Debt plant founder Jeff Sica discusses the impact of the real estate industry on the US economy and markets.
New York City’s rising costs have become a defining issue for voters in May’s Big Apple election, but politicians and economists are divided on long-term solutions to address them.
In theory, the Rent Freeze may seem like a quick and easy answer to the problem at hand. However, experts say it could hinder the city’s real estate market in the long term by preventing investment and capital gains for the fortified units.
During his campaign, Zohran Mamdani, a self-proclaimed Democrat running for Mayor on a platform to lower the cost of living for working New Yorkers, said the more than two million residents living in the investment room “must be a bed of economic security.” If elected, he promised to freeze taxes on those people who rent and use every resource available to increase affordable housing.
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Shannon McGahn, chief executive officer at the National Association of Realtors, warned that hiring frezes have historically.
“Developers are reluctant to build in areas where their properties may be subject to rent controls,” said McGahn, who noted a nationwide shortage of nearly 5 million units.
Residential apartment buildings in the Brooklyn Brough of New York. (Michael Nagle/Via Bloomberg/Getty Images)
“See [rent freezes] Cuse adred adf efrenction would have created very low units in the houses, “says McGahn.” The real solution is building more homes – less expensive –
Those concerns have been expressed at the city level, with New York Apartment Association (NYAA) CEO Kenny Burgos warning that the policy could discourage developers from investing in New York.
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“I don’t know any investor or builder who will want to build in a city where the mayor threatens the revenue and the ability to bring back the development of these projects,” said Burgos. “Therefore, you will have a lot of attraction for people to build the houses that we need, that Zohohran agrees that we need a lot.”
Experts say Cant Careze could block the city’s property market in the long run. (Zamek / Views)
Ed Elson, a business analyst and host of the “Prof G Markets” podcast, noted that the tax is determined by the forces of supply and demand.
“The solution to the high tax, therefore, is to increase more construction and more construction. Surprisingly, rent Freezes, caused by the tax is more than other places to be very high,” said Elson.
He also described cold hiring as ‘a policy too good to be true’ which would ultimately not achieve the public’s goal of reducing the cost crisis.
Alex Armlovich, a member of the New York City Returing Guidelines for Shrubs (RGB) and the policy of the New House House in the Niskanen Center, said that it supports the goal of expanding affordable housing, sending Zohran “cheap.”
But he also disagrees with Mamdani’s approach because it does not take into account the cost of renting in the free market, which is driving the problem. The argument is that most of his constituents do not understand this, he said.
The affordable message resonates with the people most affected by the excess money, but those people will not see relief from this policy, Armlovich said.
Why are the withholding tax rates increasing despite the fixed rate from the Fed?
“It’s the Market-Rate renters who are really suffering and they’re very happy and they’re being given an inexpensive message, even though snowballing won’t affect it. It’s a very strange thing,” Armlovich said. “The biggest problem in New York is our free market, right? Regulated taxes are doing well.”
Zohran Mamdani during the campaign at Ho lamahlathi Hills Stadium in Queens Blorough of New York, US, Sunday, Oct. 26, 2025. (Victor J. Blue/Bloomberg via Getty Images)
Burgos said the tax freeze is aimed at affordable housing in New York City. The proposal to Create Resents aims for about 1 million rental units, with an average rent of about $1,500, Burgo said, according to data from New York City Housing Nearing Neighborhoods.
Burgos said that in Manhattan, many buildings have a mix of market-regulated units — meaning some apartments are slated for sale where others do.
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“So, what will happen if the property owner gets snow on part of those units, the costs increase with insurance, tax, deducted by your neighbor of the market. So, your neighbor can think about it,” says your neighbor, then he will be supported by your free neighbor, “said Burgos.
There are nearly 1 million apartments in New York City. (Michael Nagle/Bloomberg via Getty Images)
However, Armlovich applauds Mamdani’s Proposit to add 200,000 housing units financed by the private market rather than removing them again and can help reduce the levels of low income, which is important to provide tenants retain.
“As long as he’s honest about that, that’s very exciting. We can get more supply in the market and get higher prices for space. He wants tenants to chase tenants, not tenants to grow apartments.”
Armlovich noted that without new construction, the city will continue to see low vacancy rates and rising home ownership, which results in higher market taxes.
