The Results of Professional Journalism: Economic Ignorance
Generally when I read an article from the AP wire, I expect a piece that sticks to the facts. I found one Friday about housing in NYC that could not be more wrong.
According to Citi Habitats, a Manhattan rental brokerage firm, rental rates have risen in Manhattan to $2,000 a month for a studio apartment. Where this story gets interesting is the explanation for the steep rising in housing costs.
The report reflects that "we're the center of everything," said Citi Habitats spokesman Christopher Dente. "There's a lot of relocation—thousands of people are coming in."
He attributed the bulging rents to the city's strong economy. In addition, the U.S. dollar is low against foreign currencies, "and we're a very popular destination for foreigners," Dente said.
What stood out to me was a sentence buried towards the bottom of the article.
"The study also does not include Manhattan apartments subject to rent control or rent stabilization—at least 10 percent of available properties."
This is preposterous! What sort of study ignores the primary cause of a phenomena? NYC has long had some of the highest housing costs in the country which can be directly (and almost completely) attributed to rent control.
I suppose I can't blame City Habitats for putting their corporate spin on this story (er, press release). What is shameful is the Associated Press running this press release as a real story. I'll have to ask Andrew Keen this evening during our interview if this is an example of professional journalists providing real analysis and in-depth coverage.
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Average Rents, Not the Reason for Them
Will, the study by Citi Habits examined average rents, not the reasons for those rents. In other words, the study set out to identify how high rates had gotten, and found the averages you mention. The reasons given were just off-the-cuff statements by the company spokesman and they were dumb reasons. But I don't think this is the best evidence of professional journalism gone astray.
Having lived in Manhattan a few years ago, where 3 of us paid $2750/month for a 650 sq. ft two-bedroom, which we converted to a three-bedroom by walling off half-the tiny living room (my bedroom was 7X9), I have some thoughts on the subject. Rent control is certainly a factor but there are a lot of other factors. As the article points out, demand definitely matters, with a less-than-1-percent vacancy rate, you can charge a hell of a lot for rent. And when buying property cost so much (some friends of mine recently bought a one-bedroom basement/garden apartment in Brooklyn for just under half a million), you end up with a lot of renters willing to pay. Plus, wages are generally higher there, too. That's probably a result of the high rents but it also helps to keep those rents in place by providing willing renters.
In general, I tend to agree with you that there's a lot of pathetic journalism out there. Maybe I've become too de-sensitized to it now, but I just don't think this is a particularly striking example.
Dustin Kidd
Dustin: the reason that this
Dustin: the reason that this IS a striking example of bad journalism is the fact that rent control is specifically mentioned in the article as a non-factor when in fact it is the primary factor.
The big issue in Manhattan isn't the demand; its the supply. Rent control in particular has created a situation in which it is almost impossible to create more supply. It also encourages many landlords to not invest in their property; afterall, what will pay for the improvements if the rent stays the same for 20-30 years?
Hey, I agree that it
Hey, I agree that it matters, but I have a really hard time believing that rents would be significantly lower without rent control. You can't dismiss the kind of demand so easily. And considering that New York is the biggest city in the US, and three quarters of its residents rent, the supply is pretty high as it is. And frankly, there's new buildings going up all the time.
Dustin Kidd
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