New York City's Housing Crisis: Experts Unpack the High Cost of Building and Regulatory Hurdles

New York City is grappling with its most severe housing affordability crisis in a century, a challenge exacerbated by complex building codes and a cumbersome land use review process. Chris Elmendorf, a prominent commentator, recently highlighted a special issue from Vital City NYC dedicated to this pressing concern, drawing attention to essays that delve into the intricacies of construction costs and regulatory frameworks.

Elmendorf specifically praised contributions from Henry Grabar and Sean Campion, who "dive into building codes & construction costs," and a piece by E. Claire Williams and Jacob Dugo. The city's median renter spent 31% of their income on rent last year, with a rental vacancy rate of only 1.4%, according to Vital City NYC. This scarcity is rooted in a significant shortfall of new homes, with the city adding almost 900,000 new jobs but only 350,000 new homes between 2011 and 2023.

Henry Grabar, in his Vital City article "The High Price of Fine Print," argues that overly complex building codes are a major contributor to soaring construction costs. He notes that while raw material costs are higher in New York, the primary drivers are laws and regulations mandating specific, often more expensive, materials and labor-intensive methods. Grabar highlights the "two-stair rule" in the International Building Code, which many cities adopt, as an example of a regulation that increases costs and limits design flexibility, unlike practices in countries such as Switzerland.

New York City, an outlier with its own modified version of the International Building Code, permits six-story buildings with one staircase, a practice that a Pew Charitable Trusts study found has no correlation with increased fire deaths. However, other New York-specific rules, such as those limiting plastic piping in plumbing, further inflate costs without clear evidence of improved safety or performance. Sean Campion, Director of Housing and Economic Development Studies at the Citizens Budget Commission, has also emphasized the economic drag of limited mobility for workers due to the housing crisis, estimating nearly $20 billion in annual gross city product lost.

The city's Uniform Land Use Review Procedure (ULURP) is also under scrutiny for contributing to delays and increased costs. Critics argue that the process, particularly the informal practice of "member deference" where local council members can effectively veto projects, stifles housing development. This dynamic often leads to projects being downsized, withdrawn, or never proposed, especially in districts resistant to new housing.

To address these systemic issues, the New York City Charter Revision Commission has proposed several amendments. These include creating "fast track" public processes for affordable housing and an Expedited Land Use Review Procedure (ELURP) for modest housing and infrastructure projects. Additionally, a new Affordable Housing Appeals Board is proposed to provide a check on hyperlocal decision-making, aiming to balance local input with broader citywide housing needs.