Together with Zohran Mamdani’s historic victory in final month’s elections, New York Metropolis additionally accredited three housing-related poll proposal. Collectively, these will make it considerably simpler to regulate land-use guidelines to permit for brand spanking new housing improvement, by lowering the Metropolis Council’s capacity to dam zoning adjustments.
I’m glad the proposals handed, for causes just like these laid out by Michael Kinnucan. Whereas zoning adjustments usually are not a ample answer to town’s housing issues, they’re useful — and extra necessary, they’re a mandatory situation for an even bigger program of public funding in housing.
Assist for the proposals was shared by many, however removed from all, housing and tenant advocates within the metropolis. Debates over the proposals mirrored variations on political precept — how huge a voice ought to native versus citywide officers have over land use? — in addition to on financial concept — how properly does the housing market match a easy story of provide and demand? However there are additionally some background factual questions the place the solutions are likely to get assumed slightly than straight debated, about what sort of housing will get constructed within the metropolis proper now.
So on this publish, I needed to assemble some factual details about latest housing development in New York. For comfort — and since that’s how a lot of the information is organized — I’m defining latest as that means the interval since 2010. A few of that is assembled from numerous experiences and publications, however the bulk of it’s my very own evaluation of the New York Housing and Emptiness Survey (HVS).
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The dimension of recent housing development that’s in all probability most seen is how geographically concentrated it’s. About one-third of all the brand new housing constructed since 2010 is in simply 4 of town’s 59 neighborhood districts, alongside the East River in Brooklyn and Queens.
You’ll be able to see this clearly on this map from the Division of Metropolis Planning, because the strip of darkish blue working from Brooklyn Heights to Astoria. (The darkish blue space in Manhattan displays some main tasks on the far west facet, together with Hudson Yards.) Brooklyn Neighborhood District 1, together with Williamsburg and Greenpoint, added 30,000 new housing models between 2010 and 2024. Half a dozen miles away on the south tip of Brooklyn, District 10, with an analogous inhabitants, added solely 500.
The focus of recent housing in a couple of areas displays plenty of elements, together with zoning adjustments underneath the Bloomberg administration and the disappearance of producing from former facilities like Lengthy Island Metropolis. This helps clarify the affiliation in many individuals’s minds of recent housing improvement with gentrification and rising rents.
Much less instantly seen is how a lot this newly-built housing prices, and who lives in it. I haven’t seen a report specializing in these questions — although I count on one exists — so I believed I’d see what I may say utilizing the Housing and Emptiness Survey.
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For individuals who aren’t conversant in it, the HVS is a survey performed each three years in the past by the Census on behalf of the New York Metropolis Division of Housing Preservation and Improvement (HPD). Its main function is to assist administer town’s lease rules, nevertheless it’s a helpful useful resource for every kind of housing analysis. It’s a decently massive pattern — about 10,000 observations — however what it makes it particularly good is that it combines administrative knowledge on issues like constructing dimension, location and rent-regulation standing, with survey knowledge on issues like occupant traits and the unit’s state of restore.
The HVS is an effective device if we wish to reply questions like, what’s the median family earnings of individuals residing in housing constructed since 2010? ($73,500, it seems — however we’ll come again to {that a} bit additional down.) The newest HVS was performed in 2023; to get an affordable pattern for smaller subgroups I mixed it with the 2021 survey, with acceptable changes to the financial variables.
Between 2010 and 2024, NY added simply over 300,000 new models of housing, or a bit over 20,000 models a 12 months. It is a respectable stage of recent constructing for town by latest requirements — corresponding to the 2000s and Nineteen Seventies, and quicker than within the Eighties or Nineteen Nineties — however lower than in earlier durations of the twentieth century. In the course of the Nineteen Fifties and Nineteen Sixties, town added over 30,000 models per 12 months, and within the Twenties, over 70,000. A surprisingly massive proportion of those homes are nonetheless right here. For instance, 729,000 housing models have been constructed within the Twenties; in response to the HVS, 718,000 of them have been nonetheless current as of 2023. That housing lasts such a really very long time is, to me, one of many central info that makes it totally different from most commodities. (The opposite is that it’s positioned in a selected place.)
