Bankrupt on Selling
January 25, 2010 3:54 PM Subscribe
Tishman Speyer Properties is defaulting on its $5.4 billion, high profile acquisition of the enormous Stuyvesant Town apartment complex in Manhattan, resulting in million in losses for investors and possibly "signaling the beginning of what is expected to be a wave of commercial-property failures".
The failure is the result of an aggressive business model designed to "push moderate income tenants out and replace them with well-heeled renters willing to pay rents at a much higher price" a practice referred to as Predatory Equity.
The same approach has been attempted elsewhere in the city such as the Riverton Apartment complex in Harlem where long term profits were expected "if they can achieve that high rate of turnover – displacing half of Riverton’s low- to moderate-income tenants in a five-year period"
The same approach has been attempted elsewhere in the city such as the Riverton Apartment complex in Harlem where long term profits were expected "if they can achieve that high rate of turnover – displacing half of Riverton’s low- to moderate-income tenants in a five-year period"
*points and laughs*
posted by Mach5 at 4:03 PM on January 25, 2010 [3 favorites]
posted by Mach5 at 4:03 PM on January 25, 2010 [3 favorites]
The Stuyvesant Town complex was developed by MetLife for returning World War II veterans and remained a middle-class haven even as rents in other parts of the city soared. Tishman's plans were to raise the rents for hundreds of the units to market rates.
Unreal.
posted by fake at 4:06 PM on January 25, 2010 [1 favorite]
Unreal.
posted by fake at 4:06 PM on January 25, 2010 [1 favorite]
This wave of commercial property failures... It will mean I can buy apartment buildings on the cheap? 'Cuz that'd be awesome.
posted by Mister Moofoo at 4:08 PM on January 25, 2010 [1 favorite]
posted by Mister Moofoo at 4:08 PM on January 25, 2010 [1 favorite]
I weep. Truly.
posted by You Can't Tip a Buick at 4:09 PM on January 25, 2010
posted by You Can't Tip a Buick at 4:09 PM on January 25, 2010
Just walk away, Renee.
posted by porn in the woods at 4:09 PM on January 25, 2010
posted by porn in the woods at 4:09 PM on January 25, 2010
The only thing that keeps me from recording a video of myself pointing and laughing to put on Youtube so I can email the link to *@tischmanspeyer.com, is that at the end of the investment chain is a bunch of middle class people scattered all over America (and England, apparently) who's retirement funds are going to get hosed by this.
posted by fatbird at 4:11 PM on January 25, 2010 [6 favorites]
posted by fatbird at 4:11 PM on January 25, 2010 [6 favorites]
But guess who's losing billions, it's not Tishman Speyer, it's creditors like the state of California's pension system which now has to liquidate (or manage) the Stuy-town property.
posted by ennui.bz at 4:12 PM on January 25, 2010
posted by ennui.bz at 4:12 PM on January 25, 2010
What of the moral hazard? I'm sure that's all we'll hear now.
But seriously, I hope Stuyvesant Town can return to/retain its middler-classy mission.
posted by drowsy at 4:12 PM on January 25, 2010
But seriously, I hope Stuyvesant Town can return to/retain its middler-classy mission.
posted by drowsy at 4:12 PM on January 25, 2010
I'm down with this if it just means sadness for corporate landlords, but my fear is that the apartments may fall into disrepair. Go tenants' associations!
posted by angrycat at 4:16 PM on January 25, 2010
posted by angrycat at 4:16 PM on January 25, 2010
Also, sucks for the fuckers' creditors, too, as others noted.
posted by angrycat at 4:18 PM on January 25, 2010
posted by angrycat at 4:18 PM on January 25, 2010
Eat the rich.
Nah. The rich are going to eat each other and leave the rest of us begging for scraps.
Same as it ever was.
posted by logicpunk at 4:21 PM on January 25, 2010 [2 favorites]
Nah. The rich are going to eat each other and leave the rest of us begging for scraps.
