Monday, April 04, 2005

Real Problems with NYC Real Estate

According to a new report by Manhattan real estate analysts Miller Samuel:

The average sales price of a Manhattan apartment stayed above the $1,000,000 threshold for the third consecutive quarter finishing at $1,041,430.

Makes housing costs in the rest of the country seem tame, right? But this isn’t just another case of New York excess. A Wharton School report points out:

Home building … prices in Manhattan currently appear to be more than twice their supply costs…land use restrictions are the natural explanation for this gap.

Meaning that half the cost of building new housing in Manhattan is due to regulatory barriers (much, much higher than in most cities). And it’s not just home buyers that are suffering from undue government interference. Renters are also feeling the crunch

As reported by the Philadelphia Inquirer, a one-bedroom apartment in Manhattan averages well over $2,300 per month.

Just the price of living in the big city? Well, not for everyone. There are over one million rent-stabilized/rent-controlled apartments in Manhattan. You don’t have to be an economist to understand that if you artificially hold down the price of a commodity for some consumers, all other consumers will suffer inflated prices.

According to a 2003 report by the Manhattan Institute:

Recent studies by MIT housing economist Henry Pollakowski show that letting [rent control] die would increase housing quality and lower housing costs.

New York City has always been the one place where everyone is welcome. It’s unconscionable that a city that can find over 2 billion dollars for a new Jets stadium can’t find the will to remove the rent controls and regulatory restrictions that are quickly turning Manhattan into an enclave for the ultra rich.

New York City officials should comprehensively address and overhaul the bad real estate laws that threaten to sap this great city of its diversity and inclusiveness.


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