The issue of high rents contributed significantly to Zohran Mamdani’s recent election as New York City mayor. His promise to freeze the rent for two million New Yorkers in stabilized units sounded great to those who would benefit. If implemented, though, this solution would make the situation worse — as socialist solutions always do. (RELATED: Gooder and Harder, New York)
Far from helping working people secure stable homes, Mamdani’s rent control scheme would choke the supply of housing and leave existing units in disrepair. Landlords would have less incentive to spend to upkeep their stock, never mind improving it, and developers would have no incentive to build more housing. (RELATED: No, Mayor-Elect Mamdani, the Homeless Are Not an Apartment Away From a Good Life)
In a free market, if there is an influx of residents into an area, temporary overcrowding and homelessness are inevitable. But it won’t take long for developers to invest in new housing to meet demand. (RELATED: Why Is Congress Importing New York’s Housing Failures? )
When landlords can’t raise rents to market rate, however, they will stop maintaining. Why bother fixing a leaky roof or updating plumbing if you can’t raise the rent above the rate of inflation — or, as Mamdani wants — at all? (RELATED: LA Is Destroying Its Housing Market)
Existing tenants enjoy short-term savings in rent-stabilized apartments, but this often leads to their living in crumbling structures with peeling paint, faulty elevators—if they exist at all—and unreliable heat. (RELATED: Saving Us From Scheming Landlords? Biden DOJ Sues Real Estate Tech Company RealPage)
Developers also aren’t running charities. They build where they can turn a profit. If rents are likely to become artificially suppressed, the math doesn’t make it worth it. This creates a shrinking pool of available rental housing and fiercer competition for what’s left. Landlords also use above-market rents for unregulated units to subsidize the sunk costs of their regulated units.
This is one of the many issues where most liberals agree with conservatives, leaving socialists out in the cold. A study by the liberal Urban Institute found that rent stabilization comes with a reduction in the total number of rental units in cities like San Francisco and New York City itself, which already implement it.
Mamdani’s plan to freeze stabilized units’ rent would most hurt the three million renters in market-rate apartments. Tenants in rent-stabilized units already have a turnover rate 2.5 times lower than tenants in market-rate units. Convincing more of the former to stay put would further decrease unit supply and increase the upward rent pressure on everyone else.
Mamdani Offers a Socialist Solution to Problems Socialism Caused
Mamdani correctly addresses the housing shortage that causes an unrealistic rent burden on the city’s working poor and lower-middle class. But just as socialists want to replace private health insurance with socialist medicine rather than fix the problems the government caused, Mamdani’s solution to lagging housing supply is to build 200,000 more government-owned units. (RELATED: Washington’s Reverse Midas Touch)
The market incentives of government housing are little better than those of homeless shelters. Both are built and maintained through charity. If conditions are not unbearable enough to warrant media attention, and bare minimal safety standards are met, there is little reason to maintain or improve either.
But if greed caused market discrepancies, cell phones would be unaffordable for the working poor.
From a political standpoint, it seems natural for struggling people to lash out at corporations and multi-millionaires who raise rents. But if greed caused market discrepancies, cell phones would be unaffordable for the working poor.
Overpricing is the result of a glitch in the free market. Fixing that glitch by adding another glitch — having the government itself enter the market — will only make things worse for more people in the long run.
Freeing the Market Would Fix Rent Affordability
Phasing out rent stabilization would solve a large part of the problem with rental housing in New York City. Turnover rates in current stabilized complexes would normalize to market levels. This would cause rents to rise in these units, but it would bring down the rent at formerly non-stabilized market units. Removing the threat of rent stabilization and freezes would also encourage developers to build additional rental housing at every price point, further reducing rent prices overall by increasing the supply.
As economist Raymond Niles noted in a recent podcast interview, New York City has its own example of this — tenement housing at the turn of the 20th century. That was the only time in history when immigration levels matched former President Joe Biden’s open borders influx. Yet it was worse back then because, rather than coming through dozens of entry points, most immigrants were flooding through Ellis Island. Despite the muckrakers’ sob stories, tenement housing offered these newcomers far better conditions than the peasant hovels and ghetto shacks they left behind in their homelands.
Politicians are free to promise whatever they want, and voters are free to believe them. But neither can bend the laws of economics to implement those promises. Housing supply and demand work like any other good. Suppliers, incentivized by the profit motive, respond to demand. When conniving politicians like Mamdani tap into class envy to create an imbalance in the rental market, it causes the quality and quantity of lower-income housing to fall, exacerbating the gap between the rich and the poor as developers cater to the former.
The solution is to eliminate all price controls and allow the rental market to fluctuate freely. This would create the appropriate quantity of housing at price points people of every income level can afford.
READ MORE from Jacob Grandstaff:
America Is a Real Country, Not the World’s All-Star Team
The Anti-Colonial Shadow Over Mamdani’s Socialism
SCOTUS Just Missed a Big Opportunity to Stop Election Meddling
Jacob Grandstaff is an investigative researcher for Restoration News.
