QUESTION
What is the availability and impact of rent stabilized units at below fair market rents?
1:39:53
·
4 min
86% of rent stabilized units are below fair market rent, with significant implications for affordability and housing policy.
- Fair market rents (FMRs) are set by the Department of Housing and Urban Development (HUD) based on recent movers and are at the high end of rent distribution.
- For FY 24, FMR for a two-bedroom is $2,752 and $3,434 for a three-bedroom, reflecting high costs for new residents.
- A policy that resets rent-stabilized units to match FMR could lead to dramatic rent increases and affect 86% of rent-stabilized and 65% of market rental units.
- Such a policy shift could result in fewer affordable units for lower-income New Yorkers and potential further increases in FMR.
- The Department of Housing Preservation and Development (HPD) is open to conducting detailed analyses to assess the impact of these potential changes.
Pierina Ana Sanchez
1:39:53
How many rent stabilized units in particular are available at below fair market rents?
1:39:58
And this question is in connection to a bill that is being heard in Albany, sponsored by Assembly member, Bud Ghosn in the in this in the lower house, that would allow increases of FMR allow rent increases up to FMR, which many of our advocates are flagging for us in no uncertain terms.
1:40:20
It is a very dire threat to rent stabilization.
Elyzabeth Gaumer
1:40:24
Sure.
1:40:25
And for that very reason, thank you for asking that question of us.
1:40:29
So first of all, as for the broader audience here, FMRs or fair market rents are set by HUD.
1:40:38
For the the New York FMRA area, and they are using a variety of policy.
1:40:46
Right, and and income to term income eligibility determinations, including our voucher programs.
1:40:52
Right?
1:40:52
That is essentially the thing that determines our our general payment standard metrics for voucher holders.
1:41:00
They are gloss over a lot of the technical details here.
1:41:03
They are essentially the 40th percentile of recent movers, citywide.
1:41:08
So they're based on rents.
1:41:10
For people who recently moved into their units.
1:41:15
Taking a step back to our HTS findings, both from 2123, we know that recent movers and units that had been available recently are very high cost.
1:41:27
And so that is reflected in New York City's FMRs.
1:41:30
They are higher prices than what most units have rents in New York City.
1:41:37
So the for example, for FY 24, for a two bedroom in 24, the FMR is 2752.
1:41:47
For a three bedroom, it's 3434.
1:41:51
For studio, almost 24100.
1:41:53
So you know from our data today and our report that that's at the upper end of the rent distribution.
1:41:59
That's actually very valuable on the policy side because it gives our voucher holders a greater competitive edge when they're out there looking for a unit.
1:42:07
Right?
1:42:07
That's very important.
1:42:09
That they'd be able to have higher payment standards to choose what neighborhoods they live in, to be able to reach and access more affluent neighborhoods that they need to.
1:42:17
And obviously with very few vacant units to be able to, right, be on equal footing or closer footing to those in the private market.
1:42:26
That said, it means that if rent stabilized units were to reset in any shape or form to that, that would be a dramatic increase in rents and not just rent stabilized units, in fact, market rentals as well.
1:42:40
So from the 23 HBS, we can say that 86 percent of rent stabilized units have a rent below FMR in 2023, 86% of rent stabilized units, and 65% of market rentals.
1:42:58
So we're talking about almost the entirety of the rental stock could in fact see a shift and that there are obviously knock on effects of that kind of approach as well.
1:43:08
You would have higher cost vacant units if because they would reset it, they can see which means that there would be even fewer units available for lower income new workers to afford.
1:43:18
And that in turn would actually drive up FMR's even more for the next reset.
1:43:24
And so we haven't done any kind of tailed analysis of that, but if that's of any help, we're happy to do that from our HTS data.
Pierina Ana Sanchez
1:43:33
Thank you.
1:43:34
Thank you, Doctor Gommer.
1:43:35
I hope that the agency will, if needed, as needed, and we'll just be very vocal about the potential impact of a change like that for rent stabilized units even if it is at vacancy.
1:43:48
I'm just going to list them out and if there are comments that you would like to share in the interest of time, and then we'll move on to public testimony.
1:43:56
Thank you all for your patience and participation.