RGB Releases 2019 Income Studies

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.

Throughout the year, the RGB staff is responsible for providing administrative support to the board and year-round research efforts regarding the economic condition of the stabilized residential real estate industry. Section 26-510(b) of the Rent Stabilization Law requires the RGB to consider “relevant data from the current and projected cost of living indices” and permits consideration of other measures of housing affordability in its deliberations.

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.

Recently, the RGB released its 2019 Income and Affordability Study and its Income and Expense Study.

Income and Affordability Study Highlights

The study highlights year-to-year changes in many of the major economic factors affecting New York City’s tenant population and takes into consideration a broad range of market forces and public policies affecting housing affordability. Such factors include New York City’s overall economic condition—unemployment rate, wages, Consumer Price Index, and Gross City Product—as well as the number of eviction proceedings and the impact of welfare reform and federal housing policies on rents and incomes.

The following summarizes some of the data issued thus far that the RGB will consider before voting on the upcoming rent guidelines for rent-stabilized apartments:

• Results from the 2017 American Community Survey show that median renter income is $47,116, median gross rent is $1,379, and the median gross rent-to-income ratio is 31.7 percent;
• NYC’s economy grew by an inflation-adjusted 3.0 percent in 2018;
• Inflation-adjusted wages were up 3.5 percent in the most recent time period studied (the fourth quarter of 2017 through the third quarter of 2018);
• The city gained 86,600 jobs in 2018, a 1.9 percent increase from 2017;
• The unemployment rate fell in 2018, to an average of 4.1 percent, down from 4.6 percent in 2017;
• An average of 60,028 persons were staying in NYC Department of Homeless Services shelters each night of 2018, up 0.9 percent from 2017;
• Nonpayment filings in housing court decreased 4.7 percent in 2018, while cases actually heard decreased 10.5 percent. The number of tenant evictions fell 13.9 percent.
• Public assistance caseloads fell 2.8 percent in 2018, while the number of SNAP (food stamp) recipients fell 3.6 percent, and Medicaid enrollees fell by 7.8 percent.

Income and Expense Study Highlights

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 New York City’s rent-stabilized housing stock. This year’s findings examine the conditions that existed in New York’s rent-stabilized housing market in 2016, the year for which the most recent data is available, and also the extent by which these conditions changed from 2015.

From 2016 to 2017, Net Operating Income (revenue remaining after operating expenses are paid) grew 0.4 percent. This is the 13th consecutive year that Net Operating Income has increased. On average, in stabilized buildings, from 2016–17:

• Rental income increased an average of 3.0 percent;
• Total income increased an average of 3.0 percent; and
• Operating costs increased an average of 4.5 percent.