New York City's housing production not keeping up with demand, report says

New York City’s housing production continues to fail to keep pace with surging demand, a problem that has persisted for decades, and isn’t even making up for the demolition and combination of apartments, according to a report issued Thursday.

“Housing underproduction has created a housing shortage that worsens quality of life for New Yorkers and drives away people, jobs, and commerce. It makes it harder for New Yorkers to find housing, harms the City’s tax base, and dampens its economy,” says the report, “A Building Crisis: The Quality-of-Life, Population, and Economic Effects of Housing Underproduction,” issued by the business-backed Citizens Budget Commission group.

The biggest burden is borne by the poorest New Yorkers, “though the impact is also felt more broadly — by New Yorkers who pay too large of a share of their income on housing, by those who pay higher taxes due to depressed economic activity, by those who leave the city to find more affordable housing, and by those who want to move here but do not because it is simply too expensive,” the report says.

The rental vacancy rate is at a historic low of 1.4%.

New York is behind Boston, Seattle, Washington, D.C., and other large cities by permitting a fraction of the housing those cities do, even as demand surges, according to a report last year from the Pew Charitable Trusts.

But Long Island is doing even worse than the city when it comes to building housing to meet demand.

Among the 100 largest counties in the United States, Suffolk and Nassau permitted less housing per capita from 2013 through 2022 than all but a single county in Ohio, according to Bloomberg News.

The housing shortage is a regionwide problem, driving up costs everywhere. In its report issued Thursday, the Citizens Budget Commission found the lack of housing dampens the city's tax base and hurts the economy — and that housing needs to be built “everywhere, for everyone” and more.

The report found the scarcity "traps people in place" and "drives up housing costs: the turnover rate for rental units — two-thirds of city housing supply — is 41% lower than the national average, and the share of renters of those who have lived in their unit for over a decade is 3.5 times higher than the national rate.

After reading the report, New York University Professor Mitchell Moss said that among places where housing ought to be built are on plots currently occupied by parking lots and garages where there is a lot of mass transit.

“New York City is now losing people because there’s not enough housing for those families who would love to stay here but can’t afford to,” Moss said.

Factors dampening housing construction are the sky-high cost of construction, land and overly restrictive zoning.

The nation's gross domestic product is reduced by at least 2% due to restrictive land-use policy. A recent estimate put that at $433 billion in economic output, the report found.

“Making room for more people to live in an economically prosperous region like New York is good for the overall economy, creating a virtuous cycle of job creation and wealth creation across the income spectrum,” the report says. “More abundant housing would allow New York City to accommodate more workers and reduce the share of income that current New Yorkers pay in housing costs.”

One of Mayor Eric Adams' signature policy proposals is called "City of Yes" — a plan to loosen the city's decades-old, and he argues, outdated, zoning rules. He wants to make it easier to build housing and convert disused office buildings into housing.

But even if the plan goes through, Moss noted, “It will take time.”

By Matthew Chayes

matthew.chayes@newsday.comchayesmatthew

Matthew Chayes, a Newsday reporter since 2007, covers New York City.