RGB Publishes Income and Affordability Study
The Rent Guidelines Board (RGB) is mandated by law to establish yearly rent adjustments for rent-stabilized apartments in New York City. The board holds an annual series of public meetings and hearings to consider research from staff, and testimony from owners, tenants, advocacy groups, and industry experts.
Throughout the year, the RGB staff is responsible for providing administrative support to the board and year-round research efforts regarding the economic condition of the stabilized residential real estate industry. Section 26-510(b) of the Rent Stabilization Law requires the RGB to consider “relevant data from the current and projected cost of living indices” and permits consideration of other measures of housing affordability in its deliberations.
The RGB annually publishes six research studies that it uses to determine the rent guidelines: Price Index of Operating Costs; Income and Expense Study; Housing Supply Report; Income and Affordability Study; Mortgage Survey Report; and Changes to the Rent Stabilized Housing Stock.
Most recently, the RGB released its 2012 Income and Affordability Study. The study highlights year-to-year changes in many of the major economic factors affecting New York City's tenant population and takes into consideration a broad range of market forces and public policies affecting housing affordability. Such factors include New York City's overall economic condition—unemployment rate, wages, Consumer Price Index, and Gross City Product—as well as the number of eviction proceedings and the impact of welfare reform and federal housing policies on rents and incomes.
The following summarizes some of the data issued thus far that the RGB will consider before voting on the upcoming rent guidelines for rent-stabilized apartments:
Vacancy rates. Preliminary results from the 2011 Housing and Vacancy Survey (HVS) were released in February of this year, and it showed that the vacancy rate for New York City is currently 3.12 percent. Approximately 45 percent of renter households in New York City are rent stabilized, with a vacancy rate of 2.63 percent.
Brooklyn had the lowest vacancy rate in the city, at 2.61 percent, translating into the availability of just 18,011 rentals in a borough with 691,178 rental apartments. Queens, by contrast, had the highest vacancy rate in 2011, at 3.79 percent. Of the remaining boroughs, the Bronx had a vacancy rate of 3.23 percent, Manhattan was at 2.80 percent, and the small sample size in Staten Island made the rate too inaccurate to report.
Income. The survey also shows that the median household income in 2010 was $37,000 for rent-stabilized tenants, versus $38,500 for all renters. The 2011 HVS found different income levels among those living in units that were rent controlled, rent stabilized, or unregulated. Rent-controlled tenants continued to have the lowest household income, earning a median of $29,000 in 2010. Tenants living in stabilized buildings built prior to 1947 (“pre-war”) had a median income of $36,000, and post-1946 (“post-war”) building tenants earned a median income level of $40,000. Stabilized tenants on the whole had a median income of $37,000, while those tenants in unregulated apartments earned a median of $52,260 in 2010.
Rent. The median gross rent for rent-stabilized tenants was also slightly lower than that of all renters, at $1,160 versus $1,204 for all renters. Rent-controlled tenants also paid the least in gross rent with a median of $895.
The HVS also breaks down the distribution of renter-occupied housing by gross rent level. Of the more than two million rental units in New York City that report cash rent, 7.3 percent rent for less than $500, and a quarter (23.9 percent) rent for between $500-$999. More than two-thirds of rental units (68.8 percent) rent for over $1,000, including 30.7 percent that rent for more than $1,500.
Measures of affordability. Rent-stabilized tenants saw a median gross rent-to-income ratio of 35.2 percent in 2011, compared to 33.8 percent for all renters. According to the report, this is the highest ratio in the history of the HVS.
Looking at these figures more closely, rent-stabilized tenants in pre-war apartments face a median rent burden of 35.8 percent, while tenants in post-war units had a median ratio of 34.0 percent in 2011. Unregulated tenants had the second highest gross rent-to-income ratio, 33.5 percent. And in a departure from the norm, rent-controlled tenants were the subcategory of tenants with the lowest rent burden, 32.1 percent.
Economic conditions. Looking at New York City's economy during 2011, the study showed both strengths and weaknesses as compared with the preceding year. Positive indicators include citywide unemployment rates decreasing to 9.0 percent during 2011, a 0.5 percentage point decrease from the prior year. In addition, employment levels grew, for the second year in a row, increasing 2.0 percent in 2011. Inflation-adjusted wages also increased 1.3 percent during the most recent 12-month period (the fourth quarter of 2010 through the third quarter of 2011). Gross City Product also increased for the second consecutive year, rising in real terms by 3.2 percent in 2011.
Housing court and emergency assistance. Negative indicators included a 7.7 percent increase in evictions, despite the number of “calendared” nonpayment filings in housing court declining 0.8 percent. In addition, cash assistance levels rose for the third consecutive year, increasing by 0.4 percent between 2010 and 2011. The number of food stamp recipients also rose, increasing for the ninth consecutive year, by 4.9 percent in 2011. In addition, homelessness rose over 2010 levels, increasing to an average of almost 38,000 persons a night, a 4.4 percent increase.
The most recent numbers, from the fourth quarter of 2011 (as compared to the fourth quarter of 2010), show that homeless levels were up 8.4 percent, food stamp case loads were up 1.5 percent, and nonpayment housing court filings were up 5.5 percent. However, calendared nonpayment housing court cases fell by 1.9 percent, employment levels were up 1.5 percent, unemployment levels remained at 9.0 percent, and Gross City Product rose by 2.5 percent.