If economic reality were over here, then New York City's Mayor-elect Zohran Mamdani's understanding of economic reality would not only be over there, it would be way, way over there, somewhere out past the Crab Nebula. But, sadly, in New York, he's got plenty of company.
One of the dumber things that the Big Apple has in its quiver of housing policies is rent control, and largely because of that idiocy, thousands of New York City apartments have been rendered economically unviable. City Journal's Adam Lehodey has some telling details to share.
Where there’s a renter, there’s a landlord who stands to profit—though that profit is by no means guaranteed. To profit, the landlord must make sound decisions as to maintenance, capital investment, and marketing. These costs must be paid; only after they’re met can the owner potentially make a profit. The legal environment also has to permit some return on investment.
But in New York City, that’s not always how it works. Take 429 East 6th Street as an example. A mere five-minute walk from Tompkins Square, the building is a convenient home for students and young professionals.
One-bedroom units in the building average $3,500— except two of them, subject to the city’s rent-stabilization laws, which hold rents below $900 per month.
As a result, both units have been allowed to fall into disrepair, because the cost of restoring them to habitability is greater than what they’d generate in rent. “We’re talking a minimum of $100,000 for [the studio we first visited], which requires a complete remodeling,” Michael Johnson, a vice president at the New York Apartment Association, explained.
To call this a stupid policy is to grossly underestimate the entire history of stupid policies. For New York City renters, this whole idea of rent control is stupidity on steroids. And the incoming mayor looks poised to, as a certain Senator famously said, double down on stupid. He's not just planning to control prices; he's advocating for outright seizure.
Read More: Good Luck With That - New Poll Shows New Yorkers Think Mamdani Might Not Be So Bad After All
There is an economic reality here that Zohran Mamdani can't just wish away. These buildings are privately owned. If the city wants to put a ceiling on rents, and if that ceiling is below the amount it costs to maintain the building - let alone turn a profit - then these buildings will be neglected, or worse, abandoned. Seizure by the city? That's just piling stupid on stupid. Look at the state of repair of any public-housing project, anywhere in the country, and you'll get a very good preview of what will happen in the Mamdani scenario.
What New York should be doing is eliminating rent controls. The city will never be a cheap place to live; that's inevitable. But if landlords can turn a profit, then there is an incentive: To build, to improve, to maintain, to let the market, not the government, set rates. At present, there is little or no incentive, and the city's rent-control policies are the reason why.
Socialism fails every time it's tried. But watch the incoming Mamdani administration, who are for sure and for certain to claim that they have the right Top Men, and that socialism, in housing markets and in everything else, will work - as Bullwinkle J. Moose intoned while trying to pull yet another rabbit out of a hat, "This time, for sure!"
Editor’s Note: Zohran Mamdani is an avowed Democratic Socialist, and on January 1st, he will be the next mayor of New York City.
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