A new vision for postpandemic housing policy
The first few decades of the 21st century have brought enormous challenges to New York City, from the terrorist attacks of September 11, 2001, to the Great Recession, Superstorm Sandy and most recently the COVID-19 pandemic and the work-from-home norm it sparked. The city has shown resilience in the face of these tests, but it remains vulnerable, especially given its high housing costs. While housing cost burdens have risen throughout the country, those burdens are higher and climb further up the economic ladder in New York than in many other large cities. That’s a problem the public and private sectors have to solve if New York is to thrive in the coming generations — and the only way to solve it is by producing much more housing of all types.
In 2022, more than half of renters paid more than 30% of their income on rent, and 21% of moderate-income renters (those earning between 80% and 120% of the local area median income — $96,150 to $144,120 for a household of three in 2022 — were similarly cost-burdened. A household making the median income for the city cannot afford the median rent in 24 of the City’s 59 community districts. Meanwhile, homeownership is increasingly hard to reach; the city’s already high housing prices rose by 49% between 2013 and 2023 and tripled between 2000 and 2023. The city’s high housing cost burdens may encourage existing residents to leave and, perhaps more importantly, discourage many potential new residents from coming. Further, these high housing prices and rents threaten to undermine the rich diversity that makes New York such a vital, dynamic and productive place. Thoughtful housing policy is thus essential to a robust recovery and thriving future for New York.
We don’t have the space to lay out a detailed agenda for City (and state) leaders, but we want to offer six key principles to guide future housing policy.
The first principle is flexibility. The cities that will thrive in the future are those that can reinvent themselves in the face of remote work and other unforeseen challenges to come. Effective urban policies will make the stock of buildings in the city as adaptable as possible so that the city can evolve as economic, climate and demographic conditions change. New York City was far more successful than many of its Northern peers in reinventing itself as the economy in the U.S. shifted from manufacturing to information-intensive industries. Harvard economist and urbanist Edward Glaeser has emphasized the importance of a well-educated population in facilitating such shifts, but another key is a flexible building stock. Consider all the former manufacturing buildings in the city that are now homes and offices.
The most pressing need for flexibility right now involves office conversions. As is highlighted elsewhere in this issue, the share of workers commuting to their offices plummeted during the pandemic, and the remote work norm shows no sign of going away completely. This doesn’t spell the end of New York, as people increasingly come to cities to live not to work. They are attracted by cultural amenities, rich social networks, walkable and transit-rich neighborhoods, and the opportunity to reduce their carbon footprint. But the transition will be a challenge; New York City has more office space than any city in the country, and the demand for that space is likely to remain below prepandemic levels for the foreseeable future.
But lots of regulation can get in the way of conversions (for example: The zoning text only allows buildings built prior to 1961 to convert in most areas of the city; provisions in the building code make the conversion of many buildings very difficult; minimum parking space requirements that are expensive to meet are still in place in some parts of the city). Policymakers must identify which regulatory barriers to office conversions are really justified and evaluate whether regulatory barriers are really the dealbreaker given the economics of conversions. They also need to think creatively about how to support conversions. Such adaptive reuse will provide much-needed housing, is more environmentally sustainable than demolition and new construction, could potentially allow lower-income households to move to neighborhoods with great transit and amenities, and arguably will breathe fresh, 24-hour life into existing commercial areas. City leaders should also find ways to facilitate the conversion of retail spaces that continue to exhibit high vacancy rates and reconsider restrictions on locating housing in manufacturing zones as long as the housing achieves performance standards with respect to danger, pollution and noise.
In addition to incorporating housing into commercial districts, the City government should also consider ways to facilitate the introduction of more commercial spaces into residential neighborhoods outside of Manhattan. The City Council recently rejected a City of Yes provision to allow corner stores in residential areas. This is misguided. Given remote work, New Yorkers are spending more time in their neighborhoods, and they want mixed-use neighborhoods where they can live, work, shop and enjoy community spaces.
The city’s already high housing prices rose by 49% between 2013 and 2023.
The second principle is openness to growth and change. From rent regulation to just-cause eviction and foreclosure protections, many local housing policies focus on protecting existing residents from rent increases and displacement. Such policies are often justified as strategies to preserve economic and racial diversity in the face of gentrification pressures. But keeping households in place — however valuable — will be insufficient to maintain diversity over the longer run.
People move all the time, and even protected tenants will ultimately leave their homes and make them available to newcomers. If the city doesn’t build, the rents and prices of these homes will rise (unless demand decreases, which would be a bad outcome for the city) and the newcomers will likely have higher incomes and wealth than the households they replace. Further, the homes may deteriorate or even become obsolete if rents are not allowed to keep up with the expense of operating and maintaining the building, which will put even more pressure on the existing supply. Long-run diversity demands keeping the door open to new residents by creating new homes and different types of homes.
To be clear, protections for current tenants may be necessary and appropriate, but they can’t be the sole focus — or even the main focus — of our housing strategy if we care about long-run affordability and diversity. Instead, New York leaders should focus on making it easier to build more, and more varied, housing overall and investing heavily in means-tested, subsidized housing that can ensure some level of diversity even in the face of rapid appreciation.