Same as it ever was.
posted by logicpunk at 4:21 PM on January 25, 2010 [2 favorites]
On the plus side, eventually all the wealthy people in the entire country will be concentrated in New York City, making it much easier to cordon them off and starve them all to death, then plunder their jewel-encrusted corpses.
posted by briank at 4:24 PM on January 25, 2010 [11 favorites]
posted by briank at 4:24 PM on January 25, 2010 [11 favorites]
The rich are going to eat each other and leave the rest of us begging for scraps.
There are more of us than there are of them. Maybe we should stop begging.
posted by enn at 4:24 PM on January 25, 2010 [7 favorites]
There are more of us than there are of them. Maybe we should stop begging.
posted by enn at 4:24 PM on January 25, 2010 [7 favorites]
There are more of us than there are of them. Maybe we should stop begging.
Shh... if you're quiet and don't raise a fuss you might get a little extra...
posted by logicpunk at 4:28 PM on January 25, 2010 [14 favorites]
Shh... if you're quiet and don't raise a fuss you might get a little extra...
posted by logicpunk at 4:28 PM on January 25, 2010 [14 favorites]
Isn't it immoral to walk away from an obligation like this? Why aren't Speyer and BlackRock picking up extra jobs to make ends meet?
Oh, right. It's just business.
posted by ryoshu at 4:31 PM on January 25, 2010 [30 favorites]
Oh, right. It's just business.
posted by ryoshu at 4:31 PM on January 25, 2010 [30 favorites]
my fear is that the apartments may fall into disrepair
Actually, I think this was a greater danger if the Tishman-Speyer entity had continued to own it, heavily burdened by debt and unable to raise cash. It's now bank-owned (or will be when the ink is dry) and will presumably be sold at or even under the market rate of $1.8B, this time to someone with a really solid business plan.
The fears of tenants being thrown out are also unlikely. Technically a new owner could do this under certain circumstances but frankly, this is a renter's market now and any landlord would be foolish to do so. It might be months or years before they would be able to achieve current tenancy rates. (And although it would suck to be evicted, the same market forces mean you could almost certainly get a nicer place for the same money -- or pay less for the same niceties elsewhere.)
The shame for Tishman-Speyer is that they're only losing about 2% of the overall haircut. By all rights this should affect future confidence in their investment vehicles.
posted by dhartung at 4:32 PM on January 25, 2010
Actually, I think this was a greater danger if the Tishman-Speyer entity had continued to own it, heavily burdened by debt and unable to raise cash. It's now bank-owned (or will be when the ink is dry) and will presumably be sold at or even under the market rate of $1.8B, this time to someone with a really solid business plan.
The fears of tenants being thrown out are also unlikely. Technically a new owner could do this under certain circumstances but frankly, this is a renter's market now and any landlord would be foolish to do so. It might be months or years before they would be able to achieve current tenancy rates. (And although it would suck to be evicted, the same market forces mean you could almost certainly get a nicer place for the same money -- or pay less for the same niceties elsewhere.)
The shame for Tishman-Speyer is that they're only losing about 2% of the overall haircut. By all rights this should affect future confidence in their investment vehicles.
posted by dhartung at 4:32 PM on January 25, 2010
The fears of tenants being thrown out are also unlikely. Technically a new owner could do this under certain circumstances but frankly, this is a renter's market now and any landlord would be foolish to do so. It might be months or years before they would be able to achieve current tenancy rates. (And although it would suck to be evicted, the same market forces mean you could almost certainly get a nicer place for the same money -- or pay less for the same niceties elsewhere.)
Err, this is New York. These are rent-controlled apartments; the landlord has every incentive to evict and there is no way a long-term rent-controlled or rent-stabilized tenant will be able to find another place for anywhere near the same price.
posted by enn at 4:34 PM on January 25, 2010 [3 favorites]
Err, this is New York. These are rent-controlled apartments; the landlord has every incentive to evict and there is no way a long-term rent-controlled or rent-stabilized tenant will be able to find another place for anywhere near the same price.
posted by enn at 4:34 PM on January 25, 2010 [3 favorites]
This game of pricing out the moderate income tenants to bring in the high rent ones has been going on for decades in NYC. I remember my grandmother (moderate income) being routinely bullied and threatened by her landlord on Riverside Drive in an effort to force her out and allow for conversion and more lucrative tenants. This was over 30 years ago, in the late 1970s.
