6 ms·

The fact there are arbitrage opportunities are precisely the reason the regulations exist. The problem is that the market equilibrium would be really bad for r

by pyduan 13y ago

The fact there are arbitrage opportunities are precisely the reason the regulations exist. The problem is that the market equilibrium would be really bad for residents. You have to stop and think about what there being no such opportunity would mean: housing in these areas is in scarce supply, and letting the market do its thing would incentivize people to convert rooms to full-time hotels at the expense of people who actually live there (since the true market value of a room is much higher than the average rent; in other words, your arbitrage opportunity), which will in turn reduce the supply of apartments available for residents, thus making rent even more expensive than it is right now for the few that will be able to afford it. I agree the regulations are not perfect, but people have to understand it comes from a conscious political decision to protect residents. And this by the way is why you need a government to create such rules, because contrary to what people like the man in this article might think, the market equilibrium is not always the most desirable situation.

cbr 13y ago
which will in turn reduce the supply of apartments available for residents If the cities allow new construction the supply should expand to match the increased demand, creating jobs in the process.
- ceejayoz 13y ago
  Manhattan has somewhat limited space for new construction.
  - hapless 13y ago
    Manhattan could re-zone to permit a great deal more construction, but it is unlikely to happen. First, residents strongly oppose it. Second, much of the transport system is maxed out. Building more housing or office space would only overburden systems operating at capacity. (e.g. the west side highway, fdr drive, lexington avenue subway line are all unusably crowded)
    - saalweachter 13y ago
      What is the zoning like in Manhattan? I see intermingled residential/office/commercial spaces everywhere I go (heck, my last office was in the same building as apartments, with a store-turned-restaurant on the ground floor), so I didn't realize there were zoning restrictions in that sense.
      - hapless 13y ago
        lots and lots of historic districts there are crippling height restrictions all over the place, and you have to buy un-used "air rights" from your neighbors to build anything taller than what already exists in the neighborhood environmental impact studies (weirdly) can be used against projects local "community boards" have a lot of power and the aforementioned centrally imposed limits on development -- the city's top-level boards may not like what you're doing to transportation
- ebiester 13y ago
  Please, visit Istanbul sometime. It follows those rules pretty closely. But don't just visit the historical districts -- visit the neighborhoods where there's a random skyscraper in the middle of otherwise low-rise residential. Nearly everyone gave up on building attractive buildings. There is a character to a city, and it is easy to destroy the things that make them worth living in.
- potatolicious 13y ago
  Manhattan is extremely construction-friendly. There are, however, limits. It's already an extremely developed city, so there's no real empty space left. Any construction will involve buying out existing owners/tenants, demolition, and replacement. This is happening, but naturally is not fast. There are reasons why you wouldn't someone to demolish a skyscraper in the middle of Manhattan without oversight. Adding to this problem is the state of infrastructure. Manhattan streets are packed, and most subway lines also. There is currently a proposal to up-zone the area directly around Grand Central and raise the height limits. This is a great thing, except all subway lines feeding Grand Central are already operating past peak capacity. Creating this extra space is pointless (and in fact detrimental) unless there is infrastructure ready to support it. There are already infrastructure projects in place to alleviate this, but digging tunnels through bedrock is understandably not a fast affair. The East Side Access project will connect Penn Station and Grand Central, and alleviate some of the traffic at both. Adding to the complexity here is that Manhattan's underground is already filled with tunnels of all varieties, forcing new projects to tunnel ever deeper, with requisite cost and slowness. The world is complicated, city planning is complicated. This isn't software where we can just deploy a new server - apartments, offices, subway lines, streets, sewers, power plants, cannot be willed into existence at a whim.
  - aeorgnoieang 13y ago
    Do you live here? Because there are lots of empty lots and there are tons of under-developed areas. I don't know why you believe "Manhattan is extremely construction-friendly"; it's certainly not 'construction-friendly' enough so that there are numerous affordable housing options. Some crazy number of housing units are under either rent control or rent stabilization. The housing dynamic here is insane.
    - potatolicious 13y ago