The third key principle is generality. The task of providing more housing — and more subsidized, means-tested affordable housing — can’t fall to just a few neighborhoods, as it is now. Efficiency, fairness and political viability all depend upon every community district doing its part to provide more housing. Modest or incremental increases in housing in every neighborhood will add up to significant change in the aggregate. Plus, more generally applicable policies won’t distort economic decision-making by restricting developers to particular neighborhoods, and it may aid in boosting competition among developers too.
Such generality is also fair. No neighborhood should be exempt from investing in housing when the city as a whole needs it so urgently. A broad-based approach will also help to affirmatively further fair housing and reduce segregation, especially if the city demands some level of affordability in every district.
As for political viability, when every community is contributing to addressing the city’s housing shortage, no one district will feel unduly burdened. That said, while all community districts should have to meet consistent targets, the City should consider the views of the local community regarding the design of that housing and where that housing is created within the neighborhood’s boundaries. No one community’s interests, however, should block the interests of the city as a whole.
To be clear, protections for current tenants may be necessary and appropriate, but they can’t be the sole focus — or even the main focus — of our housing strategy if we care about long-run affordability and diversity.
The fourth principle is equity. We must end exclusionary and unfair land use policies, reduce the city’s high levels of segregation and boost homeownership among households of color. Among large cities, New York has the fourth-highest level of Black-white segregation and the fifth-highest level of Hispanic-white segregation. The disparity in homeownership rates is enormous. In 2022, while 46% and 41% of the city’s Asian and non-Hispanic white households owned their homes respectively, just 27% of Black households and 17% of Hispanic households were homeowners. Building more diverse types of housing and ensuring means-tested affordable housing in all neighborhoods will expand choice and help reduce these persistent disparities.
A fifth principle is targeting the neediest. We need to focus on the lowest-income households (in part because they won’t directly benefit as much as others from new building). The housing package in the state’s recent budget legislation paid surprisingly little attention to the needs of the city’s lowest-income households. Preserving the city’s stock of public housing is critical, as it provides permanently and deeply affordable housing for many New Yorkers, but faces an estimated $78 billion of needed rehabilitation.
It is critical for City leaders to continue to embrace the Permanent Affordability Commitment Together (PACT) and the Public Housing Preservation Trust, both of which unlock public and private funding for renovation by transferring developments to a more stable source of funding (Section 8), while ensuring long-run affordability. City leaders should also continue to push to improve the management of NYCHA, and to lower the cost of operating its buildings, both to improve responsiveness to resident concerns and stretch NYCHA’s dollars further.
Rental assistance through state and City voucher programs (in addition to the federal housing choice voucher program) is critical for lower-income households, as their incomes are often too low to support building operations and maintenance, much less construction. Vouchers make housing affordable for these households, who typically spend about 30% of their income on rent. Unfortunately, however, only about one out of four households who qualify for vouchers actually receive one, as sadly illustrated by the fact that more than 230,000 households applied for a voucher in the first day after NYCHA opened its wait list for vouchers for the first time in 15 years.
The Furman Center’s recent State of the City’s Housing and Neighborhoods report shows that almost 90% of voucher households pay less than 30% of their income on rent, while more than 80% of unassisted poor renter households in New York City are extremely rent burdened, spending more than 50% of their income on rent. Yet the latest estimates from the Furman Center also show that fewer than half of households who receive vouchers are able to use them to lease homes, and even those who are successful typically searched for 171 days before moving into their new homes (compared to the national median of 71 days). Reforming the voucher programs to make them easier for renters — and landlords — to use is essential.
New York leaders should focus on making it easier to build more, and more varied, housing.
Other cities in similarly tight markets have been able to achieve significantly higher success rates. One key is identifying programmatic reforms that ease the administrative burdens of the voucher program, perhaps most notably through streamlining inspections, which often take months to complete. The City should scrutinize its inspection process and experiment with ways to speed it up, guided by clear and consistent checklists and supplemented by random audits. Research has shown that offering search assistance to voucher recipients and recruiting landlords can help to facilitate successful voucher moves. Stronger enforcement of the City and state source-of-income discrimination laws could also help.
The final key principle is thoughtful cost control. Recognizing and addressing the outsized increases we’ve seen recently in the cost to develop and operate residential buildings is critical, as these threaten both affordability and the financial feasibility of new and existing housing. Growth in those costs has far outpaced inflation, and is limiting the number of people who can be helped with City support. The City needs a comprehensive and sustained all-hands-on-deck strategy to reduce costs and stretch tax dollars further.
The mayor’s “City of Yes” proposals are an important next step to reforming our complicated zoning laws to make housing creation and conversion easier, quicker and cheaper. More generally, the City should continually scrutinize its permitting, inspection and housing lottery processes to identify ways to simplify them. The City should also do more to take advantage of new technologies to more cheaply and efficiently enforce its regulations and target its assistance.
To give a few examples, the City could move away from its largely complaint-driven building code inspections and increase its use of big data to target proactive code enforcement. It could also expand the use of drones for building façade and exterior inspections. The City should also take advantage of new funding from the Inflation Reduction Act and other sources to help building owners transition to renewable energy, which will help reduce operating costs.
In sum, housing affordability is key to a vibrant and sustainable future for New York. While the roots of some of the challenges are national, and even global, there is much the City can do. We hope these six principles provide a useful guide for policymakers as they try to create a housing strategy that will continue to welcome a diversity of new residents and to help them climb the economic ladder. While the city has changed in myriad ways over the decades and centuries, one constant has been its wonderfully open doors.