RGB Releases 2013 Operating Cost and Affordability Reports
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 2013 Price Index of Operating Costs. And on April 4, it released its Income and Affordability Study.
Income and Affordability Study Highlights
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:
- Results from the 2011 Housing and Vacancy Survey show that the NYC vacancy rate is 3.12 percent, median renter income is $38,447, median gross rent is $1,204, and the median gross rent-to-income ratio is 33.6 percent;
- New York City’s economy grew by 2.2 percent in 2012, compared to a 2.0 percent increase during 2011;
- The city gained 79,500 jobs in 2012, resulting in a 2.1 percent increase from 2011 in total employment levels;
- The unemployment rate rose slightly in 2012, to an average of 9.2 percent last year, up from 9.0 percent in 2011;
- Inflation averaged 2.0 percent in the metro area in 2012, down from 2.8 percent in the prior year;
- Inflation-adjusted wages fell 4.5 percent during the most recent 12-month period, following a 1.2 percent increase in the preceding 12 months;
- In 2012, an average of 43,295 people were staying in Department of Homeless Services shelters each night, up 14.6 percent from 2011;
- The number of nonpayment filings decreased 1.5 percent in 2012, while those actually heard in Housing Court increased 5.2 percent, and the number of evictions increased 4.0 percent.
Price Index of Operating Costs Highlights
The Price Index of Operating Costs (PIOC) measures the price change in a market basket of goods and services used in the operation and maintenance of rent-stabilized apartment buildings in New York City. The goods and services that make up the market basket were originally selected on the basis of the findings of a study of 1969 expenditure patterns by owners of rent-stabilized apartment buildings. Changes to the market basket have been made over time. The relative importance of the various goods and services in the market basket was updated in 1983 by means of a study of expenditure patterns of owners of rent-stabilized apartment buildings. And additional updates to these expenditure patterns have been done throughout the years in order to present a current and relevant analysis of changes in owner expense. Here are the highlights of this year’s report:
- The PIOC for Rent-Stabilized Apartment Buildings increased 5.9 percent this year;
- Costs in natural-gas heated buildings increased 4.3 percent and costs in fuel-oil heated buildings rose 7.3 percent;
- The “core” PIOC, which excludes the erratic changes in fuel oil prices, natural gas, and electricity costs, is useful for analyzing inflationary trends. The core rose by 3.7 percent this year;
- Fuel oil costs rose 20.0 percent;
- Real estate taxes increased 2.6 percent due to a rise in assessments for Class Two properties;
- Labor costs rose 3.0 percent;
- The Utilities component increased by 6.3 percent, primarily due to an increase in water and sewer costs;
- Insurance costs increased by 7.1 percent; and
- The Price Index of Operating Costs for Rent Stabilized Apartment Buildings is projected to increase 2.6 percent next year.