Circle Squared Investments founder Jeff Sica discusses the affect of the actual property trade on the U.S. economic system and markets.
New York Metropolis’s hovering housing prices have turn out to be a defining subject for voters within the Massive Apple’s mayoral election, however politicians and economists are divided on the fitting long-term options to handle it.
In principle, a hire freeze could appear to be a fast and straightforward reply to handle the affordability disaster. Specialists say it might hinder town’s actual property market in the long run by discouraging funding and worsening affordability for non-rent-stabilized models.
Throughout his marketing campaign, Zohran Mamdani, a self-described democratic socialist who’s working for mayor on a platform to decrease the price of dwelling for working-class New Yorkers, mentioned greater than 2 million residents stay in rent-stabilized flats that “must be the bedrock of financial safety.” If elected, he pledged to freeze rents for these tenants and use each obtainable useful resource to increase inexpensive housing.
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Shannon McGahn, chief advocacy officer on the Nationwide Affiliation of Realtors, cautioned that hire freezes have traditionally backfired.
“Builders are reluctant to construct in areas the place their properties could turn out to be topic to hire controls,” mentioned McGahn, who famous that there’s already a nationwide scarcity of about 5 million models.
Residential condominium buildings within the Brooklyn borough of New York. (Michael Nagle/Bloomberg by way of / Getty Pictures)
“They [rent freezes] ward off the extra provide that may truly create extra low- to mid-range housing models,” McGahn mentioned. “The actual resolution is constructing extra properties – not discouraging the very funding wanted to create them.”
That concern is echoed on the metropolis stage, with New York Condo Affiliation (NYAA) CEO Kenny Burgos warning that the coverage might make builders cautious of investing in New York.
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“I do not know any investor or builder who would need to construct in a metropolis the place the mayor is threatening to cap revenues and a capability to pay again the event of those tasks,” Burgos mentioned. “So that you’re simply going to have lots much less attraction of individuals to construct the housing that we want, which Zohran acknowledges that we want so desperately.”
Specialists say a hire freeze might hinder town’s actual property market in the long run. (Zamek/VIEWpress)
Ed Elson, a enterprise analyst and co-host of the “Prof G Markets” podcast, famous that rents are decided by the forces of provide and demand.
“The answer to excessive rents, due to this fact, is to extend provide and incentivize extra building. Paradoxically, hire freezes disincentivize building, which causes rents in all places else to go up even increased,” Elson mentioned.
He described hire freezes as a “too good to be true” coverage that may in the end obtain society’s aim of assuaging the cost-of-living disaster.
Alex Armlovich, a member of the New York Metropolis Hire Tips Board (RGB) and senior housing coverage analyst on the Niskanen Heart, mentioned he helps the aim of increasing inexpensive housing, posting on X that he was “excited to work with Zohran to make NYC housing extra ample & inexpensive.”
However he additionally disagrees with Mamdani’s strategy as a result of it does not handle the hire prices within the free market, which is driving this disaster. The difficulty is that lots of his constituents do not perceive this, he mentioned.
The affordability message is resonating with the individuals most impacted by excessive rents, however these individuals will not see the reduction from this coverage, Armlovich mentioned.
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“It is the market-rate tenants who’re actually struggling and are most excited and energized by the affordability message, although the hire freeze is not going to have an effect on them. It is a very ironic factor,” Armlovich mentioned. “The large drawback in New York is our free market, proper? Regulated rents are doing nice.”
Zohran Mamdani throughout a marketing campaign occasion at Forest Hills Stadium within the Queens borough of New York, US, on Sunday, Oct. 26, 2025. (Victor J. Blue/Bloomberg by way of Getty Pictures)
Burgos mentioned that the hire freeze is focused on the most inexpensive housing in New York Metropolis. The proposal to freeze rents targets about 1 million rent-stabilized models, whose median hire is about $1,500, Burgos mentioned, citing knowledge from the 2023 New York Metropolis Housing and Emptiness Survey.
Burgos mentioned that in Manhattan, many buildings have a mixture of regulated and free-market models – that means some flats are rent-stabilized whereas others will not be.
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“So, what is going on to occur is that if a property proprietor receives a freeze on half of these models, the associated fee will increase for insurance coverage, property taxes, labor, gas, every thing you possibly can consider, then will get pushed onto the market tenants. So, your neighbor, your free market neighbor, can be subsidizing the hire freeze in that constructing,” Burgos mentioned.
There are roughly 1 million rent-stabilized flats in New York Metropolis. (Michael Nagle/Bloomberg by way of Getty Pictures)
Nevertheless, Armlovich applauded Mamdani’s proposal so as to add 200,000 backed housing models, saying it could complement the personal market moderately than exchange it and will assist ease town’s low emptiness charges, which is crucial to giving tenants extra bargaining leverage.
“So long as he’s being trustworthy about that, that’s very thrilling. We will get extra provide available on the market and get emptiness charges up. The next emptiness charge provides tenants bargaining energy,” he mentioned. “You need landlords chasing tenants, not tenants lining up for flats.”
Armlovich famous that with out new building, town will proceed to see low emptiness charges and rising landlord leverage, which drives market rents increased.