Why an income has gone down in the US will not go up again

When I was 25 and knew nothing about pandemics, I made a list in a small notebook of the things I hoped to achieve in my life. One of those goals was “Living in my own apartment at 37.”

Some people may wonder: why do I think it would take so long to get my own site? The answer: Manhattan rentals.

Just before the pandemic, the average rent for a bedroom across the United States was $ 968, according to The Apartment List. At the heart of The Big Apple, it was $ 2,703.

As a result, throughout my twenties, my friends and I needed to live with roommates, some of whom have been in their thirties or forties.

Living with strangers, eating with each other, passing them on with the bath towel, I wanted to have my own apartment, but I also resigned myself to not being able to do so for many years.

More information on personal finance:
Using deferred tax savings can help you get this $ 1,400 incentive check
How to make sure you don’t miss 1,400 stimulus checks in the mail
$ 1,400 could be adorned with stimulus checks for unpaid private debt

When the pandemic hit New York City in March and rents started to go down, I didn’t take it too seriously. Then they kept falling. In December, I realized that I could live alone a little more than I paid to live with three people.

Still, I told myself not to look at the listings. I didn’t want to grow my hopes. I knew these reduced rates were temporary.

And the idea of ​​moving to my own place at the end of my 20s, only having to move within 12 months when the rent came back seemed horrible. Like many New Yorkers (and Americans), I have seen family and friends escape from the apartments where they had lived for years and loved when they could no longer afford them.

Since rents in many U.S. cities have dropped over the past year, I imagine a lot of people are faced with the same stressful question: Take advantage of lower costs to move to a place you couldn’t afford before, but risk that You will have to abandon it when the pandemic ends and rents are likely to rise again?

Fortunately, my little sister, Janna, wasn’t so caught up in these questions. He graduated from college in pandemic and this experience has educated him in flexibility. She began working as a freelance video editor and soon found that she earned enough, with lower rents, to afford a studio in Manhattan. When she asked me if I would look at places with her, I said yes.

As the runner showed us several apartments on a Saturday morning in February, I felt those contradictory feelings, longing, and anxiety. Then the runner mentioned that the units were stabilized.

Was he feeling right? I asked him to repeat himself.

In all of the approximately one million stabilized apartments in New York’s five districts, homeowners have a limit on how much they can increase rent each year. Each June, the Board of Rental Guidelines votes on a permitted increase. Last year, in part because of the pandemic, the board decided landlords could not increase rents. Other years, the rises have been 1% or 2%.

As a result, the value of these apartments only grows over time. When someone moves to a stabilized rental unit in New York, the cost is usually about 7% cheaper than the market price, according to the results of Columbia Business finance professor Stijn G. Van Nieuwerburgh School. The same person living in that apartment about twenty years later will pay, on average, about 45% below market income.

Thus, the tenants of the stabilized apartments in the rent are reluctant to leave them, which makes the units almost impossible to find.

“A year and a half ago, a broker would have laughed in the face if he asked for a stabilized apartment for rent,” said Mike McKee, treasurer of TenantsPAC, a New York-based advocacy organization.

The pandemic has changed that.

There are no current data on the vacancy for stabilized apartments for rent across the city, but there are some indicative figures from the StreetEasy apartment list aggregator. They found more than 2,400 stabilized units for rent on the market in New York between January and February 2020, compared to 780 during the same months in 2019. You can search for these units in the app by adding the keyword “stabilized.” )

“Overall, we continue to see a huge accumulation of rental inventory in New York City as the rental market picks up from last year’s activity pause amid the pandemic,” the economist said of StreetEasy, Nancy Wu. “This means more options for tenants to choose from in all types of apartments across the city, including the rare and much-desired unit stabilized in rents.”

That Saturday evening, Janna and I requested two stabilized apartments, a bedroom for me and a studio for her. It took us 48 hours to receive news from the corridor, during which I drank a good amount of wine.

Most tenants in the United States are not covered by rent regulation laws and dozens of states effectively prohibit rental control policy. This means that many tenants can afford unlimited excursions from one year to the next.

But there is a growing movement across the country to regulate rents.

In 2019, Oregon became the first state to impose statewide rent control. Most cities in California now have some sort of limit on rent increases, while many other areas, such as Minneapolis, are currently moving to establish similar regulations. Rental control was approved this month in Ashbury Park, New Jersey. Albany and Rochester in New York have considered adopting an income stabilization policy like the one that exists in all five districts.

There have also been temporary rental freezes in response to the pandemic, including in Washington state, Washington, DC and some San Francisco Bay Area cities.

“There are tenants in all parts of the country who are organizing to control rent,” McKee said.

Landlord groups and some economists criticize rental control policies, saying they help some tenants stay home, but also discourage new construction, which holds back supply of units and ultimately reduces affordability. of housing.

Proponents say the policy should be part of a broader strategy to keep rents affordable, along with incentives for construction, but that regulation is needed with an unsustainable rise.

In 2015, more than a third of tenant households in the United States had a “charged rent,” meaning more than 30 percent of their income went to their income each month, according to Pew. This exceeds 19% in 2001. And nearly half of African-American-run rental homes are considered taxed.

“Rent control, especially when combined with other protections for tenants, is the only policy tool that can provide immediate relief to tenants facing unaffordable rent increases,” said Chris Schildt, senior partner of the PolicyLink Research and Defense Institute.

“Rental control particularly benefits people of color, low-income communities, the elderly, women, and families with children, who make up the majority of the rental population and with a rental burden.” , said Schildt.

After another night of restless sleep, I woke up Monday morning with an email from the hallway: Janna and I had been approved for the apartments.

A week later, I met up with the super who handed me the keys. For the first time at 27, I had my own apartment.

I got here exactly a decade before I planned it, and it’s best to know I could still be here a decade later.