Mamdani’s Rent Freeze Is Going As Well As Expected

If only someone could have predicted that the guy who ran for office promising a city-wide rent freeze was going to make things worse. Wait, didn’t lots of people predict this would not go well? Back in January, I wrote about how the rent freeze would lead to higher rents.

You really don’t need to be a financial wizard to realize that freezing rents is going to have a serious impact on those landlords as well as potential developers who quickly realize there is no money to be made in NYC real estate. Rent freezes are popular among renters but in the long run they only lead to higher rents for everyone because there’s no incentive to build new housing.

I pointed out how a comparison of LA and San Diego proved the point. LA, like New York, has rent control and it’s difficult to build in the city. As a result rents are up and vacancy levels are low. San Diego has no rent control and streamlined building processes. As a result, San Diego is building new apartments like crazy.

 The result: As of last quarter, the number of new apartments under construction in San Diego County rose 10% from three years earlier, CoStar data show. New apartment construction in Los Angeles County tumbled 33% over the same period, hitting an 11-year low in the three months through December. San Diego is expanding its apartment pool at nearly twice the rate of L.A. and other major city clusters in the state.

And that brings us back to New York City where the mayor who promised everyone “affordability” is presiding over a spike in rent.

The average price tag for a place to live just hit a jaw-dropping $6,655 a month, an all-time high, according to fresh data from Corcoran Sunshine Marketing Group.

That’s a brutal 10% jump from a year ago, and real estate pros are pointing straight at Mayor Mamdani’s incoming rent freeze on stabilized units as one of the culprits, along with a looming pied-a-terre tax that brokers say is only going to squeeze the market harder. The pain is compounded by a record-low number of vacant apartments across the city, leaving desperate renters with almost nowhere to turn.

The median rent, meanwhile, sits at $5,295, up 6% from last July, though it held flat month over month after climbing 3% in both June and July from May’s previous record of $5,125.

Every size apartment is getting hit, with average prices up double digits for two- and three-bedrooms. Studios now average $4,088 (up 8%), one-bedrooms are at $5,486 (up 7%), two-bedrooms have soared to $8,054 (up 13%) and three-bedrooms are averaging a staggering $12,228 (up 12%), all year-over-year. Studios, one-bedrooms and two-bedrooms have all hit all-time highs.

Mamdani’s rent freeze has been voted on but technically doesn’t take effect until October 1. Still, everyone knows what’s coming. Fox News has more.

At the same time, apartments are becoming harder to find. The number of rentals available across the city fell 1.4% from a year ago, while Manhattan saw a 4.4% drop. It was even more dire for larger apartments in Manhattan, where the number of available two-bedroom units fell 9.3% and three-bedroom units dropped 11%.

Mamdani has promised to expand the supply of new apartments but that goal is at odds with the rent freeze he ran on.

“Merely the threat of a more hostile tax and regulatory environment has been enough to chill investment in New York City, and that’s already impacting prices,” E.J. Antoni, chief economist at the Heritage Foundation, told Fox News Digital. “Builders and financiers aren’t going to start multi-year projects that might become unprofitable on Mamdani’s next whim.”…

“Economists, whether they are on the right or on the left, essentially are in universal agreement, that when the government implements price controls in the rental market, you end up with housing shortages,” Antoni said.

Mamdani has promised to build 200,000 new apartments over the next decade. Unless he can somehow pull that off, rents are going to continue to go up.

Finally, it’s worth pointing out that a group of New York landlords has sued to block the rent freeze.

The complaint, filed in Staten Island Supreme Court, alleges Mamdani placed undue influence on the nine-member Rent Guidelines Board — which then cherry picked data to understate landlord costs and overstate incomes. The mayor-appointed panel voted 7-1 in favor of a rent freeze on one- and two-year leases. The decision will take effect on leases signed on or after Oct. 1.

The board “made a mockery of its statutory mandate, resorting to multiple manipulations of its own data to try to justify this irrational result. And this all comes amid unchecked inflation and rising costs that struggling landlords will have to bear to survive,” the lawsuit alleges.

That lawsuit may just be the start. There are cases pending which could make their way to the Supreme Court and potentially overturn the whole scheme of rent control. The Supreme Court passed up a chance to take cases like this a couple years ago but things could change.

The composition of the nation’s highest court has not changed since 2024, when it declined to hear multiple lawsuits challenging the constitutionality of New York’s rent-regulation system. It also declined to hear a similar lawsuit in late 2023. Those challenges were filed in the wake of sweeping changes to New York’s rent laws in 2019, when state lawmakers overhauled the system to make it much more favorable to tenants.

However, the court’s 2024 denial of two of the cases came with a statement from Justice Clarence Thomas that seemed to leave the door open to hearing a future challenge — if landlords can bring a case with the right set of circumstances. “In an appropriate future case,” Thomas wrote, the court should “address this important question.”

There are already two existing federal cases, one of them filed shortly after Mamdani’s general election win. That lawsuit, brought by the libertarian Institute for Justice on behalf of landlord group Small Property Owners of New York and individual landlords, alleges restricting rent hikes on vacant apartments violates the takings clause of the Constitution. The case is pending in federal district court. The other lawsuit, also a takings claim, was filed in 2022 by a Manhattan landlord who is now being represented by the libertarian Pacific Legal Foundation. They’re awaiting a decision on whether the Supreme Court will take up the case.

Maybe SCOTUS will save Mamdani from his own bad policies. For now, his affordability promises don’t seem very realistic. If only someone would have told the voters this wasn’t going to work.

Editor’s Note: New York City is now facing the consequences of Mayor Zohran Mamdani’s socialist takeover.

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