I have to say it is enjoyable to read about one of these folks failing. I hope my grandmother is smiling.
posted by bearwife at 4:36 PM on January 25, 2010 [3 favorites]
I have to say it is enjoyable to read about one of these folks failing. I hope my grandmother is smiling.
posted by bearwife at 4:36 PM on January 25, 2010 [3 favorites]
Note to self: the banks tell defaulting home owners that it is immoral to "walk away."
But they do it with their properties.
posted by Postroad at 4:38 PM on January 25, 2010 [8 favorites]
But they do it with their properties.
posted by Postroad at 4:38 PM on January 25, 2010 [8 favorites]
Krugman today said Bernanke saved us from another Great Depression. But given how uncertain the recovery really is, then if the Depression we've "avoided" ends up occurring this year or next, is that still the case? It seems to me that all that happened during the Wall Street bailouts was to buy us more time (i.e. a year or two). I don't see any good news on the horizon.
posted by HP LaserJet P10006 at 4:50 PM on January 25, 2010 [1 favorite]
posted by HP LaserJet P10006 at 4:50 PM on January 25, 2010 [1 favorite]
Exactly, Postroad. When corporations, investment groups, or banks walk away from underwater loans it is "just good business". But they freak out at the idea that private party homeowners might do the same.
It's all just business. Is your mortgage significantly underwater and there is little hope of ever getting that money back? Walk away. It's not some sort of moral failing; it's, yes, just good business. The contract itself specifies the penalty for walking away. Generally with mortgages this is simply forfeiture of the property. If the banks don't like that idea they are perfectly able to require you to collateralize the loans with something besides the property itself. That they didn't do so is not your fault.
posted by Justinian at 5:09 PM on January 25, 2010 [9 favorites]
It's all just business. Is your mortgage significantly underwater and there is little hope of ever getting that money back? Walk away. It's not some sort of moral failing; it's, yes, just good business. The contract itself specifies the penalty for walking away. Generally with mortgages this is simply forfeiture of the property. If the banks don't like that idea they are perfectly able to require you to collateralize the loans with something besides the property itself. That they didn't do so is not your fault.
posted by Justinian at 5:09 PM on January 25, 2010 [9 favorites]
This might be a good thing, actually. Tishman basically "mailed in the keys" to their creditors, who now have to unload the property.
If I was a tenant, I'd want to immediately put a bid together (like the one that they had in to compete with Tishman, a few years ago) and approach the creditors. I'd imagine they'd be in a selling mood: who wants to be holding onto a big NYC mega-apartment complex right now? If they can get some City grants or something as sweeteners, bonus.
The economic downturn might give a tenant buyout offer its best hope of succeeding.
posted by Kadin2048 at 5:09 PM on January 25, 2010 [1 favorite]
If I was a tenant, I'd want to immediately put a bid together (like the one that they had in to compete with Tishman, a few years ago) and approach the creditors. I'd imagine they'd be in a selling mood: who wants to be holding onto a big NYC mega-apartment complex right now? If they can get some City grants or something as sweeteners, bonus.
The economic downturn might give a tenant buyout offer its best hope of succeeding.
posted by Kadin2048 at 5:09 PM on January 25, 2010 [1 favorite]
A friend of mine (she also once in a blue moon posts here) lives here. She'd gotten one of the apartments back when it was rent-controlled, before this mess started. I'm a bit nervous.
posted by EmpressCallipygos at 5:11 PM on January 25, 2010
posted by EmpressCallipygos at 5:11 PM on January 25, 2010
Note to self: the banks tell defaulting home owners that it is immoral to "walk away."
But they do it with their properties.
Well, you know what? I think I have it figured out, between the recent changes to allow US corporations to spend funds on political campaigns [yes, oversimplification, good enough for this comment] and the contrast between what's "morally" correct for corporations (banks et al) and people to do, there's only one real solution.
