The vacancy rate in NYC is a lie — and we can double it overnight
If you live in NYC, you’re used to sky-high rents. You live in a weird dystopia in which people with 6-figure salaries have roommates because they legitimately cannot pay their bills without them. There’s a common narrative as to why: supply and demand, the vacancy rate — there are a lot of people renting and not a lot of apartments for them to rent.
You’ve probably read numerous newspaper articles and blog posts complaining about it, too. Maybe you read this one in The Post, about how the vacancy rate is 1.07%. “Rising rents” and “gentrification” are such common topics around here that they’ve become memes.
There are a little under a million apartments in Manhattan. Here’s a source, if you need one, but it’s easily Google-able. 850,000, to be exact-ish.
So, we’re talking around 8,500–9,000 apartments on the market at a time.
Politicians will throw out tax breaks to developers faster than they can even say “800 new affordable units” — and not without cause — with so few apartments on the market, a ~10% increase in renter-ready apartments can make an actual difference in how many voters’ rents go up before the next election.
So, what if I told you there was a way to get more than 10,000 new affordable units on the market? And what if I told you it could be done in days, rather than years? What would that do to rents?
I present to you: A giant pool of apartments that are not lived in, but are currently excluded from those vacancy numbers. On Airbnb. 16,000 in the city. 12,000 in Manhattan. These numbers are just for full-apartment listings, that are available most of the year. I’m not talking about people who are renting their spare couch for extra income. These are not someone who’s out of town for a week. These are full-time, year-round, illegal hotels.
Let’s put that another way:
If you’re in Manhattan, and you walk into an empty apartment, it’s a lot more likely that it’s listed on Airbnb with a nightly price than that it’s listed on StreetEasy with a monthly price.
Now, people who took one semester of economics might argue that this is the free market. They’re reducing the friction between hotels and apartments. Increasing efficiency. Hotel prices are artificially high because of government regulation.
They’re right about all of that. But they’re also missing the point: Some inefficiency in the housing market is good. A truly economically “efficient” market responds to changes daily, and if that means you’ve got to move your furniture out today because a war started on another continent, the price of oil is up 20% and so is your rent, then get out of the way and let the free market work.
Hotel prices should be artificially high. You can’t sign a year-long lease at a hotel. Your landlord can raise the rent at the drop of a hat. They can change the locks on you without going to court. They can charge you extra to have friends visit. Hotels pay a hefty tax for those rights. That tax isn’t just about revenue — we all want that barrier between hotels and apartments, because if we all lived in hotels, life would suck. The city has a compelling interest here: preventing its own death.
Put another way: moving is already wasteful; if the landlord doesn’t have skin in the game, that inefficiency doesn’t vanish, the burden is just passed to the tenant.
So what can be done right now? Right now, there’s a law on the books against this. There’s a fine, but it’s only a few thousand dollars — if this is a business for you, that’s a cost you can eat.
Albany could raise the fine for repeat offenders to something that’s too high to write off as a cost of doing business.
Or, Bill de Blasio could hire an intern whose full-time job is to search “whole apartment”, look for “37 reviews” or for 3 consecutive months of availability (hint: it’s most of them) and go write someone a ticket. Even without increasing the fine, this position would cover their whole year’s salary in the first week. He could do this unilaterally, right now.
Making this a less viable business model means that owners of those apartments will start taking them down from Airbnb and put them up on Zillow, Trulia, and StreetEasy. Or maybe they’ll stay on Airbnb as monthly or annual rentals. That’s what we, as people who rent and live in this city, want.
I’m not opposed to Airbnb’s original concept. Bed and breakfast on an air mattress is a lovely way to save money when you’re traveling, make money when you’re home, and meet interesting people. There’s nothing wrong with wanting to recoup a few hundred bucks from your vacation costs, either. But large-scale businesses running hotel operations are raising my rent and yours, and it’s a solvable problem.
Write the mayor, city council, your congresspeople if you agree.
Originally published at drshaffopolis.tumblr.com.
