Get ready. The Albany legislative session has begun and we are going to tell you how housing discussions may shape up. Plus, we talk about how some politicians want to get campaign contributions from the real estate industry, even though they swore them off a few years ago; what happened? And home ownership is down in New York and we think that co-op conversion restrictions might be why. 

Let's start housing New York.  

[THEME]

“We need 800,000 units to meet the demand today. What we have right now in the United States and what we have right now in New York City is almost a crisis of absurdity. And we all must move from the position of No and say Yes. Housing will finally allow us to turn three generations of No into a city of Yes…”

[INTRO]

I'm Kenny Burgos, the CEO of the New York Apartment Association. Every week I discuss the news and stories impacting housing policy, and we try to make things a little better. 

I'm excited to announce that we have a new magazine, Housing New York. It's dedicated to the stories, challenges and triumphs shaping housing across New York. By the time you're hearing this, our very first edition should be arriving in members' mailboxes. It's packed with content you won't want to miss, from a detailed look at housing court, the state of rent-stabilized housing, and updates on key issues that impact the industry. We hope you enjoy it. And please send us feedback; we welcome it. 

We're taping this on Monday, January 13th. Now it's time to get to the news. 

[01:28] [The view from Albany]

We start the podcast in Albany, where I'm off to as soon as we finish taping. The legislative session is underway, and Governor Hochul's State of the State is this week, and we'll see from the second floor what the governor's proposing and what they're planning to do for New York this year. So we'll have a lot more to say about that next week.

But this week, I thought it would be good to level set and talk about where we are starting from this session. The reality is that lawmakers are unlikely to focus on housing policy issues this year. That's because they passed a slate of reforms last year, and they typically want to wait and see how those changes work before they do anything new.

That may not fly though. Housing affordability is still a top concern of voters, so the status quo won't cut it. Also, lawmakers just got re-elected, or elected for the first time. They're typically more productive in the odd years, because they are campaigning for re-election in the even years. So there could be an appetite to try and get things done this session. 

In Albany, policy changes only happen if there are champions to push them through. This could be the governor, or a legislative conference. But if nobody is actively pushing for the creation of more housing, then it's not going to happen. So we're hopeful that the governor takes on that mantle in her speech later this week.

If she doesn't, then it would fall on the Legislature to make it a key issue in this year's session. We will be providing weekly updates on things on the podcast.  

[02:47] [Mayor Adams’ State of the City]

[Audio: January 9, 2025 Mayor Adams’s Fourth State of the City Address]

[Mayor Eric Adams] “...it took real teamwork to get this done. New York City is finally becoming a City of Yes, a City of Yes…” (applause)  

[Kenny Burgos] Mayor Adams gave his State of the City Address last week with a focus on families and affordability.

[Mayor Adams] “We said Yes to 80,000 new homes. Yes to $5 billion for housing and infrastructure, and Yes to making sure more families can afford to live all across New York City.” (applause) 

[Kenny Burgos] One of his proposals was a housing pledge to build 100,000 new units of housing in Manhattan over the next ten years. 

[Mayor Adams] “We start to use the new zoning tools we secured from Albany and our City of Yes plan to add a hundred thousand new homes in Manhattan. Reach a total of one million homes in the next decade – one million homes in the next, new decade…” (applause)

[Kenny Burgos] He plans to do this using the denser rezoning made possible by the city of Yes for housing opportunities. Office to residential conversions and the revival of state taxes for new development.  

The mayor has been consistent in his pledge for abundant housing. The recent proposal is just the latest zoning proposal he has pushed. But rezoning alone will not be enough to get there. We need to also ensure we are preserving the existing affordable housing, lowering the cost to maintain housing, and ensuring there are pathways towards home ownership.  

Lawmakers control so many of the costs associated with housing, including property taxes and utilities. They could also ease insurance, which is one of the biggest burgeoning costs – especially outside of the core of Manhattan. 

Any attempts to address the housing crisis and the affordability crisis need to focus on all things impacting supply; and that includes regulations that are leading to a loss in existing housing. 

[04:29] [Is the ‘real estate pledge’ dead yet?]

Next up, we wanted to talk about a story in City & State Magazine. They wrote about how many candidates running for New York City Mayor are willing to accept campaign donations from the real estate industry, even though they pledged not to a few years ago. 

