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An building with income-restricted apartments in Brooklyn. (Adi Talwar\/City Limits)<\/p>\n\u201cThe core problem with New York\u2019s housing affordability is not, at its heart, a rent regulation problem. It is a divergence problem. Rents for existing affordable units have become increasingly affordable over time, while rents for new \u2018affordable\u2019 units \u2026 have become increasingly unaffordable.\u201d<\/p>\n
An building with income-restricted apartments in Brooklyn. (Adi Talwar\/City Limits)<\/p>\n
New York City\u2019s housing debate tends to produce a lot of heat and very little light. Every spring, landlords and tenant advocates face off at the Rent Guidelines Board. Every few years, a mayoral candidate promises to solve the affordability crisis. And every year, the underlying structural problem\u2014a widening divide between the tenants who already have affordable housing and everyone else who needs it\u2014gets a little worse.<\/p>\n The data tell a story that neither side wants to fully acknowledge. Existing affordable housing has quietly gotten more affordable over time. New affordable housing has gotten dramatically more expensive. And the policies we spend the most energy debating are largely beside the point.<\/p>\n The Tenants Already Inside Are Doing Better Than You Think<\/p>\n When you adjust for inflation, a striking pattern emerges. Since 2007, actual median family income in New York City has grown by about 13 percent in real terms<\/a>. Over that same period, the cumulative rent increases approved by the Rent Guidelines Board total roughly \u22122 percent in real, inflation-adjusted terms<\/a> \u2014 meaning a tenant who has been in a stabilized apartment since 2007 is paying meaningfully less of their income on rent today than when they moved in. Their rent has declined in actual purchasing power.<\/p>\n This is not an accident. The Rent Stabilization Law <\/a>directs the RGB to weigh the operating and financing costs of rent-stabilized buildings\u2014taxes, insurance, fuel, labor\u2014and to set guidelines that reflect those costs while maintaining \u201creasonable rents.\u201d The board is not tasked with tracking tenant incomes. But in practice, the increases it has voted over the past two decades have consistently run below both inflation and income growth\u2014a pattern <\/a>the New York Apartment Association has documented<\/a>, noting that from 2013 to 2024, cumulative RGB one-year guideline increases for a representative Bronx apartment produced rents roughly 15% below where they would have been had increases tracked the CPI-adjusted commensurate adjustment over the same period.<\/p>\n That gap is a compounding benefit for long-term tenants. It is also, increasingly, a crisis for the buildings they live in. The RGB\u2019s own data <\/a>shows its Price Index of Operating Costs has risen between 5 and 8 percent annually in recent years, while approved increases have repeatedly fallen short. As I wrote in an earlier piece for Vital City<\/a>, this gap has been measurable for years: in 2025, 10 percent of rent-regulated buildings already report operating costs equal to or greater than their rental income, and i<\/a>nflation-adjusted net operating income for pre-1974 100 percent rent-stabilized buildings outside the core of Manhattan has dropped 25.2 percent since 2019, reaching 35 percent in the Bronx<\/a>.<\/p>\n So yes\u2014for tenants lucky enough to be inside the system, the deal is getting better every year. That divergence is also why, as I have argued in Vital City<\/a>, the RGB should differentiate its annual guideline by building age, size, geography, and resident income rather than applying one uniform increase across roughly a million apartments.<\/p>\n But New Affordable Units are Increasingly Detached<\/p>\n The picture inverts the moment someone needs to find a new affordable unit.<\/p>\n Rents in newly constructed affordable buildings aren\u2019t set by the RGB. They\u2019re based on a federal metric called Area Median Income (AMI)\u2014a government-calculated benchmark for what counts as \u201caffordable\u201d rent. But as I\u2019ve detailed <\/a>before, when the federal High Housing Cost Adjustment (HHCA) is applied, AMI becomes tied to market rents rather than to actual incomes.\u00a0<\/p>\n The adjustment pushes the official benchmark upward in expensive housing markets\u2014pegged to what rents cost rather than to what residents earn. For 2025, New York\u2019s official AMI for a family of three was $145,800, while the U.S. Department of Housing and Urban Development\u2019s own calculation of actual median family income for the same area was approximately $103,000. The HHCA accounts for a gap of roughly 33 percent.<\/p>\n Because affordable rents are set as a percentage of this inflated AMI\u2014not of real incomes\u2014they have risen in lockstep with market rents, not with what New Yorkers take home. Since 2007, the AMI figure used to price new affordable units has risen roughly 45 percent in real, inflation-adjusted terms<\/a>\u2014more than three times the growth in actual household incomes over the same period. This system means that these projects remain financeable from a development perspective, but not that they remain actually affordable.