      I do live here. I know of exactly one substantial empty lot in Manhattan - just south of the UN building. I still wonder what the plan is there. Hell, the biggest development project going on right now involves building on top of a train yard. This does not suggest an availability of actual empty land. > "and there are tons of under-developed areas" And yes, that's precisely what I referring to when I mentioned that any new development would have to involve demolition and replacement. Replacing a 15-story apartment complex with a 45-story apartment complex may be a good idea, but first you'd have to buy out all the owners in the building. That sort of thing is neither simple nor fast. The infrastructure problem exists still also. Spanish Harlem can be argued to be underdeveloped - and we can surely replace those buildings with tall apartment complexes... except the 4/5/6 subway is already massively oversubscribed. You can build apartments there, but said residents won't be able to get to work. The 2nd Ave Subway is supposed to alleviate a lot of this pressure, but we all know how fast that is going. Same goes for basically all of Upper Manhattan - there are plenty of opportunities to replace buildings, but not enough infrastructure to move people around. Transportation (like most cities) is the biggest developmental bottleneck. > " it's certainly not 'construction-friendly' enough so that there are numerous affordable housing options." You've missed the entire point of my post. "Construction friendliness" is not Manhattan's bottleneck. Lack of infrastructure, and systemic slowness inherent in building replacement (read: buying out existing stakeholders) are. For all intents and purposes, Manhattan is "friendly enough". There is a building that's finally going up near me in the Lower East Side - a replacement of an old walkup. The owners in the old building resisted sale for a long time, as it would involve displacing them, plus they (rightly) speculated that their property value would continue to increase. The solution at the end of the day is to offer existing owners a brand new (albeit small) apartment in the new building. Not only did it cost the builders money to demolish and erect the new building, but also to buy out the old owners and give them part of the new property for free. Things like this are why Manhattan is replacing buildings so slowly, not because Manhattan is somehow opposed to development.
- logfromblammo 13y ago
  Or if new construction is impossible, they could also encourage companies and residents to relocate somewhere else, thus reducing the congestion burdens on those who remain. But what city with taxing authority would ever do this? As long as cities can take revenue from everyone regardless of their satisfaction with the city, there is a perverse incentive to oversubscribe city services. Since they are a monopoly over their whole territory, it is the same pressure as upon telecoms to add more customers without building out infrastructure.
dreamfactory 13y ago
Refreshing to see such a clear and reasoned repudiation of the usual naive 'free market is king' nonsense.
logfromblammo 13y ago
But the regulations cannot stop anything. They only introduce additional costs that distort the natural behavior of the market. And since everything in the market is connected, often in ways we do not understand, regulations produce odd behavior and unexpected consequences. The rent is too danged high because the supply of rentals is too danged low with respect to market demand. If hotel demand is high enough to cut that far into regular rentals, that just means there aren't enough purpose-built hotels. The regulation chooses to protect long-term residents at the expense of visitors and owner-investors. Why are they less valued people? Because NYC has a very high renter and owner-occupier population, and they vote. And does it even truly protect them? People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life. Attacking rogue AirBnB users may satisfy shortsighted political goals, but removing artificial barriers to new housing construction would be better for everyone in the long term. That said, the guy from the article is a dick that engages in willful fraud on a daily basis. NYC is right to go after people like him, but not at the expense of solving the underlying problem that produces such people as a symptom. Price is high because the cost to produce additional supply is high. Period.
- steveklabnik 13y ago
  > But the regulations cannot stop anything. Regulations can and do stop lots of things. If the regulations don't stop anything, then why do they 'distort the natural behavior of the market'? You can't claim that regulation is ineffective at affecting behavior while decrying its distortive effects at the same time.
- lmm 13y ago
  > Why are they less valued people? Because NYC has a very high renter and owner-occupier population, and they vote. Isn't that normal and just? People want something to happen, and they formalize this as law rather than applying mob violence, which is a Good Thing. > People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life. What you do with your property affects those around you; there's no god-given fundamental right to use your building for whatever you want to. We have things like zoning regulations for a reason - because we voted for them, because we wanted them. > removing artificial barriers to new housing construction would be better for everyone in the long term. I think everyone is in favour of new housing construction, but there's only so much Manhattan to go around. The choice is not between new houses and no new houses, or hotels and no hotels; it's between residential housing and hotels, and it's right that that choice be made democraticly.