Everyone should simply incorporate their families, or themselves. There, done. Buy your house through your corporation; want to walk away? It's just business. Want to contribution tons of money to a campaign without your neighbors getting upset? Use the corporation. It seems so simple somehow.
Hey, we can even raise children that way! Start a family corporation, and make the kids assets. If the parents get divorced, no problem, because they're still assets of the corporation, and so money and visitation and such can be handled through it. With the parents still on the board, all concerns can be negotiated. It'll be awesome.
All the power, possibly even more, and no moral ambiguity -- it's ALL GOOD FOR BUSINESS.
posted by davejay, inc. at 5:04 PM on January 25
posted by davejay at 5:23 PM on January 25, 2010 [17 favorites]
But they do it with their properties.
Well, you know what? I think I have it figured out, between the recent changes to allow US corporations to spend funds on political campaigns [yes, oversimplification, good enough for this comment] and the contrast between what's "morally" correct for corporations (banks et al) and people to do, there's only one real solution.
Everyone should simply incorporate their families, or themselves. There, done. Buy your house through your corporation; want to walk away? It's just business. Want to contribution tons of money to a campaign without your neighbors getting upset? Use the corporation. It seems so simple somehow.
Hey, we can even raise children that way! Start a family corporation, and make the kids assets. If the parents get divorced, no problem, because they're still assets of the corporation, and so money and visitation and such can be handled through it. With the parents still on the board, all concerns can be negotiated. It'll be awesome.
All the power, possibly even more, and no moral ambiguity -- it's ALL GOOD FOR BUSINESS.
posted by davejay, inc. at 5:04 PM on January 25
posted by davejay at 5:23 PM on January 25, 2010 [17 favorites]
Ack! That's what I get for loading a page waaaaaaay before I comment. Bluh.
posted by davejay at 5:23 PM on January 25, 2010
posted by davejay at 5:23 PM on January 25, 2010
Nice title. If it were me, I'd have hoped someone would appreciate it, so here you go.
posted by rusty at 5:28 PM on January 25, 2010
posted by rusty at 5:28 PM on January 25, 2010
Everyone should simply incorporate their families, or themselves.
"I formed a corporation this year, and I'm the president, my mother is vice president, my father is secretary and my grandmother is treasurer, my uncle is on the board of directors, and they got together the first week, and they tried to squeeze me out. I formed a power block with my uncle and we sent my grandmother to jail..."
-Woody Allen
posted by logicpunk at 5:37 PM on January 25, 2010
"I formed a corporation this year, and I'm the president, my mother is vice president, my father is secretary and my grandmother is treasurer, my uncle is on the board of directors, and they got together the first week, and they tried to squeeze me out. I formed a power block with my uncle and we sent my grandmother to jail..."
-Woody Allen
posted by logicpunk at 5:37 PM on January 25, 2010
I recently came across this article that rejects paying underwater mortgages as a moral obligation and encourages homeowners with underwater mortgages to default, especially in states such as California where borrowers pay a premium due to their mortgages being non-recourse debt.
posted by hellx at 5:48 PM on January 25, 2010 [1 favorite]
posted by hellx at 5:48 PM on January 25, 2010 [1 favorite]
I don't see any good news on the horizon.
7 Things About The Economy Everyone Should Be Worried About
7 Things About The Economy Everyone Should Be Worried About
Clinton-era Labor Secretary Robert Reich recently speculated about what lies ahead for the economy. He wrote he see only a 10 percent chance of a double dip recession (vs. a 30 percent chance of a strong or solid recovery; a 40 percent chance of a jobless recovery; and a 20 percent chance of a stalled recovery).posted by stbalbach at 5:50 PM on January 25, 2010 [2 favorites]
That the place where a lot of workers live? Firemen, nurses, police, teachers? DNRTFA
posted by uncanny hengeman at 5:55 PM on January 25, 2010
posted by uncanny hengeman at 5:55 PM on January 25, 2010
The company actually got a 4+ billion dollar no recourse loan? Why can't the creditors go after the other buildings the company owns?
