NYC is known as a melting pot of people and jobs,
which embraces the hopes of prosperity, opportunity and growth for its
inhabitants. Unfortunately NYC is notoriously known for its cities high levels
of Income inequality, but still a constant flood of U.S citizens and immigrants
continue to hope to make NYC their home. This continued growth of population
has caused pressure on the rent and housing market supply, which has not
equivalently expanded to meet the needs. The question I am analyzing is why
does NYC have such a significant housing/rent crisis, and how does the
inequality of income distribution in the area have an affect on this crisis? The
relevance of this housing crisis has reached a record high level, having the
greatest effect on the low to very low income earning households and on recent
movers to the area. While NYC faces a mismatch in supply and demand of housing,
its rent and housing crisis is heavily influenced and exemplified on the income
inequality of NYC’s low to very low-income earners. 

Further into the reading I will analyze the
effects and causes of the continued population surge into NYC, and the
consequences recent movers and low-income households encounter with the
competition and limitation of the supply of affordable housing. I will also
analyze the stagnation of median wages in NYC over time and compare it to the
mismatch of the raising rent and housing levels. I will later address the slow
progression of low-income housing developments in NYC, due to capitalistic
construction being focused on urbanization and luxury development that favors
the higher income groups opposed to low income housing developments. Another
factor I will address is the inequality of Rent Control, and how long term NYC
renters are protected with exceptional long term rental deals, which help to
escalate properties that are unaffected by rent control. One of the largest
problems in rent and income inequality is the repercussion on households being
considered rent-burdened households (households that spend an annual gross
income of over 30% on their rent and utilities. The low to very low-income
groups are the groups that have shown to be most heavily affected, and I
believe this is one of the largest factors of low-income earner inequality in
correlation to the housing crisis.

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II. LITERATURE REVIEW/DISCUSSION

To start the attractiveness and
range of opportunities, work and entertainment that NYC possesses is a main
determinant of why these large numbers of people are flocking to NYC. Older generations
are tending to retire in the same NYC households, while young families,
businessmen and businesswomen actively enter NYC for work and family
development. The problem economist share is that the growth levels on NYC
population are not consistent with the growth levels of available and
affordable housing. Clearly NYC’s land space will not grow just because more
people wish to live in the city. NYC also has some of the most expensive and strictest
city construction laws, and regulations that hinder and inhibit development;
factors of this include limited storing space, constant traffic, density of pedestrians
and the increased desire for construction of wealthier clients over low income
developments. Other research conducted through NYC Bureau of labor statistics
has shown the effects of the slow growth of median wages in NYC on the
increasing growth of rent in NYC. “Between 2005 and 2012 (the most recent
year for which consistent data is available), the median monthly rent across
the City increased by about 11 percent, after adjusting for inflation. Over the
same time, the real income of the City’s renters has stagnated, rising from
$40,000 in 2005 to just $41,000 in 2012”[1]

As we can see from the data and figure there is a
significant disparity between the growths of median gross rent and median
renter income, as rent increases and wages decrease the pressure of living
increases heavily on NYC residents. The affects correlate to the majority of
NYC renters becoming rent burden residents. The determinants of what is
considered as a rental burden is, when a renters or households cost of rent and
utilities exceeds 30% of their gross income, severely rent burdened households
pay more than 50% of their gross income on rent. If a renter pays less than 30%
of their gross income on rent the rental is considered affordable. The combined
factors of scarcity of supply of rental properties, stagnant income/wages and
increased cost of utilizes/living have equated to large portions of rent-burdened
households.  Figure 2 from US data census
shows the percentage of renters faced with increased rent-burdened livelihood. This data from data
census shows “In 2012, almost 55 percent of all rental households were
rent-burdened, which is an increase of more than 11 percent since 2000.”[2]

While every income group reaps the effects on the availability of
affordable crisis the greatest impacts on the crisis of rental burden are on
the low to very low-income groups. The availability of affordable houses for
low to very low-income groups has had little to no growth or development. While
moving seems like a viable option, the process is incredibly costly and
difficult especially with low-income earners and their ability to survive and
find a new job during their relocation process. Low-income earners are stuck
with having to pay large percentages of their gross income just to put a rough
over their head. The US census Data and Housing Bureau estimated that there
were approximately one million low to very low income earning households
looking for rent in NYC but only about 425,000 rentals available that fit into
rental affordability for the various income earners bands.                                                                       Figure 3

To further demonstrate the
gravity of the inequality faced on low to very low-income earners on NYC rental
and housing The US Census on Housing and Vacancy broke down the availability of
affordable housing and the quantity of affordable rentals for specific renters in
each income distribution group and the gravity to which they are being
affected.

As you can see in the distribution in figure 4, the low to severely
low-income earner groups have significant percentages of rent-burdened and
severely rent-burdened situations over the higher income earners and the
availability of housing to meet their gross annual income. The higher income
earners face little to no repercussion of rent burden shown in the graph and
the quantity of rentals is much lower. This distribution shows that this
problem of inequality is systemic and is growing with the expanding population
and disparity of income distribution. Economist and census surveys have
determined some of the reasons for this growth in inequality have been present
in the development of NYC construction and its long term affects of rent
control.

