“I would never invest in rental housing in New York,” a Florida real estate person emailed me in July. “No wonder there’s a rental housing shortage there. New York is a terrible place to be a housing services provider.”
I like pointing out contradictions, so I replied that a housing shortage is good for investments in rental housing, because scarcity keeps rents high.
But the Florida guy wrote back, “Not where there’s rent control and a war on housing services providers. And New York is the worst!”
Why not invest in free-market rentals, which are about half of the city’s rental units?
“Prefer places where rent regulation is against the law. Less risk that my non-rent regulated investment becomes rent regulated.”
I thought: That has not happened in 50 years, and the risk of it happening again is close to zero. But I let the conversation die — or so I thought.
Three and a half months later, Zohran Mamdani was elected mayor. Lo and behold, the Florida guy dug up our email thread and came back like a bad rash.
“Still think New York is a great place to be an HSP?” he wrote.
I was getting testy, but answered politely: “If your buildings are free-market, yes. Rent-stabilized, no. A Mamdani victory has been baked in for four months now. Free-market rents have remained strong.”
Then came a comment I wasn’t expecting.
“What’s to stop Mamdani from freezing rents on properties that are currently free market?”
Was he baiting me? No. It was an honest question — born from a fear that Mamdani is a Svengali-like figure who could turn the city into a socialist state.
I assured the reader that the city has no authority to enact universal rent control, let alone freeze all rents. The Urstadt Law makes rent stabilization a state matter.
The closest that New York has come to this is Good Cause Eviction, a 2024 law that makes it hard for a landlord to evict a tenant for nonpayment after a rent increase greater than 5 percent plus the rate of inflation.
The initial soft cap on rents was nearly 9 percent — a far cry from a hard cap of zero percent.
But Mamdani has caused such panic among some people that they think he could do anything.
Reality check: Even if he hypnotized the state legislature and instructed it to pass universal rent control with zero percent increases, it would be challenged in federal court and ruled an unconstitutional taking.
I should have known that the Florida guy wouldn’t accept this. Mamdani haters have whipped themselves into an absolute frenzy. I saw one person on X tweet that every Jew she knows is talking about leaving New York — “Every. Single. One.”
She clearly has a close circle of like-minded friends. Polling indicates about one-third of Jewish voters supported Mamdani.
Getting back to rent control: The courts have ruled that changes to rent-regulated housing are constitutional because buyers of those buildings knew those regulations could be adjusted. That rationale would not apply to free-market buildings.
Mamdani has proposed rent stabilization for future developments that receive a tax abatement. We actually had that system for a previous version of 421a. Now it only applies to affordable units in those tax-abated buildings.
Even if Mamdani persuades Albany to go back to the previous system, investors would know in advance if their rental projects would be subjected to stabilization. It couldn’t be applied retroactively.
Florida guy, unfortunately, still wasn’t convinced that the “takings” clause would protect owners of free-market rentals. He noted that the courts have never ruled rent control unconstitutional.
That’s like saying the courts have never ruled murder legal. If New York passed a law legalizing murder, I am confident that the courts would strike it down.
The truth is, I don’t have to convince people like the Florida guy that New York multifamily — except for fully rent-stabilized buildings — is a good bet, despite Mamdani’s rhetoric and disdain for profit.
Savvy investors know that a mayor only has so much power and is term-limited. If Mamdani scares some investors away, others will see an opportunity. The market will decide.
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