Jay Martin has long been the “Mr. Chicken Little” of the real estate industry, perpetually claiming the sky is falling. He cries “imminent disaster” and his usual solution is to give landlords more money.
But his cherry-picked information from the NYC Rent Guidelines Board (RGB) reveals the truth: Rent-stabilized housing is profitable! Landlords get an average net operating income (profit over expenses; NOI) of $333 every single month for each rent-stabilized apartment in the Bronx—and $605 per rent-stabilized apartment per month in NYC overall. The Rent Guidelines Board (RGB) reports an NOI increase of 0.3% from 2021 to 2022, the most recent date for which there is information.
The RGB’s April 2024 report shows that since 1990, net operating income has increased 50% overall in NYC and 37% in the Bronx. The slight dip during the pandemic is at an end, with NOI on the rise, and plenty of money was still coming in over expenses.
That means it doesn’t make sense when Martin claims, “When NOI declines, it means operating expenses are greater than rental income and the value of the building declines.”
First, there’s no decline, and second, owners are still making a profit.
We wonder what landlords have been doing with the profits they’ve been making all along. Their buildings should already be well-maintained because repairs and maintenance are factored into the costs the RGB considers.
It’s true that some landlords can’t meet their financial obligations because, speculating on a windfall, they overpaid for buildings: They planned to replace lower-paying tenants with higher-paying occupants in newly deregulated apartments. Those buildings had more maintenance and repair violations since owners declined to invest in needed work.
This was typical of one hotspot for this speculation—the Bronx—but a 2019 change in the law meant the landlords could no longer deregulate the rent-stabilized homes.The speculators were out of luck—just as any other investor might be. Now they are begging yet again to raise the rents after their risky gamble didn’t pay off.
Unfortunately, Albany bent to big real estate demands this spring for big—and permanent—“Individual Apartment Improvement” rent increases in last year’s budget, especially in apartments landlords had been holding off the market for their Chicken Little scenario. Landlords didn’t even have to show their books to prove a dire need. Instead, they spent millions of dollars on a public relations campaign to get their way, millions they claimed they lacked for apartment repairs. After some landlords speculated and others neglected their property, consigning some older tenants to squalor, owners were rewarded with rent increases to upgrade the units and bring them up to code.
Our city and state governments should not be bailing them out with our rent money. Even in 2022, 50% of American renters already spend more than 30% of their income in rent.
Thankfully, some real solutions are on the horizon. Community- and tenant-owned and -controlled housing are coming ever closer to reality, with community land trusts, land banks, and bills to give tenants the opportunity to purchase their buildings, and proposals for more permanent social housing. That would ensure that tax dollar investments in affordable housing yield a strong and ongoing return for the people of this state and provide quality, stable homes for the people who live here.
Jodie Leidecker, Sue Susman, and Edward Ratliff are members of the Coalition to End Apartment Warehousing. Leidecker is an organizer at Cooper Square Committee. Ratliff is an active member of the coalition. Susman is head of the Central Park Gardens Tenants’ Association and runs an email list about affordable housing.