posted by TheJoven at 6:02 PM on January 25, 2010
posted by TheJoven at 6:02 PM on January 25, 2010
I'd like to point out the nice Modest Mouse reference in the title.
posted by colinshark at 6:21 PM on January 25, 2010
posted by colinshark at 6:21 PM on January 25, 2010
If banks get all death-y again when commercial property stalls, I am sure that the populist GOP will let them fail with dignity.
posted by a robot made out of meat at 6:23 PM on January 25, 2010 [1 favorite]
posted by a robot made out of meat at 6:23 PM on January 25, 2010 [1 favorite]
This is kind of sad, from the perspective of someone who pays non-controlled rents. Hopefully the next developer will succeed in forcing those fuckers to move to New Jersey.
posted by planet at 6:38 PM on January 25, 2010
posted by planet at 6:38 PM on January 25, 2010
Take the Stuyvesant Town deal. The investors aren't shady subprime lenders or naive kids. ... One of the most persistent narratives of the recent crisis portrays a nation of unsophisticated home buyers led astray by greedy bankers. Supposedly those bankers were willing to write risky loans because they intended to pass them on to some unwary investor. But this explanation falters in the face of a legion of failing commercial deals. Prospective landlords had all the expertise they should have needed to put a fair price on properties—and the majority of lenders who were originating loans for their own portfolios had ample incentive to perform careful due diligence. The best explanation for the calamity that has overtaken us may simply be that cheap money makes us all stupid.posted by Johnny Assay at 7:46 PM on January 25, 2010 [4 favorites]
My brother's mom and dad both have separate units in that place. They are great people. Stayed there at Thanksgiving this year, a nice little part of Manhattan.
posted by Ironmouth at 8:42 PM on January 25, 2010
posted by Ironmouth at 8:42 PM on January 25, 2010
Everyone should simply incorporate their families, or themselves. There, done. Buy your house through your corporation; want to walk away? It's just business.
You can certainly do this, but it has some possible tax downsides (Google Cache link) that you'd want to be cautious of.
The real reason to set up a corporation or partnership, as it's been explained to me, is when you want to own property in a complex way, e.g. a bunch of people buying an investment property that they all want to have resalable shares in. If you're just buying a house that you intend to live in, it's a lot of extra paperwork and possible tax disadvantages for very little actual gain.
Plus, as others have pointed out, in many states there's very little stopping you (in non-recourse states) from walking away from a residential mortgage anyway. You take a hit to your personal credit, but only for a few years. The banks' attempts to make an ethical issue out of it are laughable. They might as well try to call prepayment unethical as well — prepayment (and consequent prepayment risk) is actually a bigger problem, in normal economic times, than default.
posted by Kadin2048 at 10:01 PM on January 25, 2010
You can certainly do this, but it has some possible tax downsides (Google Cache link) that you'd want to be cautious of.
The real reason to set up a corporation or partnership, as it's been explained to me, is when you want to own property in a complex way, e.g. a bunch of people buying an investment property that they all want to have resalable shares in. If you're just buying a house that you intend to live in, it's a lot of extra paperwork and possible tax disadvantages for very little actual gain.
Plus, as others have pointed out, in many states there's very little stopping you (in non-recourse states) from walking away from a residential mortgage anyway. You take a hit to your personal credit, but only for a few years. The banks' attempts to make an ethical issue out of it are laughable. They might as well try to call prepayment unethical as well — prepayment (and consequent prepayment risk) is actually a bigger problem, in normal economic times, than default.
posted by Kadin2048 at 10:01 PM on January 25, 2010
But guess who's losing billions, it's not Tishman Speyer, it's creditors like the state of California's pension system which now has to liquidate (or manage) the Stuy-town property.Well, why is calpers investing in such crazy-ass schemes in the first place? The whole "OH NOES STATE PENSION FUNDS" thing is a bit much. It seems like these things are often pretty corruptly managed.
