How NYC created a housing crisis; what it would take to fix it, & what Mayor Adams and Governor Hochul must do next

  • New York City Mayor Eric Adams promises to add 500,000 homes by 2032, and Governor Kathy Hochul has teased a plan allowing 800,000 homes statewide.
  • Details for achieving either target aren’t final yet, but both will require aggressive policy changes.
  • New York City’s citywide growth control law of 1961 created the city’s housing shortage.
  • Mayor Adams is so far proposing important but incremental pro-growth reform legislation—but the mayor can’t fully fix the legacy of 1961 without city council approval and gubernatorial support.

New York City Mayor Eric Adams and New York Governor Kathy Hochul have recently announced bold targets for housing growth to finally put a real dent in the city and state housing crisis. Though city and state governments do not directly build most housing, they do set growth control laws that dictate in extraordinary detail the precise sizes, shapes, and quantities of homes that the private sector is permitted to build. Adams’ 500,000 unit target in NYC proper, and Hochul’s 800,000 units statewide, imply bold changes to growth control laws — but we have yet to hear any specific proposals that meet the scale of the problem.

Today’s housing crisis: The long shadow of 1961

New York City outlawed itself in 1961. It banned the very same types of buildings built there for a century before. The city capped the amount of floor space that could be built per square foot of land — effectively restricting building bulk in addition to height limits. It also mandated parking requirements for the first time and made various other technical changes that restricted the volume and variety of affordable housing. 

State legislators simultaneously backstopped the local downzoning by removing the highest density level from local control — it was capped statewide at 12 square feet of residential floor area per square foot of land. To this day, even after incremental reforms under the Bloomberg and de Blasio administrations in New York City, significant net housing growth remains impossible. At least 40 percent of Manhattan would be illegal to rebuild merely as densely as in its current form — let alone more.

Rapid suburban growth kept the city cheap amid an exodus of residents from 1960 to 1980. This suburban growth accommodated regional housing demand until single-family suburbs reached the (very limited) density allowed by suburban zoning.* 

Since population growth within the city resumed in the 1980s, policymakers have been playing catch-up with the housing supply. But measured by the yardsticks of housing costs, homelessness, and the flight of families with children from the city, we are losing. 

While state-level and federal reform is usually a higher housing policy priority than the fight in any one municipality, New York City proper has more residents than 38 other U.S. states. When you include New York’s commuter rail suburbs, the metro area has more residents than every state except California, Texas, and Florida. And the region’s extreme mix of high wages, consumption amenities, and land prices portend that it would grow more than any other area in the country outside California if growth controls did not exist — a surprising fact growing in public recognition in recent years.

Estimates of the housing supply shortfall induced by New York’s growth controls vary from 342,000 homes to more than 560,000 homes. I estimated in 2017 that New York City would need at least 410,000 units over the following decade just to sustain a healthy 7 percent residential vacancy rate and grow the housing stock by an extremely modest 1 percent annually thereafter.

Incremental, sensible, “no-brainer” reforms proposed

Mayor Adams’ new land use reform platform, called “City of Yes”, has much to commend it. It contains three citywide proposals, “Zoning for Zero Carbon,” “Zoning for Economic Opportunity,” and “Zoning for Housing Opportunity,” with modest and sensible reforms in each category. (See the appendix for more details.)

To be clear, none of these proposals reverse the downzoning of 1961. They will not permit the production of the hundreds of thousands of units NYC needs and would otherwise have built. But the draft proposals do offer sensible, “no-brainer” improvements that would help.

Importantly, the proposal would legalize a wider array of housing types, especially smaller units. The proposal would lift the “dwelling unit factor,” an arcane ratio that is equivalent to an average unit-size mandate. Lifting it would allow microunits and studio apartments building-wide, and facilitate certain types of SRO-like co-living. This change would allow, wherever market demand favors smaller and cheaper units, more apartments built in the same total space without requiring proportionately larger units elsewhere in the building.