            While some NYC
residents are protected by long standing rent-controlled units, which prevents
the increase of rent and utilities of a renter over period growth, this ability
of rent-controlled units is a very scare and sought after market. Figure 5 from
Rent guideline data reports show how scare rent-regulated units are in NYC, and
with the increased population growth the affects on the declining regulation
and mark up of above market wages.  The effects of rent control can also
dramatically increase the prices of unregulated rent controlled areas and
especially new movers who are prone to be charged with much higher rent prices.
 The reality may be that there are
affordable housing and renting in NYC, new renters just cant get because the
tenants hold onto these rentals for over 20 years. When above average income
earners/renters abuse the affordable housing market by clinging onto rentals
for extended periods of time they will effectively reduce the supply of
affordable housing for the new expanding groups of renters making their rental
prices higher to compensate for the rent controlled areas.

            Another variable in
the present inequality is in the new construction and development of NYC spaces.
NYC has been known for its leading progression of urbanization especially in
the luxury market, not only does primarily high end construction get done
because of the high price for land but also the high price of construction work
to be done. The price of construction in NYC in alarmingly high due to the long
list of construction requirements, labor union agreements and accommodations
and the limited working and warehouse space available in NYC. As the
construction process is more complicated in NYC due to these factors and
additional inspections and regulations this translates into forced higher rent
costs. It has also affected the addition of new low-income affordable housing
units becoming developed, because the costs don’t match the returns of
constructing and buying land with such high value pricing without balancing it
out on higher rent costs. The response to high pricing in construction is
either fewer properties are becoming constructed and developed or rent prices
need to increase. This problem in construction relates to the miss match in
supply and demand of the growing population and the slower growth of newly
developed building activity in NYC. Figure 5 represents the developments of new
housing construction in NYC and its slowed decline.                                      Figure 6

NYC’s Low to very Low-income groups has relied on
government funding and assistance on housing and the dependence of housing
owners and subsidy programs to support under market housing prices.  “According to the Subsidized Housing
Information Project maintained by the Furman Center for Real Estate and Urban
Policy, which tracks the four largest subsidy programs, 68,000 units of
subsidized affordable rental housing have opted out of those programs over the
last few decades.”[3]
The loss of support from Federal funding for housing and the reactivation of
subsidy programs for affordable housing has had significant impacts on
low-income earners. In recent years data has shown that NYC has reduced its
federal funding and voucher regulation for affordable housing. “NYCHA provides
about 91,000 households, and HPD provides about 32,000 households, with Housing
Choice Vouchers every year, so maintaining (and indeed, increasing) HUD’s
budget for vouchers is critical to the City’s ability to provide affordable
housing to the neediest families.”[4]
If this funding I severely decreased the low-income households will be greatly
affected by this insufficient funding for distribution of diverse housing. The
disregard of the effects on the availability and quilting of living of the low
the very low-income distribution is incredibly apparent.

CONCLUSION

In relation to my
question “why
does NYC have such a significant housing/rent crisis, and how does the
inequality of income distribution in the area have an affect on this crisis?”
It is evident that not only does NYC face additional problems with universal
housings/rent scarcity and increased population growth, but the most
influential affects are on those whom are burdened by low to very low income
gross and their ability for affordable rent/housing. Through US housing and
wage census data analysis the factors of this inequality lie in systematic
stagnation of wages of low-income groups with the increased rental price due to
the ineffective distribution and investment of federal funded housing programs
and the development, investment and availability of rentals that low to very
low income earners can access inside the city. Low income households and
renters are thus not protected from unregulated and increasing rents, to stay
inside the city renters are forced to pay high rent levels to the point where
they are becoming rent-burdened. The percentages of low-income earnings earners
rent-burdened levels compared to higher income earner bands are also a major
determination of the inequality of the housing crisis. Low-income earners are
trapped in a cycle of paying a large percentage of their gross income to avoid
homelessness. With little regulation or change and the increased population of low-income
workers and the demand for housing inequality in NYC housing has become a long-standing
problem, and effectively the largest in determining the inequality of
distribution of low-income earner groups of people through NYC.

Bill DeBlasio and NYC housing have started to
develop a 10 year housing plan that will help regulate and develop large
portions of affordable housing for NYC resident growth. The plan aims to
develop 200,000 more available housing units for low-income earners and
distribute their location to help enhance low-income neighbors and push back
the effects on low-income inequality. Plans to help diversify the housing of
income earner bands are included in the 10 year plan, with developing equal
spread of new affordable housing in all five of NYC boroughs, with proper local
investor and construction. The effects of the promotion of a mixed income
earning households and renters in a community would reap increased improvements
on the inequality of low-income communities and their standards of living.

 

 

 

•      
[1]
nyc.gov/housing Housing New York: A Five-Borough, Ten-Year Plan Bill DeBlasio

 

•      
[2]
nyc.gov/housing Housing New York: A Five-Borough, Ten-Year Plan Bill DeBlasio

 

[3]
Furman Center for Real Estate and Urban
Policy, Subsidized Housing Information

 

[4]
nyc.gov/housing Housing New York: A Five-Borough, Ten-Year Plan Bill DeBlasio