The New York Times Real Estate section reports on the East 84th-Street Manhattan two-bedroom penthouse apartment of a 26-year-old daughter of a Goldman Sachs broker and a supermodel, which features a 47-inch flat-screen television. It reports that the apartment "is legally hers, turned over to her by her parents." Not until later in the article do we learn that the apartment is "hers," the Times says, "thanks to the miracle of rent stabilization." It isn't such a miracle for the landlord who, at least in theory, owns the apartment, and who doesn't rate so much as a how-do-you-do in the Times account. For the landlord, rent stabilization is less a miracle and more than a curse. The Times estimates that the rent on the space is less than half what a market price would be, costing the landlord more than $25,000 a year in foregone income. The Times article makes reference to a "roommate" of the 26-year-old who lives in the apartment's second bedroom, without probing what, if any, rent the roommate pays, or what exactly the justice is in allowing tenants of "rent-stabilized" apartments to sublet portions of them out at market rates that the law prevents the actual owner of the property from charging.
A 1996 editorial in the Times about rent control said, "Rent regulation has not served New York City well. It has discouraged investment in the upkeep of old properties and the construction of new ones. The laws hurt the entire city by reducing the tax base. An expensive and extremely cumbersome state bureaucracy is required to implement them. Especially galling, the laws create an irrational system in which some well-to-do tenants pay very little rent for large apartments while less-prosperous newcomers are forced to pay rates that are artificially inflated by the shortage of market-rate housing." What the Times editorialists with good reason called galling, the real estate section today calls a miracle. It's a cautionary tale for those who advocate government intervention in any market without weighing the possible unintended consequences.