Of the housing models constructed between 2010 and 2023, about 10 % are owner-occupied, a bit over 25 % are unregulated market-rate leases, and 60 % are rent-regulated leases. (There are additionally a small variety of vacant models that aren’t for lease, and a really small variety of new public housing models.)
It could be shocking that there are extra rent-stabilized models than market-rate ones, on condition that lease rules in New York by default apply solely to massive buildings constructed earlier than 1974. There are two causes for this.
The primary motive is {that a} substantial fraction — 25 to 30 % — of recent housing inbuilt New York lately has been sponsored inexpensive models. “Inexpensive” on this context is a time period of artwork: It refers to housing that receives public subsidies, most significantly the federal Low-Revenue Housing Tax Credit score, and in return is proscribed to renters (or sometimes purchasers) making under a sure earnings threshold — 80 % of the world median earnings or some decrease fraction. In New York, these sponsored models are additionally usually rent-stabilized. Because the close by determine from the Furman Middle reveals, the proportion of affordable-in-the-technical-sense models has fallen off considerably lately, however continues to be substantial.
It’s necessary to notice that whereas the determine reveals “LIHTC” (Low Revenue Housing Tax Credit score) models and “market price models,” this isn’t an easy division. Whereas most income-restricted models obtain LIHTC subsidies, not all of them do; and models that don’t obtain working subsidies or have earnings restrictions, and are thus counted available in the market price class right here, should be topic to lease regulation. In the remainder of this publish, I as a substitute deal with rent-regulated versus unregulated models, the place there’s a sharper line.
The second motive for the excessive proportion of rent-regulated models is that almost all new housing constructed outdoors of Manhattan throughout this era was eligible for the 421-a property tax exemption. This provides long-term exemptions from property taxes — so long as 40 years in some circumstances — in return for sure situations, together with participation in lease stabilization. On account of these applications, although tent stabilization shouldn’t be obligatory for any housing constructed since 1974, in observe newer housing in New York usually tend to be lease stabilized than older ones.
I personally agree with critics who argue that these tax exemptions are a wasteful and inefficient approach to promote new housing development. The issue for builders is financing the beginning of the mission — a tax exemption many years from now’s primarily nugatory to them, whereas for town, with its longer horizons, it’s nonetheless expensive. In impact, 421a is paying for housing in a forex that’s price a lot much less to the recipient than to the payor.efn_note]Put one other method, the general public sector should have, and in observe typically does have, a a lot decrease low cost price than the personal sector. This was once a huge half of debates on the economics of local weather change. Nevertheless it’s additionally related to housing. The frequent thread is the very long time durations concerned.[/efn_note] However be that as it might, it has resulted in a really massive fraction of recent housing being rent-stabilized.
The truth that maybe 1 / 4 of the brand new housing produced in New York is income-restricted inexpensive models — certainly the very best proportion in any main US metropolis — doesn’t get a lot consideration in discussions of housing, so far as I can inform. Nor does the truth that the massive majority of recent housing is rent-stabilized — I wasn’t conscious of it myself till fairly lately. However each of those seem to be necessary info.
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Let’s transfer on to how a lot these recently-built residences lease for, the query that bought me began scripting this publish. The median lease for rent-regulated house constructed since 2010 is $1,800, whereas the median lease for an unregulated (i.e. market-rate) house constructed since 2010 is $3,200.
To make sure, the comparability of rents in stabilized versus unregulated residences is a bit tough, as a result of these usually are not the identical sorts of residences. Because the figures close by present, unregulated models usually tend to be in Manhattan, and are considerably bigger on common — studios and one-bedrooms make up 70 % of latest rent-stabilized models, in contrast with 60 % of latest unregulated ones. One factor that stunned me these numbers was how few bigger rental models are being constructed, market-rate or in any other case.
Since 421-a subsidies usually are not typically out there in most of Manhattan, the rent-stabilized models there are principally sponsored inexpensive models. So in Manhattan, recently-built market-rate residences lease for nearly twice as a lot as equal-size stabilized ones. In the meantime, in Brooklyn regulated models lease for less than about one-third greater than unregulated ones, and in Queens and the Bronx rents for the 2 lessons of residences are primarily the identical. (Staten Island has hardly any new housing of any form.)
The distribution of rents by regulation standing is proven within the determine under, which is probably the primary factor it’s best to take from this publish.
