Getting serious about housing in New York City

New York City Mayor Eric Adams wants to upend some of the comfy arrangements that have evolved over the years that block new housing from being built in most of the city and produce a never-ending housing shortage. Instead, he wants to build “a little more housing in every neighborhood.” The city’s proposals are a belated but welcome endorsement of zoning reforms that have taken hold across the nation, in politically diverse states from Montana to Vermont.  A review of the proposal suggests New Yorkers should support Adams’ efforts and try to make them even more effective.

For those who live in all but a handful of neighborhoods in New York City, little has likely changed over the past few years, at least in the physical sense. Sure, houses have become more expensive, and the people moving in recently probably have higher incomes than the people who moved in decades ago. But not much new housing has been built.

Perhaps, a homeowner might remember the neighborhood being “downzoned” to limit new construction. The idea was pushed by neighborhood associations circulating flyers asserting that without it, the beloved local “character” would be ruined by ugly new buildings. Residents probably didn’t think about it much, but homeowners might have realized that downzoning—making it harder to build more housing—was probably going to make homes worth more.

It’s a system that works well for incumbent homeowners but not so well for others, particularly newcomers who want to make their lives in New York City but struggle to find housing on the open market. Plenty of people have job skills that make them employable in any big city, but with residential real estate so expensive in New York City, they are often better off moving to some growing metropolitan area in the Sunbelt where they might get paid less, but housing is much cheaper.

While building more housing would be profitable in large parts of the city, it’s often blocked by restrictive zoning. Lifting those restrictions is a political problem because more housing brings more people and more traffic and makes it hard to find street parking. Many politicians also seem convinced that if the city allows more housing, developers will build high-end units pushing rents up even more and displacing the remaining moderate-income households in the neighborhood. Actually, the opposite is true—but many still argue that the only good kind of new housing is “affordable” housing, where the rents are set by the government at well below market levels. That requires public subsidies the cash-strapped city is less and less able to afford. New York City has also relied on an extremely costly off-budget tax subsidy for affordable housing, called Section 421a, that lapsed in June 2022 and that the state legislature has thus far refused to renew. Insisting that new housing be substantially “affordable” often turns out to mean no housing gets built at all.

Adams’ plan, called “Zoning for Housing Opportunity,” would reverse, in part, the effects of restrictive zoning that dates back, in some cases, to the 1930s. He identifies as a watershed moment the city’s comprehensive rezoning in 1961. Relatively permissive zoning, which allowed large amounts of new housing to be built in response to market demand, was replaced with a far more restrictive ordinance. This downzoning occurred just as the city’s population was changing due to an influx of African Americans and Puerto Ricans, later supplemented by foreign immigrants. The effect of restrictive zoning was to confine many of these newcomers to older, declining neighborhoods.

The city’s new zoning proposals challenge every talking point of housing opponents in the interest of addressing the supply shortfall. Worried about new, ugly apartment buildings in the neighborhood? The proposals would allow lots more, everywhere. Want cheap and plentiful parking? The proposal wouldn’t require any off-street parking for new residential buildings, making housing cheaper to build. Believe that the only good new housing is affordable housing? Adams would follow the lead of other states and cities, supported by the latest research, and allow lots more housing to be rented or sold at market rates. Housing abundance is better for affordability than a trickle of heavily subsidized “affordable” housing.  His plan would allow developers to construct larger apartment buildings if they include “affordable” units. Additionally, it recognizes this strategy also requires the state legislature to reinstate the expired Section 421a property tax incentive. In its absence, new, albeit smaller, apartment buildings could still be built.

“Zoning for Housing Opportunity” could be better. It needs to focus on building housing in areas with better transit service. To maximize benefits of transit-accessible housing, the city should be coordinating with the Metropolitan Transportation Authority to make public transit more frequent and reliable in parts of the city where more housing can be built. In places less proximate to transit, car ownership per household is currently high, and that may be true for residents of new units as well. In those neighborhoods, the new zoning can use simple site planning rules to preserve on-street parking and maintain an attractive streetscape.

On balance, however, there’s much to like. All New York City neighborhoods should share in the obligation to contribute to a solution to the city’s housing supply shortfall. Zoning should prioritize people over parking, and indeed, people over the much-abused concept of preserving neighborhood character. Making that a little less of a priority perhaps leaves homeowners a bit less well-off but opens opportunities to many others. Housing equity won’t be achieved until housing is in abundant supply. Adams is to be commended for joining governors, mayors and legislators across the country in recognizing this fact.

Eric Kober is a senior fellow at the Manhattan Institute.