NYC's Housing Crisis Worsens As Legislators Consider Band-Aid Solutions

As local politicians gnash their teeth over the outbound migration of New York City’s wealthiest residents, the city’s hundreds of thousands of lower-income renters are still at risk of mass eviction with little concrete relief in sight.

Many of their landlords could be forced to sell their properties to large corporate buyers if help doesn’t come soon, which tenant and landlord advocates alike fear would make the city less affordable.

With rent debt on the rise, landlords struggling to pay their mortgages and thousands of eviction notices already filed, an extension of the statewide moratorium will only buy the city time to see if Congress steps in with comprehensive relief, including back pay for the months that renters went without support. Without direct rental assistance, the city will be left with irreparable wounds in its rental market that only a painful correction could cure, housing experts say. 

“It’s scary anytime there is only one shot [at fixing the crisis] and you’re waiting on this one thing to happen that could not happen,” said Jay Martin, the executive director of the Community Housing Improvement Program. “It gets scary for both renters and landlords. 

The share of rental households that lost income between February 2020 and August 2020 in New York City, at 17%, exceeds the national average by 5%, according to the nonpartisan think tank Urban Institute.

The New York University Furman Center estimates that about 341,000 renter households in New York City with a total rent of about $580M have lost employment income, and 168,000 of those households were low-income before the pandemic struck, based on a new analysis of unemployment filings. 

Some 1.3 million renters nationwide are set to have $7.2B or more of rent debt combined by the end of 2020, according to an October report by the Federal Reserve Bank of Philadelphia. The vast debt owed has huge implications for the future of the city's rental market, which has already taken a brutal hit over the past eight months.

The pressure could not only push residents into homelessness when eviction moratoriums expire, but it could also lead to a mass corporate consolidation of rental housing. 

“Landlords are really quite stretched,” Urban Institute Policy Program Manager Kate Reynolds said. “The buck stops with the landlord, lenders aren’t providing much with leniency and multifamily loans have bad forbearance terms.” 

Some 31% of 1,381 landlords surveyed by the Urban Institute in October said they felt more pressure to sell their properties amid the coronavirus pandemic. That number increased for those who didn't receive full rent in September — 57% said they felt pressure to sell. If federal relief doesn't come, many of these landlords could give up their properties, and this will have distributional effects and will lead to less affordable housing, Reynolds said. 

While the affordability crisis has become significantly more dire since the onset of the pandemic, it has only exacerbated existing issues. More than half of New Yorkers were rent-burdened — spending over 30% of their income on rent each year — at the end of 2019.

Forty percent of low-income New Yorkers were already homeless or severely rent-burdened before the pandemic hit, according to an April report by the Community Service Society. The median rent-to-income ratio in New York grew from 40% to 52% between 2002 and 2017, the report showed.

Last year, 30% of low-income renters were behind on rent and 70% had not saved more than $1K in case of an emergency or sudden loss of income. 

“At the end of the day, people who were experiencing housing instability are more likely to experience it now,” Real Estate Board of New York Vice President for Policy and Planning Basha Gerhards said. “It is important for us to address some of the structural housing issues in the city that existed before the pandemic.”

As New Year’s Eve — the expiration date of both federal and state moratoriums — approaches, each respective government is trying to come up with a plan to delay a looming eviction crisis brought on by the pandemic’s wrath on the economy.

In Albany, there is a consensus that the statewide eviction moratorium will be extended, it is just now a matter of how and when. 

Gov. Andrew Cuomo has yet to extend the moratorium while state legislators are considering two pieces of legislation of their own: one would maintain the moratorium until an unspecified date to be determined by the legislature, while another — dubbed the Emergency Housing Stability and Tenant Displacement Act — would extend the pause on evictions until a year after the crisis ends, The Real Deal reported last week.

State Sen. Julia Salazar, who represents most of north Brooklyn, supports the latter. This kind of measure is the only way to truly provide comprehensive relief for those who would otherwise be at risk of homelessness as a result of the pandemic, she said in a statement to Bisnow. 

"The economic and public health crisis that our state is facing is far from over, which is why we must act to protect New Yorkers from eviction,” Salazar said in the statement. “With positive COVID-19 cases increasing again at an alarming rate, evictions aren't only unethical, but they are dangerous.”

REBNY also called for an extension of the statewide moratorium Tuesday, but one that addresses the needs of property owners as well as tenants. The group called for a coinciding extension for property tax payments and for new legislation that would decrease the interest rate for late payments. 

But even with an extension, housing experts say that a moratorium is a Band-Aid over an increasingly gaping wound in the current rental crisis. While it has led to fewer eviction filings this year than last, it does nothing to address the loss of income on both sides, said Charles McNally, director of external affairs at the NYU Furman Center. 

“The issue is sort of a kick-the-can-down-the-road type of situation,” he said. 

Meanwhile, congressional lawmakers say they are nearing a second coronavirus relief stimulus package, which would put direct relief into the hands of millions that have suffered income loss for the first time since the Coronavirus Aid, Relief and Economic Security Act was passed in March. 

Leaders from both parties and houses of Congress convened Tuesday to discuss the package, which could include an extended eviction moratorium and $25B for those who have fallen behind on their rent.

Without significant comprehensive direct assistance from the federal government, mom-and-pop landlords, and specifically many small landlords of color, will likely fall into foreclosure or be forced to consider selling to a corporate giant, experts say.

Black and Hispanic landlords were more likely to negotiate rent with their tenants and also more likely to take mortgage forbearance, according to a recent survey conducted by Urban Institute and the management platform Avail, whose clients are 53,000 small, independent property owners. This indicates that Black and Hispanic landlords want to keep their tenants and keep their buildings at higher rates, the report states. 

“People want to feel ownership of their community and they want the ability to build and accumulate wealth, that’s why Black property ownership is so important to Black communities,” Council of Urban Real Estate Treasurer Sonya Rocvil told Bisnow in June. 

These landlords are also more vulnerable: They have fewer properties on average and are more likely to have a mortgage. Thirty-eight percent of Black landlords surveyed by Avail and the Urban Institute made less than $75K a year, compared to 35% of Hispanic property owners and 28% of White landlords. 

“What we’re looking at is the possibility of a massive negative consolidation of the industry,” Martin said. “What many have speculated and what I believe is that there will be a period of tremendous pain, properties will go into foreclosure or they’ll be forced to sell before that.” 

A lack of direct relief before the moratorium is lifted could also ultimately push more low-income New Yorkers into homelessness or force them to leave the city, increasing a vacancy rate that has been on the rise since March, said Casey Berkovitz, a senior associate at nonpartisan think tank The Century Foundation who works on housing issues. 

Until direct rent relief comes, an extended eviction moratorium is a public health necessity, he said. Twenty-seven states lifted their eviction moratoriums at different points over the summer, leading to 433,700 additional coronavirus cases and 10,700 deaths, according to a study by public health researchers from Johns Hopkins University, Boston University, the University of California, San Francisco and UCLA. 

“The first and most immediate impact is the threat of evictions,” Berkovitz said. “Some number of people who face the threat of eviction are just going to leave New York City.”