1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar

Mises Economics Blog

Vacant Apartments in New York City

July 18, 2009 9:52 AM by Robert Blumen (Archive)

We are shocked, shocked, to read in Gotham Gazette: Unlocking the Apartment 'Warehouse'

[a homeless advocacy group] found that 24,000 apartments could come out of the vacant buildings and lots they canvassed. The report noted that while the count only covered Manhattan, "highly visible clusters of boarded-up buildings in neighborhoods exist throughout the five boroughs." Picture the Homeless said that the vacant property could house the entire homeless population of New York City.

The report then goes on to ask why there are so many vacant apartments? According to a pro-landlord group:

  • "the property is tied up in an estate"
  • "the landlord might think that using the property would not be profitable"
  • "structurual problems with buildings"
  • "property owners who tired of managing"

Throw in a couple more reasons from the "Housing Not Warehousing Coalition"

"Warehousing today is all about gentrification. That's all it's about," he said. "If you're holding on to a building, paying and maintaining the cost of taxes, sitting on an investment you're not profiting from, it's for a reason, and it's because you plan on making more money in the future."

Making more money in the future: that sounds pretty evil, huh?. But wait, government to the rescue:

Councilmember Tony Avella, a Queens Democrat running for mayor, is working on a bill aimed at stopping landlords from keeping vacant property off the market.

How anyone can write an entire article about vacant housing in New York City and not mention rent control, or really any rational explanation for this phenomenon, boggles the mind. In one of the most crowded and expensive cities in the world why are there empty apartments? Are landlords stupid? Do they not want to make money?

That rent controls produce a shortage at the controlled price with reservation demand above the controlled prices is one of the most basic conclusions of economics.

All of the other problems mentioned in the article could be caused by rent control as well. Property tied up in an estate? Most business firms do not shut down when they pass into an estate, they continue to operate. The executors of the estate could still manage the property for income, like any other business, were there an incentive to do so. The property is not profitable? This might change if it could be rented at a higher price. Structural problems? Capital consumption common in rent-controlled areas because landlords try to cut costs rather than raise prices. Owners tired of managing? Why not hire someone to manage?

Anecdotally, I know of several instances of off-the-market property in San Francisco where I live and which has rent control. Owners have told me the reason is that, once you lease a property, you cannot terminate the rental very easily. This means that you cannot get the property back for your own use if you wish to use it for yourself or family members. (There are some exceptions to this, it's complicated...).

I'm not familiar in detail with the ins and outs of New York rent control. At one point in time, the rent control was associated with the unit, not the tenant, which provided a incentive for a property owner to with hold units to avoid establishing a controlled rent. I know that there has been some liberalization over the years, however, Wikipedia links to this New York Times article which states that the state legislature has made the rent control law even more strict.

Bookmark/Share | Comments (19)

Comments (19)

  • Brad

    Well I'm sure all these do-gooders have couches or even spare rooms. THOSE would house all the homeless too.

    Perhaps there is also reasons on the other side of the ledger as to WHY many of these people are homeless. Their behaviors and standards were suspect in the first place, for whatever reason, and the same reason the advocates aren't throwing open their doors to the homeless is the same reason those holding property for commercial reasons aren't either.

    I think someone should propose that all those people brimming with proposals on how other people need to dispose of their property should take one or two homeless people in first as a trial run.

    Also, can we project what is going to happen if vacant apartment owners are forced to house the homeless? Who is going to bear the risks? I think I can safely say that the vast majority of those homeless are not too particular as to which laws they follow. Who is going to pay and be responsible for the general lawlessness that will likely follow? One homeless person rapes another, does the "landlord" bear any blame? What happens when a particular building becomes a center for drugs? Are private insurance carriers going to have to raise premiums?

    Basically if the homeless were made up mostly of the portraited "family down on its luck" that the advocates showcase, then THEY would take them in for a spell. But the homeless are largely made up people whose mental capacities are limited, either by some congenital mental issue or addled by self medication gone wild. So much so that those who once may have cared for them as family or friends aren't supporting them. So if family and friends aren't a support system, and those who Care so much aren't throwing open their doors, why is the solution always then to Force a third party to give their rights?

    I guess it's always easiest to mail a fist to someone and pat yourself on the back about how much you Care without getting your hands dirty. It is pure evil how this equation has become the bedrock of "good public policy".

    Published: July 18, 2009 8:47 AM

  • iH8libertarians

    You're right, we should just take away all regulation and let these braniac small business people figure it out. After all, it can only fail so many times, right?

    Fool.

    NWO FTW!

    Published: July 18, 2009 10:56 AM

  • Matt Weber

    While rent control is inept for the reasons stated, supposing that these vacant buildings would house the homeless of NYC were rent controls to be removed is insensible. Even if the buildings were converted to apartments, which is by no means inevitable, the homeless couldn't afford them anyway.