<\/p>\n As an example: if a family moved into a rent regulated two-bedroom apartment in 2007 and were paying the \u201cfair market rent\u201d of $1,182 per month. After 17 years of modest RGB-governed increases, they would be paying around $1,824 today (well below the cumulative inflation rate over that period). That same two-bedroom, newly constructed and priced at today\u2019s 100 percent AMI rate would rent for approximately $3,645. A gap of over $1,821 for an apartment carrying the same \u201caffordable\u201d label. It is also worth noting that <\/a>once a tenant qualifies for an income-restricted unit at the time of entry, they can remain regardless of subsequent changes to their income<\/a>. The long-term stability that comes with a stabilized apartment is itself a form of economic security\u2014one that accrues only to those who got in.<\/p>\n To put this in context, according to New York City construction cost data compiled by the New York Building Congress<\/a>, actual construction costs in New York have risen roughly 35 percent in real terms since 2007\u2014significant, but well below the 45 percent real increase in AMI-linked rents over the same period. In a rational market, you would expect that if the allowable rents for new \u201caffordable\u201d units were outpacing the cost of building them, one of two things would follow: more new affordable buildings would get built, or developers would price units at lower AMI bands. Neither has happened at a meaningful scale.\u00a0<\/p>\n New York City\u2019s affordable housing programs require developers to deliver a specific share of units at a blended average AMI in exchange for tax abatements or zoning bonuses. Developers reasonably select the menu option that maximizes return, not adding additional or more affordable units unless explicitly required. The other factor is financing: rising cap rates and borrowing costs have consumed whatever margin the inflated AMI rents might have freed up. The HHCA\u2019s ratcheting of permissible rents upward has therefore largely transferred value to private capital rather than producing more housing or lower rents. It has made new \u201caffordable\u201d units more expensive without making them easier to build.<\/p>\n These two things are not contradictory. They are the logical outcome of a housing system where the existing stock gets cheaper in real terms every year while the cost of creating new stock keeps rising \u2014 and where the benchmark used to set \u201caffordable\u201d rents is calibrated to market conditions rather than to what New Yorkers actually earn. The lucky tenants who secured a stabilized apartment years ago are beneficiaries of a remarkably good deal. Everyone who needs housing today is not.<\/p>\n Where We Go From Here<\/p>\n The core problem with New York\u2019s housing affordability is not, at its heart, a rent regulation problem. It is a divergence problem. Rents for existing affordable units have become increasingly affordable over time, while rents for new \u201caffordable\u201d units\u2014anchored to an AMI metric untethered from actual incomes \u2014 have become increasingly unaffordable. The two categories now describe almost entirely different housing markets, despite carrying the same label and being subject to the same yearly rent increases (or freezes).<\/p>\n Closing that gap requires movement in two directions simultaneously. On the older existing stock, the RGB should allow higher annual increases\u2014calibrated by building age, size, and geography\u2014particularly for buildings whose rents have fallen furthest behind real operating costs. That would provide a more sustainable financial foundation for the buildings where most long-term affordable tenants actually live.<\/p>\n On the new construction side, the goal should be to bring future affordable units into actual relation with the incomes of the New Yorkers they are meant to serve. That means moving away from the HHCA in setting affordable rents\u2014a shift the city and state can pursue inside their own subsidy and zoning programs, where eligibility thresholds are set locally, even as federal Low Income Housing Tax Credit and Section 8 programs continue to use HUD\u2019s AMI.\u00a0<\/p>\n It also means government financing tools that allow developers to build at lower AMI bands without losing the ability to cover costs. A version of this was just attempted with City of Yes, which restructured affordable program thresholds<\/a> to push more units into deeper affordability bands; whether that framework actually moves the needle is still an open question.\u00a0<\/p>\n![\"CityViews](\"https:\/\/citylimits.org\/wp-content\/plugins\/trx_addons\/components\/lazy-load\/images\/placeholder.png\")
<\/a><\/p>\nCredit: Edward Palka. Analysis based on HUD Metropolitan Fair Market Rent Area income limits and NYC median family income data, 2007\u20132024. Construction cost trend derived from the estimate compiled and reported by the New York Building Congress (2007\u20132018 per the 2019 Construction Costs report; 2019\u20132024 from RLB quarterly cost reports with NYC-specific deviations noted). All figures shown as cumulative percent change from 2007, adjusted for inflation using the BLS CPI-U annual average.<\/p>\n