Everyone should simply incorporate their families, or themselves. There, done. Buy your house through your corporation; want to walk away? It's just business. Want to contribution tons of money to a campaign without your neighbors getting upset? Use the corporation. It seems so simple somehow.Well, with a no-recourse mortgage ordinary people can already walk away from their mortgages if they want too. Incorporating in a LLC is something people already do if they want to. And before the SCOTUS ruiling people could already spend whatever they wanted on campaigns, as long as the spending wasn't co-ordinated. You could donate as much as you wanted to MoveOn, for example. The law has just changed to make it legal for corporations to do the same thing.
(And although it would suck to be evicted, the same market forces mean you could almost certainly get a nicer place for the same money -- or pay less for the same niceties elsewhere.)If it's not obvious: rent control means you don't pay market rate. But if you move out, you have to get a new apt at the current market rate, which then stays fixed. The market rates now, even in a down turn are going to be more then they were when the tenant moved in (based on my understanding of NYC rent control, which I read about in an Econ 101 textbook)
posted by delmoi at 10:11 PM on January 25, 2010
If it's not obvious: rent control means you don't pay market rate.
I knew that, and I acknowledge my oversight.
posted by dhartung at 11:07 PM on January 25, 2010
I knew that, and I acknowledge my oversight.
posted by dhartung at 11:07 PM on January 25, 2010
Note to self: the banks tell defaulting home owners that it is immoral to "walk away."The banks don't walk away from their debt. They walk to the US Congress. They make sure that debt is properly disposed of.
But they do it with their properties.
posted by cotterpin at 12:47 AM on January 26, 2010
rejects paying underwater mortgages as a moral obligation and encourages homeowners with underwater mortgages to default
I wish more people thought this way. Right now the banks can afford to sit on properties instead of selling them off because of the influx of fed dollars. The more home owners that walk away from their debts, the more properties the banks will have to absorb (or fucking sell already).
posted by Civil_Disobedient at 5:27 AM on January 26, 2010 [1 favorite]
I wish more people thought this way. Right now the banks can afford to sit on properties instead of selling them off because of the influx of fed dollars. The more home owners that walk away from their debts, the more properties the banks will have to absorb (or fucking sell already).
posted by Civil_Disobedient at 5:27 AM on January 26, 2010 [1 favorite]
Well, why is calpers investing in such crazy-ass schemes in the first place?
A yearning for diversification. After Yale made spectacular returns on things other than stocks 'n' bonds, the institutional investors felt they had to get in on the act.
Not that Yale did all that well last year either....
posted by IndigoJones at 5:56 AM on January 26, 2010
A yearning for diversification. After Yale made spectacular returns on things other than stocks 'n' bonds, the institutional investors felt they had to get in on the act.
Not that Yale did all that well last year either....
posted by IndigoJones at 5:56 AM on January 26, 2010
Right now the banks can afford to sit on properties instead of selling them off because of the influx of fed dollars.
Agreed. But selling them at discount would look bad on their balance sheets and queer any hopes for bonuses this year. Best to ride it out....
Result? Well, anecdotally, this past year I visited a beautiful old Tudor in a tony Greater New York area neighborhood where bank stubbornness had left it unattended for over a year. Basement flooded, mold to the joists and beams, huge fans "dehumidifying" the basement- oh it was a mess. All because the bank refused to take market prices.
It seems like these things are often pretty corruptly managed.
Or just stupidly managed. Remember when Orange county went bankrupt?
posted by IndigoJones at 6:07 AM on January 26, 2010
Agreed. But selling them at discount would look bad on their balance sheets and queer any hopes for bonuses this year. Best to ride it out....
Result? Well, anecdotally, this past year I visited a beautiful old Tudor in a tony Greater New York area neighborhood where bank stubbornness had left it unattended for over a year. Basement flooded, mold to the joists and beams, huge fans "dehumidifying" the basement- oh it was a mess. All because the bank refused to take market prices.
It seems like these things are often pretty corruptly managed.