Most importantly in the near term, however, these proposals are practically scoped to what the Adams administration believes the city council will accept without draining mayoral political capital. Though NYC has a “strong-mayor” city charter, land use changes require city council approval — usually subject to the custom of “member deference” to the local councilor in whose district a change is proposed.

Aggressive reform would fix the housing crisis, but NYC isn’t politically ready (yet?)

A much bolder citywide reform, one on the scale of recent actual and still-pending reforms in California, is technically simple but not yet politically feasible. New York City could unilaterally fix the Metropolitan Transportation Authority’s long-term fiscal crisis, and its own looming budget troubles over the next decade, simply by reversing the 1961 growth controls within walking distance of MTA rail stations. That would permit hundreds of thousands of new units across the city, substantially chipping away at the 400,000+ unit backlog, especially if it were paired with a measure allowing “gentle density” accessory dwelling units elsewhere.

Uncapping residential growth on and near rail stations would funnel new passengers into a transit system in dire need of ridership. Remote and hybrid work have dragged usage down to 1990 levels, with subway ridership not projected to exceed 80 percent of 2019 levels until 2026. 

State-level incentives or outright pro-growth preemption would help even more. Short of that, the state, at the very least, must reverse its preemptive floor area limit on residential buildings.

A socialist-progressive-centrist coalition for land use reform is tentatively forming in New York, with the assent of some market-oriented conservatives and libertarians. This consensus is forming with a long lag behind other jurisdictions on the West Coast and even in New Jersey. There are encouraging signs from Governor Hochul at the state level, including her recent acknowledgment of a vast housing production shortfall in New York’s portion of the tristate region. Still, the YIMBY coalition has not yet proven strong enough to advance major structural changes.

New York thus far chooses not to fix its problems

We must remember that New York — like other similarly-situated expensive cities under growth control — chooses homelessness and housing shortages amid population loss. It is essential to understand that the present situation of post-COVID urban population loss is not like that of 1970s Detroit or even 1970s New York, where inner-city home prices were low and falling as residents fled for the South and the suburbs. People are still paying top dollar to move to New York City and similarly pricey, high-wage cities, but it remains effectively illegal to move there without first buying out an existing homeowner or evicting an existing renter. It is not a crisis of abandonment — it is a crisis of elite complacency, privilege, and exclusion.

A complete and total turnaround in the city, state, and MTA’s long-term budget losses and in COVID-era population losses are fully within the mayor, council, and governor’s combined powers. Every day, the city’s homeowners, power elite, and elected officials simply choose not to allow new mixed-income housing on and near the trains. Until the YIMBY coalition is strong enough, that will continue to be the case.

Appendix: “City of Yes” detail

  • Zoning for Economic Opportunity: Primarily proposes to reverse some of the absurd, archaic, almost-humorous commercial use restrictions that limit various harmless commercial activities in commercial districts. It would also harmonize ground floor design requirements citywide to improve predictability, relax loading dock retrofit requirements, and create a new type of zoning district for job centers
  • Zoning for Housing Opportunity: Proposes to re-legalize “gentle density,” relax parking requirements, provide a 20 percent by-right density bonus to income-restricted buildings, facilitate conversion of obsolete commercial buildings to residential use, and permit more total units within existing permitted floor area by relaxing the average unit size mandate
  • Zoning for Zero Carbon: Proposes to reduce restrictions on solar panel roof coverage, permit high-performance construction and renovation methods that improve buildings’ energy efficiency, remove restrictions on electrical charging infrastructure, and impose stronger stormwater regulations to reduce the amount of runoff discharged into sewers during storms.

* Today, New Jersey’s suburbs continue to build, carrying the entire burden of housing the region, but it has not been enough to reduce prices. New York’s commuter rail suburbs in Westchester and Long Island — with very few exceptions — permit almost no new housing whatsoever, even by the standards of America’s most exclusive suburbs. Even San Francisco built six times more homes per capita than Nassau County, the Long Island county immediately adjacent to NYC proper, over the last decade.

Photo credit: iStock