Right here we see that there are extra 35,000 rent-regulated residences constructed since 2010 that lease for lower than $1,000, and barely 5,000 unregulated residences renting for that little. However whereas most regulated residences lease for lower than $2,000, greater than 1 / 4 lease for over $3,000 and about 10 % lease for over $4,000. In the meantime, about 70 % of unregulated models lease for between $2,000 and $4,000, whereas 1 / 4 lease for lower than $2,000 and 10 % for greater than $5,000.
Once more, these variations are partly resulting from the truth that unregulated residences are considerably bigger, and significantly extra more likely to be positioned in Manhattan, in contrast with rent-regulated residences.
For recently-built rental models as a complete, the median lease is $2,000, with one-third renting for lower than $1,100 and one-third for extra $3,000; 10 % lease for greater than $4,500. That is considerably larger than rents in older buildings — for town as a complete the median lease is $1,670. (If we examine one-bedrooms solely, the comparability seems related.)
There are clearly many extra methods one may slice this, however these numbers give a helpful benchmark: If we’re speaking a couple of newly constructed market-rate house in New York, we must always take into consideration an house renting for round $3,200. If we wish to get a bit extra granular, we may consider one-bedroom house in Brooklyn renting for $2,200 a month, a 2-bedroom in Brooklyn renting for $3,800, or a one-bedroom in Manhattan renting for $4,700 — these can be typical examples of lately constructed market-rate residences. (Although the pattern dimension will get uncomfortably small as we slice the information on extra dimensions.)
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A pleasant factor concerning the HVS is that it lets us do the identical evaluation for incomes.
The quick reply right here is that median family earnings for residents of recently-built owner-occupied models, median earnings is $161,000. For rent-regulated residences, median family earnings is $54,000; for unregulated residences, it’s $117,000. For recently-built rental models as a complete, the median family earnings is $73,000.
Because it occurs, $73,000 is nearly an identical to median family earnings for town as a complete. The $117,000 median earnings for residents of recently-built market price leases, in the meantime, is near the 67th percentile for town as a complete — in different phrases, two thirds of households have incomes under this, and one third have incomes above it.
The problems with geography and unit dimension usually are not as related right here. However for the half or so of rent-regulated models which can be additionally sponsored and income-restricted, resident incomes will in fact be decrease. The median earnings in unregulated residences is greater than twice as excessive in Manhattan as Brooklyn — $205,000 versus $90,000 — whereas the median lease in rent-regulated residences is simply about 25 % larger.
The figures close by reveals the distribution of recently-built regulated leases, unregulated leases, and owner-occupied models by family earnings and by per-capita earnings, which is arguably extra related. (Observe that the earnings classes are barely totally different for the 2 figures.)
As you may see, nearly all of recently-built rent-stabilized models — 78,000 out of 134,000 — are occupied by households with earnings under $75,000, roughly town median. About 15,000 of them, nonetheless, are occupied by households with incomes above $250,000. The distribution of incomes in unregulated models is flatter — a bit over 10,000 have tenants with incomes underneath $40,000, and about the identical quantity have tenants with incomes with incomes above $250,000. Incomes are a lot larger in owner-occupied models. Practically half — 10,000 out of twenty-two,000 — are occupied by households with incomes above $250,000.
The image seems a bit totally different after we flip to per capita incomes. For comparability, the median per-capita family earnings in New York Metropolis is $36,000. The bulk (about 55 %) of rent-regulated new residences are occupied by households with incomes under this. However solely about one-third of unregulated residences are. Apparently, after we have a look at per-capita earnings, owner-occupied models are now not so disproportionately more likely to be occupied by households with very excessive incomes. In New York Metropolis, evidently, owners are more likely to have bigger households.
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How ought to one consider these numbers? My aim on this publish is simply to convey some info into view. I’m not a lot attempting to make a substantive coverage argument, as attempting to make the controversy extra concrete and particular, a minimum of in my very own head. In some methods, the very best case for this publish can be that individuals would very totally different views about housing coverage may discover one thing in it they may use.
That stated, what prompted me to begin these numbers have been claims, within the runup to the election, that merely making it simpler to construct is not going to assist with affordability, since personal improvement received’t produce inexpensive housing, or will solely produce luxurious housing.
