In many U.S. cities, rents have fallen amid the pandemic. Here’s why mine 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 had hoped for in my life. One of those goals was: “Live in my own apartment until 37.”
Some people may ask: Why did I think it would take me so long to get my own place? The answer: Manhattan’s rents.
Just before the pandemic, the median rent for a bedroom in the U.S. was $ 968, according to The Apartment List. In the heart of The Big Apple, it was $ 2,703.
As a result, my friends and I had to live with roommates during my 20s, some of whom were in their 30s or 40s.
I lived with strangers, ate among them, handed them my bath towel and longed for an apartment of my own, but I was also content that I couldn’t do this for many years.
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When the pandemic hit New York City in March and rents fell, I didn’t take it too seriously. Then they dropped. In December, I realized that I could live a little more alone than I would pay to live with three people.
Still, I told myself not to look at the offers. I didn’t want to raise my hopes. I knew these reduced rates were only temporary.
And the thought of finally moving into my own place in my late twenties only to have to move out in 12 months when the rent went up again seemed terrible. Like many New Yorkers (and Americans), I have watched family members and friends be evicted from homes they had lived in for years and loved because they could no longer afford them.
With rents falling in many U.S. cities over the past year, I imagine many people faced the same stressful question: take advantage of the lower cost to move to a place you previously couldn’t afford but risk this, will you have to leave when the pandemic subsides and rents are likely to go up again?
Fortunately, my little sister Janna wasn’t so bogged down by such questions. She graduated from college in the pandemic, and that experience trained her in flexibility. She began working as a freelance video editor and soon found that with rents falling, she was making enough to afford a studio in Manhattan. When she asked me if I would go to places with her, I said yes.
When the agent showed us a row of apartments on a Saturday morning in February, I sensed these conflicting feelings, longings and fears. Then the broker mentioned that the units were rent stabilized.
Did i hear right? I asked them to repeat themselves.
In all around 1 million rent-stabilized apartments in the five boroughs of New York, the landlords have only limited ability to increase the rent per year. Every year in June, the Rent Guidelines Board votes on a permissible increase. Last year, partly because of the pandemic, the board decided that landlords couldn’t raise rents at all. In the other years the increases were 1% or 2%.
As a result, these apartments only grow in value over time. According to Stijn G. Van Nieuwerburgh, a finance professor at Columbia Business School, when someone moves into a rent-stabilized unit in New York, the cost is usually around 7% cheaper than the market rent. The same person who lives in this apartment about 20 years later pays, on average, about 45% below the market rent.
And so tenants of rent-stabilized apartments are reluctant to leave, making it nearly impossible to find the units.
My sister Janna is unpacking in her new studio.
Source: Janna McPartland
“A year and a half ago, a realtor would have laughed in your face if you asked for a rental-stabilized apartment,” said Mike McKee, treasurer of TenantsPAC, a New York advocacy group.
The pandemic has changed that.
There is no up-to-date data on the vacancy of rent-stabilized apartments across the city, but there are some meaningful figures from the apartment list aggregator StreetEasy. They found more than 2,400 rental-stabilized units in the New York market between January and February 2020, compared to 780 in the same months in 2019. (You can find these units in the app by adding the keyword “stabilized.”)
“Across the board, we continue to see a huge surge in the rental portfolio in New York City as the rental market recovers from last year’s lull in activity amid the pandemic,” said StreetEasy economist Nancy Wu. “This means more options for tenants to choose from all types of housing across the city – including the rare and highly covet rent-stabilized unit.”
That Saturday evening, Janna and I applied for two rental stabilized apartments, a bedroom for me and a studio for her. It took 48 hours to get a response from the agent saying I had a healthy amount of wine.
A year and a half ago, a realtor would have laughed in your face if you had asked for a rental stabilized apartment.
The Treasurer of TenantsPAC
Most tenants in the United States are not covered by rental control laws, and dozen of states are effectively banning rental control policies. This means that many tenants can hike indefinitely 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 introduce state-wide rental control. Most cities in California now have some form of rent increase caps, while many other areas, such as Minneapolis, are currently implementing similar regulations. Rent control passed this month in Ashbury Park, New Jersey. Albany and Rochester in New York have considered pursuing a rent-stabilized policy like the one that exists in the five boroughs.
There have also been temporary rental stops 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 organizing for rent control,” McKee said.
Landlord groups and some economists criticize rental control policies, saying that they help some tenants stay in their homes, but also discourage new builds, which limit the supply of housing units and ultimately make housing less affordable.
Proponents say that policies must be part of a broader strategy to keep rents affordable, along with incentives for building, but that regulation is needed if interest rates do not rise sustainably.
In 2015, more than a third of tenant households in the US were “rent charged,” meaning that more than 30% of their income was being used on rent each month, according to Pew. That’s a 19% increase in 2001. And nearly half of African American-owned tenant households are considered rent-encumbered.
“Rent control, especially when combined with other tenant protection measures, is the only policy tool that can provide immediate relief to tenants faced with prohibitive rent increases,” said Chris Schildt, senior associate at PolicyLink research and advocacy institute.
“Pension control benefits black people, low-income communities, senior citizens, women and families with children who make up the majority of tenants and the rent-burdened population,” Schildt said.
After another night of restless sleep, I woke up Monday morning to an email from the agent: Janna and I had been admitted to the apartments.
Within a week, I met with the super who gave me my keys. When I was 27 I had my own apartment for the first time.
I got here exactly a decade before I planned it out and the best part is knowing that I could still be here a decade later.