The analysis around this was pretty clear: The candidates see no benefit from taking a position against the industry anymore. That begs the question, why did they think there was a benefit to making an anti-real estate pledge before? 

The answer to that is pretty simple. They were threatened in the past by certain advocacy groups. They responded to that threat, but ultimately, they saw no real political benefit in doing so. 

It is clear that the political reality has changed. Public sentiment is overwhelmingly in support of housing abundance, which is the path to lower rent, better housing, more choice over where you want to live. The majority of voters realize this and the majority of politicians now realize that the industry needs to be partners to make this happen. 

This shift is not due to ideological change by elected officials. It is just a reminder that most are pragmatic and reactive. This is why NYAA's path forward is to continue to educate voters on good housing policy, as well as elected officials, because moving public sentiment moves politicians more effectively than direct appeals to our leaders.  

[5:45] [‘Warehousing’ update]

Let's talk about “warehousing,” a term often used negatively by some tenant advocates and lawmakers who are attacking the owners of rent-stabilized housing for political gain. 

The idea is that owners will deliberately keep their units off the market until the laws change or the building is empty, so they can take the building out of rent stabilization entirely.

Last week, The Real Deal wrote about how, for years, there have been claims of tens of thousands of units being warehoused, despite a lack of data supporting this claim. In fact, bills intended to count these warehoused units have pretty much flopped because nothing nefarious is happening.  

What is happening is logical responses to current laws. If a private owner is going to lose money renting a unit, they aren't going to rent the unit. 

Currently, there are more than 366,000 apartments in New York City that rent for less than $1,450. These apartments don't cover operating costs on average. When one of these units becomes vacant, property owners calculate the financial viability of renovating and re-renting them. In most cases, the unit either sits vacant permanently or turnover is delayed for months or years. It's the most responsible thing to do for a building owner when they are facing renovation costs that often run close to $100,000. 

If lawmakers wanted to get these apartments back on the market, they need to create an incentive to make that happen. 

Some lawmakers have suggested penalties, fines, or taxes; those are unconstitutional. Even lawyers representing tenant groups say it's unconstitutional. So there is no stick available to lawmakers; they need to provide a carrot. That could be a government subsidy, but considering the limited budget available, the most logical solution to this problem is – and has always been – a change to regulations. 

At NYAA, we are talking to the governor, the mayor, members of Congress, the state Legislature, and the City Council about this. Because if you care about supply, you need to fix this. 

[7:41] [Co-op & condo conversions are declining]

We're going to end this podcast today by discussing home ownership. In New York, two-thirds of people are renters. For most, home ownership is completely out of reach. This is because the average home price in the metro area is more than $750,000. In Manhattan and Brooklyn, it's even higher.

One of the reasons prices continue to rise is because of changes to the laws In 2019. Before then, hundreds of rent stabilized buildings each year would convert into co-ops or condos.

The process was actually really good for renters looking to own their homes. For example, let's say the new condos were going to be for sale for $500,000 after a conversion. The negotiation with the renters in place usually landed with them buying their apartments for close to $350,000  or less. And in most cases, the tenant wouldn't have to put down any money to buy it – they could just secure financing from a bank for the full $350,000, based on the fact that the value of the apartment was $500,000. 

Changes in the law have basically ended the conversion practice. Now we see a dozen a year, if that, and the people most hurt by this are renters who are hoping to one day own a home.

The old system was a great deal for renters. They would become homeowners overnight and have hundreds of thousands of dollars in equity immediately. 

We think this area of the law should be revisited. This is a great pathway for working families to get homeownership. We don't have to go back to the exact same system that was in place before, but we should be able to craft a pathway to make this an option again. We hope to have conversations with renters about this in 2025, empowering them to advocate for change. 

[OUTRO]

That does it for our podcast. A quick reminder for building owners: January 15th is the deadline for the State Fire Notices. We take fire safety very seriously and members of NYAA can reach out to us for help with compliance. 

Also coming up this week will be the notices of property value for owners, which is how the city raises your property taxes each year – even though your building's actual value declines. We're going to be talking a lot about this in next week's podcast.

As always you can get updates by following us on social media. We are @housingny on most channels. We're still figuring out how to best use Blue Sky, but there we are just @housing. 

The Housing New York podcast is a proud product of the New York Apartment Association. Please keep sending us feedback on our website or in the comments below. You've been listening to Housing New York with Kenny Burgos, and I'll see you all next week.

And remember, good housing policy starts with good conversation.