considerate and never late with rent since this is collected in advance by Airbnb.”

Either way, however, the calculus is not one-sided, not even in those premium markets like San Francisco. Green added: “You could also say that Airbnb is increasing the stock of affordable housing units by letting some keep their apartments by occasionally renting them out. It’s entirely possible Airbnb produces as many units as it loses.”

In that regard, listen to Kip (last name withheld) — a self-described 60+ woman living alone in Beverly Hills in a two bedroom apartment. A few times a month, said Kip, she rents it out through Airbnb. “That helps me with the cost of living,” she said. She stressed she would never take in a roommate but is happy with having guests a few nights a month. “It’s helped me boost my flagging income,” she said.

Christopher Nulty, an Airbnb spokesperson, had fighting words in response to the San Francisco report in particular.

“This comes from the same people who want to ban new housing in the Mission [a San Francisco neighborhood], ban home sharing and make San Francisco more expensive for middle class families,” he said. “Home sharing is an economic lifeline for thousands of San Franciscans who depend on the extra income to stay in their homes.”

So, who’s telling the truth?

“When evaluating claims about Airbnb, it is important to keep in mind whose ox is being gored,” said David Reiss, a professor at Brooklyn Law School. His point: In some cases, maybe Airbnb brings some harm. In other cases, it does good. Matters just aren’t simple or black and white.

Reiss on Airbnb

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MainStreet.com quoted me in Housing Activists Claim Airbnb Cuts Into Affordable Apartment Inventory in Manhattan. The story opens

Popular and trendy neighborhoods in Manhattan accounted for 30% of units booked as private rentals on AirBnB.com, according to information subpoenaed by New York Attorney General (AG) Eric T. Schneiderman that Airbnb fought against releasing.

Those neighborhoods include the Lower East Side, Chinatown, Chelsea, Hells Kitchen, Greenwich Village and SoHo. “Removing rental units from the marketplace by operating them as illegal hotels damages the availability of housing,” said Roxanne Earley, a blogger with the Association for Neighborhood & Housing Development (ANHD).

Another tidbit from the AG’s report based on subpoenaed records is that commercial users of the home-sharing website collected $168 million in rent last year, controlled one in five AirBnb units and one in three bookings. “Although Airbnb is marketing itself as a company that helps the majority of its hosts make some extra money to keep their homes, the reality is that a multi-billion dollar business is helping a small portion of commercial users rake in a disproportionate amount of profit,” Earley told MainStreet.

“The markup on short-term rentals is much higher than that of long-term residential use of apartments and this has resulted in landlords breaking the law and using their units, sometimes whole buildings as illegal hotels,” said Earley.

And that’s eating into affordable housing units that city residents could be living in. “Commercial users earn an incredible markup on short term rentals and take units that may otherwise be affordable off of the market for long term occupancy,” Earley said.

The existence of rent regulation is unique to cities like New York and San Francisco and further complicates the Airbnb factor. Administered by a court or public authority, rent regulation limits the changes in price that can be attached to renting a home, which balances the negotiating power of landlord to tenant.

“If rent regulated apartments become profit-centers, tenants may also be incentivized to hang on to their apartments longer than they would otherwise, negatively impacting the availability of affordable housing for those who would use it purely for their own personal residence,” said David Reiss, professor at Brooklyn Law School.