by pyduan 13y ago

cbr 13y ago

which will in turn reduce the supply of apartments available for residents If the cities allow new construction the supply should expand to match the increased demand, creating jobs in the process.

ceejayoz 13y ago
Manhattan has somewhat limited space for new construction.
- hapless 13y ago
  Manhattan could re-zone to permit a great deal more construction, but it is unlikely to happen. First, residents strongly oppose it. Second, much of the transport system is maxed out. Building more housing or office space would only overburden systems operating at capacity. (e.g. the west side highway, fdr drive, lexington avenue subway line are all unusably crowded)
  - saalweachter 13y ago
    What is the zoning like in Manhattan? I see intermingled residential/office/commercial spaces everywhere I go (heck, my last office was in the same building as apartments, with a store-turned-restaurant on the ground floor), so I didn't realize there were zoning restrictions in that sense.
    - hapless 13y ago
      lots and lots of historic districts there are crippling height restrictions all over the place, and you have to buy un-used "air rights" from your neighbors to build anything taller than what already exists in the neighborhood environmental impact studies (weirdly) can be used against projects local "community boards" have a lot of power and the aforementioned centrally imposed limits on development -- the city's top-level boards may not like what you're doing to transportation
ebiester 13y ago
Please, visit Istanbul sometime. It follows those rules pretty closely. But don't just visit the historical districts -- visit the neighborhoods where there's a random skyscraper in the middle of otherwise low-rise residential. Nearly everyone gave up on building attractive buildings. There is a character to a city, and it is easy to destroy the things that make them worth living in.
potatolicious 13y ago
Manhattan is extremely construction-friendly. There are, however, limits. It's already an extremely developed city, so there's no real empty space left. Any construction will involve buying out existing owners/tenants, demolition, and replacement. This is happening, but naturally is not fast. There are reasons why you wouldn't someone to demolish a skyscraper in the middle of Manhattan without oversight. Adding to this problem is the state of infrastructure. Manhattan streets are packed, and most subway lines also. There is currently a proposal to up-zone the area directly around Grand Central and raise the height limits. This is a great thing, except all subway lines feeding Grand Central are already operating past peak capacity. Creating this extra space is pointless (and in fact detrimental) unless there is infrastructure ready to support it. There are already infrastructure projects in place to alleviate this, but digging tunnels through bedrock is understandably not a fast affair. The East Side Access project will connect Penn Station and Grand Central, and alleviate some of the traffic at both. Adding to the complexity here is that Manhattan's underground is already filled with tunnels of all varieties, forcing new projects to tunnel ever deeper, with requisite cost and slowness. The world is complicated, city planning is complicated. This isn't software where we can just deploy a new server - apartments, offices, subway lines, streets, sewers, power plants, cannot be willed into existence at a whim.
- aeorgnoieang 13y ago
  Do you live here? Because there are lots of empty lots and there are tons of under-developed areas. I don't know why you believe "Manhattan is extremely construction-friendly"; it's certainly not 'construction-friendly' enough so that there are numerous affordable housing options. Some crazy number of housing units are under either rent control or rent stabilization. The housing dynamic here is insane.
  - potatolicious 13y ago
    I do live here. I know of exactly one substantial empty lot in Manhattan - just south of the UN building. I still wonder what the plan is there. Hell, the biggest development project going on right now involves building on top of a train yard. This does not suggest an availability of actual empty land. > "and there are tons of under-developed areas" And yes, that's precisely what I referring to when I mentioned that any new development would have to involve demolition and replacement. Replacing a 15-story apartment complex with a 45-story apartment complex may be a good idea, but first you'd have to buy out all the owners in the building. That sort of thing is neither simple nor fast. The infrastructure problem exists still also. Spanish Harlem can be argued to be underdeveloped - and we can surely replace those buildings with tall apartment complexes... except the 4/5/6 subway is already massively oversubscribed. You can build apartments there, but said residents won't be able to get to work. The 2nd Ave Subway is supposed to alleviate a lot of this pressure, but we all know how fast that is going. Same goes for basically all of Upper Manhattan - there are plenty of opportunities to replace buildings, but not enough infrastructure to move people around. Transportation (like most cities) is the biggest developmental bottleneck. > " it's certainly not 'construction-friendly' enough so that there are numerous affordable housing options." You've missed the entire point of my post. "Construction friendliness" is not Manhattan's bottleneck. Lack of infrastructure, and systemic slowness inherent in building replacement (read: buying out existing stakeholders) are. For all intents and purposes, Manhattan is "friendly enough". There is a building that's finally going up near me in the Lower East Side - a replacement of an old walkup. The owners in the old building resisted sale for a long time, as it would involve displacing them, plus they (rightly) speculated that their property value would continue to increase. The solution at the end of the day is to offer existing owners a brand new (albeit small) apartment in the new building. Not only did it cost the builders money to demolish and erect the new building, but also to buy out the old owners and give them part of the new property for free. Things like this are why Manhattan is replacing buildings so slowly, not because Manhattan is somehow opposed to development.
logfromblammo 13y ago
Or if new construction is impossible, they could also encourage companies and residents to relocate somewhere else, thus reducing the congestion burdens on those who remain. But what city with taxing authority would ever do this? As long as cities can take revenue from everyone regardless of their satisfaction with the city, there is a perverse incentive to oversubscribe city services. Since they are a monopoly over their whole territory, it is the same pressure as upon telecoms to add more customers without building out infrastructure.