Or just stupidly managed. Remember when Orange county went bankrupt?
posted by IndigoJones at 6:07 AM on January 26, 2010
Sorry, but I just can't muster any sympathy for people who may be cast out of their rent-controlled apartments. They've been living on the surplus rent of every market-renter in NYC for too long.
posted by jckll at 7:17 AM on January 26, 2010
posted by jckll at 7:17 AM on January 26, 2010
So I'm getting the impression that the NYC real estate market isn't all sunshine and rainbows, as I had been lead to believe...
posted by Theta States at 8:17 AM on January 26, 2010
posted by Theta States at 8:17 AM on January 26, 2010
Sorry, but I just can't muster any sympathy for people who may be cast out of their rent-controlled apartments. They've been living on the surplus rent of every market-renter in NYC for too long.
Yeah, it's about time we just throw in the towel and admit New York City is only for the rich.
posted by Mavri at 8:39 AM on January 26, 2010
Yeah, it's about time we just throw in the towel and admit New York City is only for the rich.
posted by Mavri at 8:39 AM on January 26, 2010
Yeah, it's about time we just throw in the towel and admit New York City is only for the rich.
Do you not understand that they are making the rents of other people who didn't happen to get into the market as early, who may be just as poor as they are, higher?
posted by rr at 9:04 AM on January 26, 2010 [1 favorite]
Do you not understand that they are making the rents of other people who didn't happen to get into the market as early, who may be just as poor as they are, higher?
posted by rr at 9:04 AM on January 26, 2010 [1 favorite]
Do you not understand that they are making the rents of other people who didn't happen to get into the market as early, who may be just as poor as they are, higher?
Yes, and it's a shame that politicians have been steadily chipping away at rent protections, making this city more and more impossible to live in.
I understand that some people seem to think that throwing out rent protections completely will somehow make rents go down, but there's really no evidence of this. The vast majority of housing in NYC is market rate. No building built after 1974 (with some exceptions for developers that received tax breaks) is rent-stabilized. And anywhere from 80,000 to 300,000 (depending on whose numbers you believe) have been destabilized in the past few years due to "luxury" decontrol. The amount of regulated housing has been going down for years, and rents go up and up and up.
Even for those tenants who are lucky enough to live in a stabilized apartment, rent increases are usually higher than inflation and higher than other cost of living indicators. I believe the impact of rent stabilization on market rents is vastly overstated by landlords' lobbyists and the politicians they have in their pockets. I also believe that things like housing and health care should be affordable to the middle and working classes. I will never be in agreement with the anti-rent-stabilization forces at work in this city. (I do believe that tying rent to income would be a more efficient and fair way to control rents in this city [as is done in the section 8 program], but trying to get a new entitlement program passed is hopeless.)
Doing away with rent protections would mean the dwindling middle class population would have to go. Like I said, if you don't like rent stabilization, just admit that you think NYC is for the rich.
posted by Mavri at 9:29 AM on January 26, 2010
Yes, and it's a shame that politicians have been steadily chipping away at rent protections, making this city more and more impossible to live in.
I understand that some people seem to think that throwing out rent protections completely will somehow make rents go down, but there's really no evidence of this. The vast majority of housing in NYC is market rate. No building built after 1974 (with some exceptions for developers that received tax breaks) is rent-stabilized. And anywhere from 80,000 to 300,000 (depending on whose numbers you believe) have been destabilized in the past few years due to "luxury" decontrol. The amount of regulated housing has been going down for years, and rents go up and up and up.
Even for those tenants who are lucky enough to live in a stabilized apartment, rent increases are usually higher than inflation and higher than other cost of living indicators. I believe the impact of rent stabilization on market rents is vastly overstated by landlords' lobbyists and the politicians they have in their pockets. I also believe that things like housing and health care should be affordable to the middle and working classes. I will never be in agreement with the anti-rent-stabilization forces at work in this city. (I do believe that tying rent to income would be a more efficient and fair way to control rents in this city [as is done in the section 8 program], but trying to get a new entitlement program passed is hopeless.)
