Monday, May 22, 2006

Housing the Big Apple

In honor of a recent trip to New York for a friend's graduation, I thought I'd add some highlights of the New York housing market.

1) New York is avid in providing apartments for all strata in their society, so they incorporate rent controls. Of course, all this does is allocate government mandated affordable living space to the lucky few who win the sweepstakes; the rest are out of luck given the new shortage of housing. Prospective housing builders view rent controls as a damper on future profits, so less units get built. And current housing owners search for ways to circumvent the law so as to derive fair market value from their properties. The only people that win are the chosen few that get awarded cheaper housing by the State, and happen to pair with an owner that can not find his way around the system to pass along costs to the tenant. Of course, I'm sure those awarded those coveted apartments were free from any sort of political manipulations, right?

2) New York also prevents current owners from charging exorbitant prices when subletting; I've come to understand that the ceiling is 10%. Again, this takes emphasis away from the efficient allocation of units and places it instead on being in the right place at the right time. The reality of the situation, though, is that this law doesn't have much of an impact at all; current lesees simply choose to sublet their abodes to those wishing to engage in side deals, such as renting the apartment's furniture for the duration of the sublet.

3) A personal favorite of mine: Every time an apartment is vacated and then filled by a new tenant, it is city law that said apartment must receive a fresh coat of paint on all its walls. Every time, every apartment. Consumer choice be damned-- you're going to have freshly painted walls. I think my officemate said it best: "All that's going to do is make people mess up their walls before they move out."


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