A Survey Shows the Squeeze on NYC's Affordable Housing Operators

Nearly two-thirds of affordable housing owners and practitioners in New York City say operating costs have climbed sharply and become unsustainable, according to a June survey by the NYC Housing Partnership, a nonprofit that develops affordable housing through public-private partnerships.

The survey of 57 owners, developers, executives and property managers found insurance premiums among the fastest-growing costs. More than half of respondents represented portfolios of at least 1,000 units, and a little more than half were for-profit owners or developers — companies that typically build with city subsidies in exchange for keeping rents at fixed below-market levels.

The squeeze is visible across the sector. About 60 percent of respondents said the financial health of their portfolios is deteriorating, and none said conditions are improving. On the revenue side, rents in subsidized projects are tied to levels set by the Rent Guidelines Board, which voted in June to freeze rents. More than three-quarters of respondents said they are concerned residents could not afford the increases needed to sustain building operations. Rent collections have also lagged since the pandemic, with about 45 percent of respondents reporting collection rates below 90 percent.

“Our survey is putting the flag down that this is an issue for all of us that are owning and operating affordable housing, whether you’re a nonprofit or a for-profit,” said Malcolm McGregor, chief asset management officer at the partnership. He described the situation as “a math problem” for residents and for the operators trying to keep the buildings running.

Advertisement

Why the Cost Squeeze on NYC Affordable Housing Is Hard to Break

The Model’s Weak Spot: Fixed Rents Meet Rising Costs

For-profit affordable housing developers enter a trade: city subsidies support construction, but rents are locked below market and increases are regulated. When operating costs climb, they cannot pass the expense through the way market-rate landlords can. The survey singles out insurance premiums as among the fastest-rising costs, a line item that is difficult to offset in a rent-regulated portfolio.

The Affordability Constraint Blocks the Obvious Fix

The Rent Guidelines Board’s June freeze removes one lever, but the survey suggests a rent increase would not cleanly solve the problem. More than three-quarters of respondents say residents could not afford the increases required to sustain operations, and roughly 45 percent report collections below 90 percent. That combination indicates the constraint is on the tenant side as well as the owner side: higher rents could simply shift financial stress rather than relieve it.

Why the Remedies Under Discussion May Fall Short

McGregor said a large-scale rental subsidy could help revenues but would be expensive for the city or state, while the administration’s proposed insurance program is hard to target and scale. Deal-by-deal fixes, he added, cannot address a citywide problem. The survey does not model the cost of those options, but the broader pattern — widespread deterioration, frozen rents and constrained resident budgets — points to a structural gap between what it costs to operate the housing and what its residents can pay.

What City Hall, the Rent Board and Operators Should Do Next

For city and state policymakers:

Advertisement
  • Treat insurance as a first target: respondents identified premiums among the fastest-growing costs, and the proposed insurance program may need to be scaled beyond its current design to reach the 1,000-unit-plus portfolios that dominate the survey.
  • Compare the cost of a large-scale rental subsidy against expense-side fixes, since McGregor says cost-curve measures will not close the gap on their own.

For the Rent Guidelines Board and housing agencies:

  • Account for the affordability constraint ahead of any future increase: more than three-quarters of owners and practitioners say residents cannot afford the increases needed to sustain operations.
  • Pair rent policy with collection and arrears support, given that about 45 percent of respondents report collections below 90 percent.

For owners and operators:

  • Model portfolio finances under continued insurance inflation and a 90-percent collection rate, since those are the two pressures named in the survey, rather than assuming rent increases will restore margins.

Risk & Opportunity Assessment

Commercial RiskHighNearly two-thirds of survey respondents call operating costs unsustainable, about 60 percent say portfolio financial health is deteriorating, and none report improvement, with insurance premiums among the fastest-rising costs.
Competitive RiskMediumMore than half of respondents are for-profit owners or developers and most report deteriorating finances; if the economics worsen, new for-profit participation in subsidized housing is at risk.
Regulatory RiskHighThe Rent Guidelines Board's June rent freeze and fixed below-market rent structures prevent owners from passing rising costs through, while the proposed insurance program is described as difficult to target and scale.
Reputation RiskMediumMore than 75 percent of respondents worry residents cannot afford necessary rent increases, and 45 percent report collections below 90 percent, a combination that heightens scrutiny of owners and policy responses.
Technology DisruptionLowThe survey contains no technology angle; the pressure comes from operating costs, insurance premiums and regulated rents rather than tech-driven change.
Commercial OpportunityMediumA large-scale rental subsidy could lift revenues and the proposed insurance program targets a named cost, but McGregor says such fixes are expensive or hard to scale, leaving the opportunity unproven.