dreamfactory 13y ago

Refreshing to see such a clear and reasoned repudiation of the usual naive 'free market is king' nonsense.

logfromblammo 13y ago

But the regulations cannot stop anything. They only introduce additional costs that distort the natural behavior of the market. And since everything in the market is connected, often in ways we do not understand, regulations produce odd behavior and unexpected consequences. The rent is too danged high because the supply of rentals is too danged low with respect to market demand. If hotel demand is high enough to cut that far into regular rentals, that just means there aren't enough purpose-built hotels. The regulation chooses to protect long-term residents at the expense of visitors and owner-investors. Why are they less valued people? Because NYC has a very high renter and owner-occupier population, and they vote. And does it even truly protect them? People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life. Attacking rogue AirBnB users may satisfy shortsighted political goals, but removing artificial barriers to new housing construction would be better for everyone in the long term. That said, the guy from the article is a dick that engages in willful fraud on a daily basis. NYC is right to go after people like him, but not at the expense of solving the underlying problem that produces such people as a symptom. Price is high because the cost to produce additional supply is high. Period.

steveklabnik 13y ago
> But the regulations cannot stop anything. Regulations can and do stop lots of things. If the regulations don't stop anything, then why do they 'distort the natural behavior of the market'? You can't claim that regulation is ineffective at affecting behavior while decrying its distortive effects at the same time.
lmm 13y ago
> Why are they less valued people? Because NYC has a very high renter and owner-occupier population, and they vote. Isn't that normal and just? People want something to happen, and they formalize this as law rather than applying mob violence, which is a Good Thing. > People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life. What you do with your property affects those around you; there's no god-given fundamental right to use your building for whatever you want to. We have things like zoning regulations for a reason - because we voted for them, because we wanted them. > removing artificial barriers to new housing construction would be better for everyone in the long term. I think everyone is in favour of new housing construction, but there's only so much Manhattan to go around. The choice is not between new houses and no new houses, or hotels and no hotels; it's between residential housing and hotels, and it's right that that choice be made democraticly.