To be clear, these are two totally different claims. Or to place it one other method, affordability within the on a regular basis political sense is totally different from inexpensive as a time period of artwork in housing coverage.
Housing the shouldn’t be inexpensive, within the technical sense, should be serving to with affordability within the broader sense, by providing higher housing choices for people who find themselves not rich. A household of two New York public college lecturers may need a mixed earnings of $150,000 or so, placing them outdoors the earnings limits for sponsored inexpensive housing. However they could nonetheless have actual issues discovering cheap housing, particularly if they’ve youngsters; and new development may enhance their scenario even when it isn’t inexpensive within the technical sense.
What does this knowledge say about these questions?
Maybe unsurprisingly, the HVS knowledge helps the declare that, within the absence of subsidies, personal builders is not going to construct a lot deeply inexpensive housing. A method of this: About 20 % of New York households have incomes under $20,000; however in unsubsidized models constructed since 2010, solely about 6 % of tenants have incomes under this stage.
One other method of it: The median New York family has an earnings of $73,000; for them to not be lease burdened, by typical requirements (30 % of earnings going to lease), they need to pay not more than $2,000 per 30 days. However practically 80 % of the unregulated residences (in addition to 30 % of rent-regulated residences) constructed since 2010 lease for greater than this. And most of the ones renting for much less are studios or one-bedrooms, which is not going to be appropriate for a lot of households with incomes close to the median.
So, the declare that permitting extra personal improvement is not going to by itself produce a lot housing inexpensive to lower-income New Yorkers, appears in line with the information.
Now, any economists or abundistas studying this may wish to leap up, and level out that even when newly-built housing shouldn’t be inexpensive for a lot of New Yorkers, it may well nonetheless assist them. The individuals who transfer into the newly constructed models are going to reside someplace, in any case; and if these new ones weren’t out there, they might be bidding up the value of the prevailing housing inventory. Turning an outdated sugar refinery in Williamsburg into luxurious residences could in a roundabout way present inexpensive housing in Williamsburg, nevertheless it takes the strain off the rental market in different neighborhoods that the trust-fund hipsters may in any other case transfer to.
Okay, you guys can sit down, you’ve made your level. And it’s a legitimate one — there’s undoubtedly some reality to this. How a lot reality, and what elements may work within the different course, is past the scope of this publish. Right here, I’m simply attempting to get my arms across the difficult-enough query of what rents and incomes seem like within the newly-built housing itself.
Returning to the central query of how inexpensive newly-built housing is, it’s price recalling that 20-25 % of recent housing is inexpensive within the sense of being income-restricted and receiving ongoing subsidies, and a majority of recent housing opts into lease regulation. So specializing in the unregulated section could also be a bit deceptive, particularly within the context of the poll proposals. A extra smart comparability could be between recently-built housing within the combination, and older housing. The following couple of figures try this.
Right here we see the distribution of rents in newer and older buildings. Observe that the vertical scale is share of models in that age group, versus absolutely the variety of models as in earlier figures.
What we see is that whereas there are a considerable variety of new models with average rents, there are lots of extra high-rent models within the newer buildings. About 15 % of models constructed since 2010 lease for greater than $4,000, in contrast with simply 3 % of older models.
After all, new models are totally different from older models in different methods — location, dimension and so forth. But when we restrict the evaluation to, say, simply one-bedroom residences, the sample is mainly the identical.
If something, the surplus of latest models on the excessive finish is even clearer on this case.
Then once more, one may have a look at the identical numbers the opposite method. 15 % of recent models lease for over $4,000 and 30 % lease for over $3,000, in contrast with simply 3 and eight %, respectively, of older models. However that signifies that 70 % of recent models lease for underneath $3,000; and about 40 % lease for lower than $2,000 — which is, once more, the brink for lease burden for the median-income New York family.
So if we have a look at the housing that’s being inbuilt New York now, it’s completely true that it’s disproportionately luxurious housing supposed for the wealthy. Though not essentially for the very wealthy — Andrew Cuomo’s $8,000-a-month Higher East Facet house can be within the prime 2 % of rents amongst recently-built models. However disproportionately shouldn’t be the identical as completely. It’s not true that recently-built housing is completely luxurious models for the highest-income New Yorkers.
