Submitted by Jabari Henderson-Brown, Dec 4, 2006 15:38

There is certainly a problem with the housing supply, but there is also increasing demand. People are coming to NYC everyday; its estimated that the population will grow by 1 million people by 2010. With the construction labor force already extremely low, its nearly impossible for the housing development industry to keep up with that rapid a population increase, especially when it comes to housing that is affordable.

Another influence on rising prices is the high cost of construction. Currently non-union labor is as much as union labor in the city. My theory is that the rapid expanse of the condo market here put lots of upward pressure on the price of construction labor. The problem is that the rental market didn't keep up with the condo market, so building a rental building didnt make sense. Now that the condo market is cooling and there are a shortage of rental buildings, developers are starting to build rental units. But in order to cover the high price of construction developers have to raise the rental prices.

As you said, rich people are not going to go homeless, and will be able to find housing no matter what happens. There is no housing shortage in NYC if you make money. If I made $300K a year, I could have an apt tomorrow with no problem. However, if I made $50K a year, thats a different story. And the problem is that you can't build a rental building thats affordable to people making $50K a year without subsidies. And instead of the city giving out millions of dollars in subsidies, which it does anyway, it forces developers to cross-subsidize using rents from the market rate units. If you are a person who is about to rent a 2-br for $4K a month, then the developer raising the rent to $4200 a month to offset the low rents of the affordable housing probably wont bother you.

Manhattan is an island, so there is only so much housing that can be built here. So instead of building out, you have to build up, and you need zoning restrictions so that every block isnt covered with 30story skyscrapers.

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