New York City’s soaring housing costs have become a defining issue for voters in the Big Apple's mayoral election, but politicians and economists are divided on the right long-term solutions to address it.
In theory, a rent freeze may seem like a quick and easy answer to address the affordability crisis. Experts say it could hinder the city's real estate market in the long term by discouraging investment and worsening affordability for non-rent-stabilized units.
During his campaign, Zohran Mamdani, a self-described democratic socialist who is running for mayor on a platform to lower the cost of living for working-class New Yorkers, said more than 2 million residents live in rent-stabilized apartments that "should be the bedrock of economic security." If elected, he pledged to freeze rents for those tenants and use every available resource to expand affordable housing.
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Shannon McGahn, chief advocacy officer at the National Association of Realtors, cautioned that rent freezes have historically backfired.
"Developers are reluctant to build in areas where their properties may become subject to rent controls," said McGahn, who noted that there is already a nationwide shortage of about 5 million units.
"They [rent freezes] chase away the additional supply that would actually create more low- to mid-range housing units," McGahn said. "The real solution is building more homes – not discouraging the very investment needed to create them."
That concern is echoed at the city level, with New York Apartment Association (NYAA) CEO Kenny Burgos warning that the policy could make developers wary of investing in New York.
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"I don't know any investor or builder who would want to build in a city where the mayor is threatening to cap revenues and an ability to pay back the development of these projects," Burgos said. "So you're just going to have a lot less attraction of people to build the housing that we need, which Zohran acknowledges that we need so desperately."
Ed Elson, a business analyst and co-host of the "Prof G Markets" podcast, noted that rents are determined by the forces of supply and demand.
"The solution to high rents, therefore, is to increase supply and incentivize more construction. Paradoxically, rent freezes disincentivize construction, which causes rents everywhere else to go up even higher," Elson said.
He described rent freezes as a "too good to be true" policy that would ultimately achieve society's goal of alleviating the cost-of-living crisis.
Alex Armlovich, a member of the New York City Rent Guidelines Board (RGB) and senior housing policy analyst at the Niskanen Center, said he supports the goal of expanding affordable housing, posting on X that he was "excited to work with Zohran to make NYC housing more abundant & affordable."
But he also disagrees with Mamdani's approach because it doesn't address the rent costs in the free market, which is driving this crisis. The issue is that many of his constituents don't understand this, he said.
The affordability message is resonating with the people most impacted by extreme rents, but those people won't see the relief from this policy, Armlovich said.
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"It's the market-rate tenants who are really suffering and are most excited and energized by the affordability message, even though the rent freeze isn't going to affect them. It's a very ironic thing," Armlovich said. "The big problem in New York is our free market, right? Regulated rents are doing great."
Burgos said that the rent freeze is targeted at the most affordable housing in New York City. The proposal to freeze rents targets about 1 million rent-stabilized units, whose median rent is about $1,500, Burgos said, citing data from the 2023 New York City Housing and Vacancy Survey.
Burgos said that in Manhattan, many buildings have a mix of regulated and free-market units – meaning some apartments are rent-stabilized while others are not.
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"So, what's going to happen is if a property owner receives a freeze on half of those units, the cost increases for insurance, property taxes, labor, fuel, everything you can think of, then gets pushed onto the market tenants. So, your neighbor, your free market neighbor, will be subsidizing the rent freeze in that building," Burgos said.
However, Armlovich applauded Mamdani’s proposal to add 200,000 subsidized housing units, saying it would complement the private market rather than replace it and could help ease the city’s low vacancy rates, which is critical to giving tenants more bargaining leverage.
"As long as he’s being honest about that, that’s very exciting. We can get more supply on the market and get vacancy rates up. A higher vacancy rate gives tenants bargaining power," he said. "You want landlords chasing tenants, not tenants lining up for apartments."
Armlovich noted that without new construction, the city will continue to see low vacancy rates and rising landlord leverage, which drives market rents higher.