    Published: July 18, 2009 11:20 AM

  • LightBringer

    Trolls on mises.org ^^. Libertarianism really *has* hit the mainstream.

    The government of the People's State of New York is insane. Suspension of 2nd Amendment rights: huge amounts of guncrime! Rent Controls? Noone has anywhere to live! Next I imagine they'll stop people intoxicating themselves so they can forget about being shot and homeless. Oh... wait...

    Published: July 18, 2009 12:02 PM

  • Mike D.

    Rent control is certainly an evil, but it is only one of the many, many ways the state creates a housing shortage, disproportionately harming low income residents. Housing safety regulations ensure that the homeless are deprived of better options, as do occupancy limits. Charles (Rad Geek) Johnson wrote a great article on the ways in which the state make war on the poor and homeless a few years back:

    http://www.thefreemanonline.org/featured/scratching-by-how-government-creates-poverty-as-we-know-it/

    Published: July 18, 2009 12:55 PM

  • Billy Beck

    Mike D. -- You bet, man. Blumen hits a point on time with the Gazette item, but there is a lot more to it than rent control. This country manufactures homeless people, at law.

    Here is another Freeman (from '94, and a fave of mine) article on point in a slightly broader dimension.

    Free Americans could -- and would -- produce their ways out of this sort of nonsense.

    Published: July 18, 2009 1:25 PM

  • nevins

    ...inexpensive boarding houses, rooming house, pensiones... and , yes, even dirt-cheap flop-houses ... used to provide low cost housing in NYC. My grandparents shared their modest 2-bedroom, "single-family" detached house with renters... to help pay the mortgage in NYC. It was commonplace.

    But a vast array of NYC regulations & taxes made simple boarding/rental arrangements totally impossible -- and that type of housing disappeared.

    Published: July 18, 2009 6:31 PM

  • left&lib

    Wow! I didn't know Mises.org had a blog How exciting!

    You'll all probably hate this, but while I agree that rent controls are a silly idea and inevitably lead to shortages, I'm not sure there's a "free-market" solution. People who are homeless simply lack the funds or ability to pay rent for private housing - maybe they can't find a job (10% unemployment) or perhaps they're mentally incapacitated. The only way some of these people won't die on the streets is if the government provides housing for them - preferably while also removing rent controls.

    Government housing projects can lower rental rates without draconian rental laws, by providing cheap, low quality housing to those who desperately need it while freeing landlords to charge as much as they want, without imposing rents on private landlords.

    NOT housing the homeless is actually incredibly costly to society. Homelessness often incapacitates people who would otherwise keep working, as they get used to and expect a life of endless panhandling. Homeless people require frequent emergency room care, which in total often ends up being more expensive than simply providing them with a room and a social worker who visits once a week... there's actually been a study to this effect which establishes that it's cheaper. Also, children often become homeless, and it's difficult to attend school and become a productive member of society under those conditions, or in government care. Being allowed to stay with parents in government provided housing is probably a better option than foster care for many of these children. There's a libertarian myth that if free housing was available, everyone would take it and stop working. This is a myth, because most people prefer to not live in government projects and will leave as soon as they can afford to do so. I believe that we all have a right to life, liberty and property, but that those rights are hierarchical in that order: the right to life is the foundation for the rights to liberty and property. We cannot have liberty if we are dead, which is why we are not free to kill each other. We can not own property if we are dead, which is why it is acceptable to tax private property to preserve life, and guaranteed emergency housing for the homeless would certainly preserve life, as it does in other countries. We in America supposedly have a right to life, and the sole legitimate purpose of government according to libertarians is to protect our rights. It's time to really think that through.

    Published: July 19, 2009 7:01 AM

  • left&lib

    nevins is right too; however, NYC youth hostels aren't regulated like apartments, but their rents are still higher than most homeless people could afford. NYC youth hostels give a good glimpse of what the best the free market can provide would be, just imagine them as long term flop houses for the poor as opposed to short term bunks for Austrians (like, from Austria).

    Published: July 19, 2009 7:15 AM

  • RWW

    Theft is theft, even with the best of intentions. The root of your problem is that you believe in positive rights.

    Published: July 19, 2009 10:09 AM

  • RWW

    To put it more simply, the "right to life" you advocate is really the supposed right of person A to force person B to feed and house him.

    What a sickening view of rights.

    Published: July 19, 2009 10:13 AM

  • Ghost

    left&lib,

    Thanks for contributing. Let me try to address some of your points.

