RGB Releases 2024 Income & Expense, Affordability, Operating Costs Reports

Operating costs rose an average of 6.1% between 2021 and 2022, while net operating income increased 10%.

The Rent Guidelines Board (RGB) is mandated by law to establish yearly rent adjustments for rent-stabilized apartments in New York City. The board holds an annual series of public meetings and hearings to consider research from staff and testimony from owners, tenants, advocacy groups, and industry experts. The RGB annually publishes six research studies that it uses to determine the rent guidelines:

• Price Index of Operating Costs
• Income and Expense Study
• Housing Supply Report; Income and Affordability Study
• Mortgage Survey Report; and
• Changes to the Rent Stabilized Housing Stock.

The RGB recently released its 2024 Income and Affordability Study, the Income and Expense Study, and the Price Index of Operating Costs.

Income & Affordability Highlights

This study highlights year-to-year changes in many of the major economic factors affecting NYC’s tenant population and takes into consideration a broad range of market forces and public policies affecting housing affordability, such as unemployment rates; wages; housing court and eviction data; and rent and poverty levels. Here are the highlights of this year’s report:

• Data from the 2023 NYC Housing and Vacancy Survey shows that rent-stabilized tenants (excluding those receiving rental assistance) had a median gross rent-to-income ratio of 28.8 percent. For all rent-stabilized tenants, the median household income was $60,000, median contract rent was $1,500, and median gross rent was $1,570. The vacancy rate for rent-stabilized units was 0.98 percent.
• The Consumer Price Index, which measures inflation, increased 3.8 percent in the NYC metropolitan area during 2023.
• Average inflation-adjusted wages were down 6.1 percent in the most recent time period studied (the fourth quarter of 2022 through the third quarter of 2023).
• Businesses within NYC added an average of 116,870 jobs in 2023, a 2.6 percent increase from 2022, and the average annual unemployment rate for NYC residents fell to 5.2 percent in 2023, down from 5.7 percent in 2022.
• Including asylum-seekers, more persons were in NYC Department of Homeless Services shelters each night of 2023, up 54.9 percent from 2022. Excluding asylum-seekers, rates increased by 9.5 percent in 2023.
• Nonpayment filings in Housing Court increased by 23.5 percent in 2023, while nonpayment cases actually heard increased by 34.5 percent. The number of residential evictions rose by 195.4 percent.
• Cash assistance caseloads rose by 12.7 percent in 2023, while the number of SNAP (food stamp) recipients rose by 1.3 percent, and Medicaid enrollees rose by 5.1 percent.
• As of March 25, 2024, the New York State Emergency Rental Assistance Program has made 232,085 payments on behalf of tenants for rent assistance within NYC. The average payment amount is $12,135.

Income & Expense Study Highlights

As part of the process of establishing rent adjustments for stabilized apartments, the RGB since 1969 has analyzed the cost of operating and maintaining rental housing in New York City. Until 1990 the board measured changes in prices and costs solely using the Price Index of Operating Costs (PIOC), a survey of prices and costs for various goods and services required to operate and maintain rent-stabilized apartment buildings, which include buildings that contain at least one rent-stabilized unit.

However, in 1990, the RGB acquired a new data source that enabled researchers to compare PIOC-measured prices and costs with those reported by owners: Real Property Income and Expense (RPIE) statements from rent-stabilized buildings collected by the NYC Department of Finance. These Income and Expense (I&E) statements, filed annually by property owners, provide detailed information on the revenues and costs of income-producing properties. The addition of I&E statements has greatly expanded the information base used in the rent-setting process. I&E statements not only describe conditions in rent-stabilized housing in a given year, but also depict changes in conditions over a two-year period.

Most important, I&E data encompasses both revenue and expenses, allowing the RGB to gauge the overall economic condition of the city’s rent-stabilized housing stock. Here are the highlights from the study:

• In 2022, the year for which the most recent data set is available, citywide average monthly collected rent for buildings containing rent-stabilized units was $1,578; average income was $1,769; average operating cost was $1,164; and average Net Operating Income was $605 per unit per month.
• The citywide adjusted Cost-to-Income ratio in 2022 was 62.9 percent. In Core Manhattan, the ratio was 60.6 percent, 3.5 percentage points lower than the city excluding Core Manhattan (64.2 percent).
• Rental income increased an average of 7.4 percent, total income grew an average of 7.6 percent, and operating costs rose an average of 6.1 percent between 2021 and 2022.
• Between 2021and 2022, Net Operating Income (revenue remaining after operating costs are paid) increased 10.4 percent for buildings containing rent-stabilized units.
• The growth in Net Operating Income (NOI) citywide was driven by Core Manhattan, where it rose 42.3 percent from 2021 to 2022. NOI in the remainder of the city rose 0.3 percent over the same period.

Price Index of Operating Costs

The Price Index of Operating Costs (PIOC) measures changes in the cost of purchasing a specified set of goods and services (market basket) paid by owners in the operation and maintenance of buildings that contain rent-stabilized units in NYC. Here are some highlights from the report:

• The PIOC for buildings that contain rent-stabilized apartments increased 3.9 percent this year.
• Real estate taxes rose by 3.2 percent primarily due to a rise in the tax rate for Class 2 properties.
• Insurance costs rose by the greatest proportion in this year’s PIOC, 21.7 percent.
• The Administrative costs component rose 4.6 percent.
• The Maintenance component increased by 3.5 percent.
• The Utilities component increased by 1.3 percent.
• The Labor Costs component increased by 4.3 percent, due to increases in wages for both union and non-union labor.
• The Fuel component was the only component to decrease, falling by 7.1 percent.
• Overall costs in natural-gas heated buildings increased 3.8 percent, while overall costs in fuel-oil heated buildings increased 3.9 percent.
• The “Core” PIOC, which excludes the changes in fuel oil prices, natural gas and steam costs, rose by 4.9 percent this year.
• Costs in pre-1974 buildings rose 3.6 percent, while costs in post-1973 rose 5.3 percent.
• The PIOC for buildings that contain rent-stabilized apartments is projected to increase 4.4 percent next year.