Making Room for Housing Market Deregulation
July 1, 2003
In an effort to recoup the $2.3 billion a year in lost property tax receipts and extra spending, the New York State Legislature is imposing a plan that will lead over the next eight years to the deregulation of many thousands of apartments. That's a step in the right direction, toward capitalism, says Nicholas D. Kristof.
Rent control rests on false assumptions, he says. First, it's not true that the beneficiaries of rent control are disproportionately poor.
- The winners are not the poor but those who have rented the same apartment for decades.
- The biggest losers are those who move to New York and try to find a place to live, because vacancy rates of under 3 percent are far below the national average of 9.4 percent.
- If all rents were freed, they would not rise to the $10,000-a-month level; on the contrary, research suggests that currently unregulated rents would actually drop.
Right now, rents for unregulated apartments are high because they make up only one-third of the market, so they are bid up to artificial levels. If prices were freed, then retirees who spend most of their time in Florida would give up their artificially cheap three-bedroom apartments, and there would be a surge of both vacancies and new construction. Because of regulations, the average rent in New York City is only $706, and that would rise, but the real rents that people actually pay when they find new apartments would fall.
Source: Nicholas D. Kristof, "Learning From China," New York Times, July 1, 2003.
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