We are able to take this query on extra straight by family earnings amongst tenants in recently-built rental models versus older ones. That is proven under.
Surprisingly, the distribution of incomes throughout newer and older residences is far nearer than the distribution of rents. Excessive-rent residences are way more overrepresented amongst newer residences than high-income tenants are.
On reflection, this isn’t shocking. Due to lease rules (and in addition to smaller landlords who don’t aggressively elevate lease for present tenants) many present tenants are paying properly under market lease. Keep in mind, lease rules in New York restrict solely lease will increase. So one may even say, that if the lease regulation system is efficient, it’ll inevitably end in newly-built residences renting for considerably greater than current ones. And inevitably, a lot of these older rent-regulated buildings will probably be occupied by higher-income households.
Observe, additionally, that newly-built house have a barely larger proportion of very low earnings tenants than older ones do. This displays the substantial fraction of sponsored inexpensive models, and is one more reason to reject the “solely luxurious models are being constructed” declare.
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What can we take from all this?
There are two issues that stunned me probably the most, these numbers. First was the massive fraction of rent-regulated models — greater than two-thirds of the models constructed since 2010. I had at all times considered lease rules in New York as making use of nearly completely to older buildings, however in reality, of the all of the age classes within the HVS, post-2010 buildings have the highest proportion of regulated leases.
Second was the preponderance of smaller residences amongst lately constructed housing. 55 % of the models constructed since 2010 are studios or one-bedrooms, in contrast with 38 % of older models. Models with three bedrooms or extra, in the meantime, account for less than 10 % of recently-built models, in contrast with a full third of older ones.
This second truth results in the primary of my coverage takeaways: After we are speaking about housing affordability, we’d like to consider what form of housing, in addition to its price.
Most items are fungible: If your loved ones consumes extra milk, or fuel, or electrical energy, then you definitely pay extra for it, however the value of the following gallon or kilowatt is similar because the final. Shopping for a gallon of milk is actually the identical as shopping for two half-gallons. Housing is totally different: You’ll be able to’t simply lease some additional sq. ft when your loved ones will get greater, you want a complete new dwelling. Constructing extra SRO-type models, as some individuals advocate, would assist handle inexpensive housing on the low finish; nevertheless it wouldn’t do something to unravel the issues of rent-burdened households.
This non-fungibility of housing was eloquently described by Sam Stein in a New York Evaluate of Books piece a couple of years in the past:
Housing won’t ever be as elastic as households. This isn’t solely as a result of development is sophisticated in a metropolis as crowded as New York, but additionally as a result of there’s a elementary distinction between individuals and issues. Households change form over time and might recompose quickly throughout an emergency like a pandemic. However regardless of the work of ingenious architects, our housing tends to remain kind of the identical. … There may be nothing fairly as concrete as concrete.
To be clear, the answer shouldn’t be so simple as merely requiring builders to construct extra bigger models. As this report from the Fiscal Coverage Institute factors out, this method may very well be counterproductive, discouraging new housing development of every kind. However it’s actually one thing to contemplate within the design of subsidies or social housing applications.
My second coverage conclusion was touched on a bit earlier: We have to be cautious about what we imply by inexpensive. A scarcity of housing is an acute drawback for the very poor. However many individuals with larger incomes additionally wrestle with housing prices. The determine under reveals the share of households paying over 30 % of their earnings in lease — the traditional definition of rent-burdened.
Because the determine reveals, nearly all low-income renters are rent-burdened, whereas nearly no high-income households are. However a surprisingly excessive fraction of middle-income households are rent-burdened by the traditional customary. If we have a look at households within the center third of the earnings distribution, from roughly $40,000 to $120,000, 45 % of the renters pay greater than 30 % of their earnings in lease. (And in New York, the massive majority of individuals on this earnings vary lease.)
After we are speaking about inexpensive housing, we must always not simply be speaking about housing for very low-income individuals, with the implicit assumption that everybody else is satisfactorily served by the prevailing housing market. We needs to be speaking about an issue with the personal provision of housing normally.