Doing away with rent protections would mean the dwindling middle class population would have to go. Like I said, if you don't like rent stabilization, just admit that you think NYC is for the rich.
posted by Mavri at 9:29 AM on January 26, 2010
Doing away with rent protections would mean the dwindling middle class population would have to go. Like I said, if you don't like rent stabilization, just admit that you think NYC is for the rich.
Rent control as it is today in NYC, as I understand it, does not divide between poor and rich at all. Instead, it divides people into "here early" and "here late" piles (the "fuck you, I've got mine" approach used by prop13 in California). Perversely, the opposite rule is in effect based on how old the building is.
And .. for that matter... NYC does appear to be "for the rich" in every other sense. It is enormously expensive, salaries for white collar professionals are commensurate with the cost of living but not for the rest.
posted by rr at 10:57 AM on January 26, 2010 [1 favorite]
Rent control as it is today in NYC, as I understand it, does not divide between poor and rich at all. Instead, it divides people into "here early" and "here late" piles (the "fuck you, I've got mine" approach used by prop13 in California). Perversely, the opposite rule is in effect based on how old the building is.
And .. for that matter... NYC does appear to be "for the rich" in every other sense. It is enormously expensive, salaries for white collar professionals are commensurate with the cost of living but not for the rest.
posted by rr at 10:57 AM on January 26, 2010 [1 favorite]
The amount of regulated housing has been going down for years, and rents go up and up and up..
Not so sure about that.
posted by IndigoJones at 11:46 AM on January 26, 2010
Not so sure about that.
posted by IndigoJones at 11:46 AM on January 26, 2010
Doing away with rent protections would mean the dwindling middle class population would have to go. Like I said, if you don't like rent stabilization, just admit that you think NYC is for the rich.
If you do like rent stabilization, just admit that you think nobody should move to NYC unless they're rich.
posted by one more dead town's last parade at 12:04 PM on January 26, 2010
If you do like rent stabilization, just admit that you think nobody should move to NYC unless they're rich.
posted by one more dead town's last parade at 12:04 PM on January 26, 2010
Instead, it divides people into "here early" and "here late" piles (the "fuck you, I've got mine" approach used by prop13 in California).
Exactly. Rent control in NYC and similar things on an even bigger scale like prop13 in California is in no way about protecting the middle class. They are massive transfers of wealth from one demographic to another, but it sure isn't from the rich to the middle class. The folks who benefit tend to be older married white couples. The people who are harmed tend to be younger single people and minorities.
The intentions may be good but, eh, the road to hell and all that. For my part I don't think young people and minorities need to be subsidizing old white people any more.
Yes, you can point to very sympathetic people who benefit. We could pass a law that all right handed people have to pay a 10% surtax on their income which goes into the pocket of left-handed people and we could find a ton of sympathetic left-handed people who benefit. That does not change the inherently unfair nature of the beast. And transferring money from young single people and minorities to older married white people is about as unfair as I can think of.
posted by Justinian at 1:24 PM on January 26, 2010
Exactly. Rent control in NYC and similar things on an even bigger scale like prop13 in California is in no way about protecting the middle class. They are massive transfers of wealth from one demographic to another, but it sure isn't from the rich to the middle class. The folks who benefit tend to be older married white couples. The people who are harmed tend to be younger single people and minorities.
The intentions may be good but, eh, the road to hell and all that. For my part I don't think young people and minorities need to be subsidizing old white people any more.
Yes, you can point to very sympathetic people who benefit. We could pass a law that all right handed people have to pay a 10% surtax on their income which goes into the pocket of left-handed people and we could find a ton of sympathetic left-handed people who benefit. That does not change the inherently unfair nature of the beast. And transferring money from young single people and minorities to older married white people is about as unfair as I can think of.
posted by Justinian at 1:24 PM on January 26, 2010
/me starts furiously working on his left-handed-ness
posted by Fezboy! at 3:11 PM on January 26, 2010
posted by Fezboy! at 3:11 PM on January 26, 2010
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posted by fatbird at 4:00 PM on January 25, 2010 [2 favorites]