If given the power, Zohran Mamdani would erase both the signal and incentive to build more housing.
As New York primary voters went to the polls yesterday, the Wall Street Journal published an article titled “New York’s Housing Crisis Is So Bad That a Socialist Is Poised to Become Mayor.” The socialist in question is Zohran Mamdani, now the presumptive Democratic nominee for New York City mayor after besting Andrew Cuomo last night.
The Journal is correct that there is a housing crisis in New York, which Mamdani has made a cornerstone of his campaign. Rental vacancy rates are at their lowest since 1968 at 1.4 percent, far less than the national rate of 7.1 percent. Median asking rent has surpassed $5,500 per month. What’s puzzling, though, is why the desperate renters and apartment-hunters the article describes think that electing the socialist Mamdani as mayor is anything near a rational response to their housing woes. Their support for him implies that, up to this point, the city’s renters have been ravaged by a laissez-faire housing market run amok. Yet the notion, retailed by progressives like Mamdani, that New York housing suffers from a dearth of public spending and government mandates is patently absurd.
In reality, New York City has one of the most strictly regulated housing sectors in the nation. Close to half of all rental units in New York are “rent-stabilized.” This is a euphemism for price controls that let city officials decide by how much rents can increase each year. Zoning rules are so stringent that 40 percent of buildings in Manhattan would be illegal to build today. If developers are lucky enough to build in a rezoned area, they are required to set aside 20 to 30 percent of their units for “affordable housing” at rents the City Council deems acceptable. New York doesn’t skimp on dishing out taxpayer money, either: The city plans to spend over $4.5 billion on housing projects this year alone.
The cumulative result of all this intervention, supposedly to ensure a plentiful supply of affordable housing, is that New York has the most expensive rental market of any city in America — by a lot. Demand for apartments far outstrips supply. Rents keep rising in New York even as they fall nationwide. Yet the city keeps making it worse. After a new law prohibiting landlords from charging broker fees to tenants came into effect, rents rose another 15 percent within a few weeks.
The fundamental problem with the New York housing market that progressives fail to understand is not exorbitant rent in itself, but what it indicates: that there are simply not enough apartments in the city to go around. Prices are signals wrapped in incentives. In a well-functioning market, high rents should draw developers to construct more housing. If given the power, Zohran Mamdani would erase both the signal and incentive to build. His signature proposal is to “freeze the rent” of all rent-stabilized apartments by disallowing any further increases. Such a policy of full-blown rent control would intensify the already fierce competition over a limited number of units and discourage investment in new and existing buildings.
The main reason that developers have not yet responded to high rents with a surge in construction is that New York inhibits them with a litany of regulations and mandates. Yet Mamdani would double down on this approach as well. He promises that only those projects which adhere to his administration’s “affordability, stabilization, union labor, and sustainability goals” will see expedited permitting. Instead of private development, Mamdani favors “putting the public sector in the driver’s seat” by spending an additional $70 billion in borrowed funds to build homes that meet his rigorous standards — “publicly subsidized, permanently affordable, union-built, rent-stabilized.”
As Charlie Cooke writes, New Yorkers already know how to solve their city’s most persistent social challenges, yet they refuse to elect people who will get it done. We already know the solution to the housing crisis as well: allow more of it to be built. Places that do so are rewarded with falling rents and rising availability. Meanwhile, cities like New York continue to provide the counterfactual. Under Mamdani’s governance, the contrast will become ever more stark.