    Your first point is that the homeless would die in the streets unless the government takes care of them. This may or may not be true. Government is not the only game in town for addressing the needs of the less fortunate. Private institutions often can and do fill this role. Moreover, if a government role in providing food and shelter for the less fortunate was completely eliminated and the homeless were quite literally dying in the streets, I feel confident a great many private citizens would be extremely disturbed by this state of affairs. Donations of time and money to private charities would probably increase substantially.

    I am, though, willing to concede that private donations may not be sufficient to address the needs of all homeless, so now we come to more of a moral argument. Your belief seems to be that everyone deserves at least a base level of food and shelter. However, what you seem to fail to realize is that providing this base level of food and shelter imposes significant costs on the rest of society. To provide a base level food and shelter will require the imposition of taxes on those who can actually support themselves. But what is taxation in essence? Isn’t it really forcibly taking the property of one person and giving it to another? Can that be anything other than theft? Allowing people to starve in the streets is not a good situation, but neither is an environment where theft is society’s modus operandi.

    Your last point is that helping the homeless will provide benefits to others besides just the homeless, in other words, government support for the homeless will produce a positive externality. Theoretically, this may be the case. However, it is not a self-evident proposition. It may be just as likely that the level of taxation to support the homeless will produce large negative externalities. People generally require financial incentives to produce the goods and services that other people demand. To reduce these incentives by the implied taxation needed to support the homeless would mean people would be less likely to engage in the activities that lead to economic growth and a higher standard of living. They would spend less time on productive activities and more time on leisure. This shift would diminish the variety and quantity of goods and services available, so that would mean fewer medical advances and other innovations and, ironically enough, a lower level of housing.

    You may argue that the positive externalities from providing housing to the homeless may outweigh the negative externalities of higher taxation, but I don’t know of a way you could prove this. On the other hand, I can’t prove that the negative externalities will outweigh the positive, but at least I can point to the size of the taxes themselves as a definite, quantifiable cost of your way of helping the homeless.

    Published: July 19, 2009 10:33 AM

  • Vanmind

    Or, Ghost, one could point to the flawless historical record of encroaching socialism worsening human suffering.

    Published: July 19, 2009 4:07 PM

  • left&lib

    "what is taxation in essence? Isn’t it really forcibly taking the property of one person and giving it to another? Can that be anything other than theft?"

    You are entirely correct; taxation is always theft.

    The moral question is, is theft always wrong? A murderer claims through his actions that his right to liberty supersedes the rights of others to life. Clearly, this is wrong; the right to life (or your right to not have your life prematurely taken by one or many people) is more fundamental than the right to not be interfered with by police (if you really think there's a difference between negative and positive rights, other than phrasing). So, society is perfectly justified in curtailing the actions of citizens when they cause the deaths of other citizens. This much is self-evident.

    The right to liberty is real and must be protected, but it stems from and is subordinate to the right to life. The question here is, is a starving man acting correctly if, unable to attain food by other means, he steals bread to feed himself or his family? Any decent person would say no, or at least say so with his actions were he in such a fix. Let's imagine another scenario: 5 men are in a life boat, a month from land. There are enough supplies for all 5 men to reach land. However, one man, (a real bastard), has a deed to all of the supplies and hopes to sell whatever he doesn't consume personally upon landfall. He tells his 4 fellow shipmates that as he retains the deed to all supplies and does not wish to share, the only moral thing for the other four men to do is to die. Do you really believe that the moral course of action for the four men would be to starve to death, in deference to the deed of the fifth man?

    In fact, the four men have a claim on the property of the fifth man to the extent that they require it to live and have no other ready options to attain alternatives. The moral, just and righteous course of action for them is theft.

    Personally, my ideal solution to such problems is not taxation. The national currency already does in theory (or should) belong to all of us. It is, after all, the *national* currency. Profits which currently accrue to private individuals and organizations through the creation of the national currency through private banking are more than sufficient to provide subsistence-level food and housing to all citizens, without any taxation-theft from anyone whatsoever, simply by re-nationalizing what should rightly be national; that is, the origination of the national currency. The first step towards that is, of course, the abolishment of the Federal Reserve and the restoration of the ability of the Congress (and the States) to create currencies directly.

    Published: July 20, 2009 5:30 PM

  • mike

    "Let's imagine another scenario: 5 men are in a life boat, a month from land. There are enough supplies for all 5 men to reach land. However, one man, (a real bastard), has a deed to all of the supplies and hopes to sell whatever he doesn't consume personally upon landfall. He tells his 4 fellow shipmates that as he retains the deed to all supplies and does not wish to share, the only moral thing for the other four men to do is to die. Do you really believe that the moral course of action for the four men would be to starve to death, in deference to the deed of the fifth man? In fact, the four men have a claim on the property of the fifth man to the extent that they require it to live and have no other ready options to attain alternatives. The moral, just and righteous course of action for them is theft."