Two extra factors converse extra on to the poll proposals. On the one hand, “construct extra housing” is a legitimate and necessary coverage aim. Even when there have been no features to affordability, merely having extra individuals residing in New York (and different dense cities) is a win for humanity, for all types of causes I don’t want to enter right here. However because the HVS knowledge reveals, new housing helps with prices as properly. A big fraction of the housing being constructed lately has been comparatively inexpensive, and is occupied by households within the decrease and center elements of the earnings distribution.
A corollary of this: Lease-regulated housing rents for considerably lower than market-rate housing, and homes individuals with considerably decrease incomes. We are able to actually ask whether or not our subsidy {dollars} may very well be spent extra effectively. I personally suppose that the long-term tax credit usually are not the fitting method; if we wish to commerce future tax income for current housing manufacturing, we’d do significantly better to subject bonds backed by that future income, and supply the subsidies up entrance. However for current functions, the important thing level is that these subsidies do produce inexpensive housing.
Alternatively — my closing coverage level — the truth that recently-built unregulated residences lease for a lot greater than current residences, and have such disproportionately higher-income tenants, ought to make us extra skeptical of claims that land-use reform, by itself, will considerably cut back housing prices. It may very well be that rents in newer residences are excessive as a result of not a lot of them are being constructed, so that’s what the market will bear. Nevertheless it additionally may very well be that rents in newer residences are so excessive as a result of that’s what personal builders require so as to construct them.
There could also be some reality to each of those views, in fact; however I believe there’s extra to the second. By which case, whereas land-use reforms just like the three poll proposals are fascinating and necessary, they may have to be complemented with public interventions within the financing and improvement of recent housing to have an actual affect on affordability.
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One closing level, on the politics, and a closing image, not from the HVS knowledge.
I began this publish again earlier than the election, earlier than setting it apart for some time. A that time, I used to be involved that misperceptions about what sort of housing is at the moment being constructed could be fueling opposition to the poll proposals. Individuals who care about inexpensive housing may oppose making it simpler to develop housing in the event that they thought that the one housing being constructed within the metropolis was luxurious residences for the wealthy.
Now that the election is over, we will see who really did oppose the measures, and who supported them. Under is the map for Proposal 2, with sure votes in inexperienced; the opposite two would look related.
What can we see? Properly, clearly, this seems just like the map of the mayoral election. Not precisely — the proposals carried all of Manhattan, whereas the Higher East Facet voted for Cuomo. However by and huge, the areas that voted sure on the proposals are the areas that voted for Zohran Mamdani.
I believe this tells us one thing necessary concerning the politics of housing. There’s an argument one usually hears, that the politics of housing lower throughout typical left-right traces — that arguments towards new housing is usually made on environmental or anti-gentrification grounds, and are available from people who find themselves, in different respects, on the left facet of the political spectrum.
Now I’d not say there’s no reality to this concept. It’s in all probability most true within the Bay Space, nevertheless it’s not restricted to there. In the course of the fights over the Atlantic Yards improvement right here in Brooklyn, I personally noticed homes with each the long-lasting “On this home…” and “We love brownstone Brooklyn” indicators; for sure, most New Yorkers don’t reside in brownstones.
Nevertheless it’s simple to magnify the significance of this mixture of views. In the actual world, the overwhelming majority of opponents of higher-density housing usually are not liberals who fly rainbow flags and donate to the Sierra Membership; they’re conservative owners who, to not put too effective a degree on it, don’t need Black individuals shifting into their neighborhoods.
After all there are honest progressives and socialists who imagine that constructing extra housing will solely elevate rents; and it’s price attempting to influence them that, in reality, extra improvement, even personal improvement, is a necessary a part of a broad public program for housing affordability.
However these persons are not the primary impediment. The people who find themselves towards constructing extra housing are, by and huge, the identical individuals who will oppose any program to boost residing requirements by redistributing earnings and energy and increasing the function of the general public sector. It’s the identical outdated traces of left versus proper.
UPDATE: I forgot to say: I adjusted the entire variety of models constructed since 2010 within the HVS so it matched the entire from the Division of Metropolis Planning for models constructed between 2010 and 2023. However I didn’t see a simple method to do that for subgroups; and whereas the HVS weights make sure that counts throughout numerous classes of buildings match the official totals, the weights are for the entire pattern, not for building-age subgroups. So there’s going to be some sampling error right here — these usually are not actual counts. I really feel fairly assured that the image is qualitatively right, although.