    Poppycock. The moral course of action would be for the four shipmates to refuse to cooperate with the fifth man in piloting their vessel until they reach an agreement on sharing supplies. Without the cooperation of the other four in piloting the boat, the fifth man might well die too. No theft required.

    Yet society is not five chaps in a tub, nor can you just march the ethics off of the political plank like that.

    Rich people already cooperate with poor people in the provision of everyday goods and services by producing the capital goods necessary to supply such goods and services.

    This cooperation, however, is hampered by price controls, mandatory insurance and arbitrary and unintended consequences of political regulation.

    It is not that the fifth man doesn't want to cooperate, it's that the other four would seek to dictate the terms of this 'cooperation' (being, you know, bastards).

    Published: July 21, 2009 12:16 PM

  • left&lib

    Point taken; strikes are a great way for non-capital owners to negotiate wages. I suppose a more accurate analogy is if the fifth man owns the deed to the boat and decides he's rather not have the other four in it, and asks them to jump off. This is pretty much how many people become homeless; they lose their job or their money to a misfortune, can no longer afford market rental rates and are asked to "jump ship" into the streets, where they will have a very low life expectancy if they can't find more work and fast. Would you jump ship in deference to a deed, or would you commit trespass and prefer infringing on the ship owner's property rights to floating on your own in the sea? Of course you'd trespass, and not lose any sleep over it, because there's nothing immoral about doing so. Individual landlords shouldn't have to subsidize individual tenants who can't make rent, but society as a whole has no right to ask people to endanger their lives living on the street because they're short of funds. When society does this and fails to provide emergency necessities to its members, it creates an entire class of people who are entirely within their ethical rights to steal. A man is entirely ethically justified in turning to property crime if he's exhausted his legitimate possibilities for acquiring funds and if he fails to acquire funds he or his family will suffer real physical harm. All denying subsistence as a right does is increase crime, and worse, it makes property laws themselves illegitimate insofar as they jeopardize life.

    I myself am of Irish heritage, and it's interesting to note that the Irish potato famine, in which hundreds of thousands perished, was so severe party because of British insistence on property "rights." Many farms in Ireland were still producing good food during the famine, but it was argued that the landholders had a "right" to sell their produce to whomever would pay the highest price. The Irish peasant class, having no money, could not afford market prices for food raised in their own nation, so food grown in Ireland was exported to France and other markets which could afford to purchase it at higher rates. This is actually a point of origin for many of the arguments in favor of "free trade" and "free markets." The result of the failures of the potato crops which were grown by small landholders and peasants and the export to richer nations of much of the food which was still produced was of course free trade, free markets, and corpses lining the streets. I support free trade and free markets, but their function is to serve society, not rule over it.

    Published: July 21, 2009 3:25 PM

  • Ball

    You may wish to read this article on the Potato Famine:

    http://mises.org/daily/2978

    Published: July 21, 2009 4:42 PM

  • Billy Beck

    "The moral question is, is theft always wrong?"

    As sweetly as it can possibly be put: come get some and find out.

    That's all there is left to say to ethical deformities like that.

    Published: July 21, 2009 5:32 PM

  • mike

    "Point taken; strikes are a great way for non-capital owners to negotiate wages."

    Point entirely missed. I humoured your analogy that was all.

    "This is pretty much how many people become homeless; they lose their job or their money to a misfortune, can no longer afford market rental rates and are asked to "jump ship" into the streets, where they will have a very low life expectancy if they can't find more work and fast."

    To say "many" people jump ship because of "misfortune" is to mischaracterize what is happening. Price controls, taxation and especially political regulation of industry all make such "misfortunes" more likely. In case you miss the point again - such "misfortunes" are not metaphysical, they are man-made (one might even say "mass-produced").

    Government is not always the sole source of such man-made calamities however. I hear a biscuit factory in the Bronx has just lost its investors and is about to be shut down - why? The workers went on strike for 11 bloody months, their case was even upheld by a court apparently.

    You know what? I chatted about this case with a customer of mine on Monday - he told me that in his country - Taiwan - an 11 month long strike over pay and benefits would simply be unimaginable in any industry, i.e. people would never dream of doing it in the first place let alone actually do it AND have it upheld in court.

    "When the State strangles entrepreneurial production and individual citizens fail to stop this emergency, it creates large numbers of people who are vulnerable to a class of disease known as "decivilization" in which they no longer view society and its' attendent political rights as a means of survival."

    See how I voluntarily tidied that up for you out of the goodness of my heart?

    Published: July 21, 2009 7:42 PM

Post an intelligent and civil comment

(Please allow up to one minute for your comment to be processed.)