Supply and The Mam

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Logo: J.P. Morgan. Text: Eye on the Market. February 2026. Supply and the Mam: How will a Democratic Socialist address New York City's housing supply shortage?

An aerial photo of New York City at night, illuminated by many lights. A man speaks in an office, where the J.P. Morgan logo is above a shelf. A window offers a view on a city skyline.

(SPEECH)

Good afternoon, everybody. It's Michael Cembalest with the February 2026 Eye on the Market podcast. Over the last two, three months, almost every client I see in the tri-state area and even beyond asks me the same question, which is, what do you think of the new mayor? I try not to evaluate politicians before they've done a few things. I think it's kind of unfair.

But in this case, I think it's important for us to think about how a democratic socialist mayor will address New York's chronic housing shortage, particularly given some of the policies that he's put forth in terms of saying that he's going to try and solve it.

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New slide. Logo: J.P. Morgan. Text: Drop Dead City. Many caricatures of people appear in a poster for the movie Drop Dead City. Text: Last fall I saw quote Drop Dead City unquote, a documentary on this period. It was entertaining but I remember thinking that it let Mayor John Lindsay off the hook almost entirely. Lindsay didn't even show up among the eighteen caricatures on the movie poster. The documentary focused instead on Mayor Abe Beame who inherited most of the mess and other protagonists. But Lindsay, NYC's young, articulate and charismatic mayor from 1966 to 1973, was the architect of many policies that eventually led to the crisis: a debt-financed spending spree, a quadrupling of municipal pension costs and growth in city payrolls to the point where Lindsay's government employed more people than the garment, banking and longshoring industries combined.

(SPEECH)

So I want to start with this movie that I rented recently. It was called Drop Dead City, and it was a documentary on the city fiscal crisis during the 1970s.

It was pretty entertaining, but I remember thinking that it left Mayor John Lindsay off the hook almost entirely. There was a movie poster with 18 different caricatures of the people in the movie, and Lindsay wasn't even one of them. The documentary focused instead on Mayor Abe Beame, who inherited most of the mess, and a bunch of other protagonists. But it was Lindsay who was New York's young, articulate, handsome, and charismatic mayor from 1966 to '73 that was the architect of many of the policies that eventually led to the crisis.

A debt financed spending spree, a quadrupling of municipal pension costs, and growth in the city's payrolls, to the point where Lindsay's New York City government employed more people than the garment industry, the banking industry, and longshoring combined. Now you have to remember this was the '70s when all of those three things were pretty big businesses. So interesting that they kind of left Lindsay off the hook there. And that was the hook, so to speak, for me to start thinking about the new mayor and his policies.

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New slide. Text: NYC's new mayor Zohran Mamdani is a Democratic Socialist that campaigned on certain high-profile policies to address the housing shortage: 70 billion dollars in new city-funded capital investment in affordable housing, accelerated land use approvals for such projects, a rent freeze for rent stabilized apartments and increased taxes on companies and wealthy residents. This Eye on the Market looks at the NC housing shortage, its resulting demographic/economic costs and at prior policies enacted by the Adams Administration to jump start housing development. We then focus on Mamdani's housing proposals and challenges they face, in part due to constraints on NYC borrowing and its fiscal burden which is already high versus other cities. We conclude with research on the generally long-term negative impacts of rent freezes on the housing stock. Bottom line:if Mamdani's 70 billion dollar housing plan does not take flight, NYC will have to keep hammering away at restrictive zoning policies that impede development, forge private-public partnerships to improve housing abundance and affordability, and design solutions to the problem of uneconomic rent stabilized renovation cost-recovery rules.

(SPEECH)

So where are we? We have one of the tightest housing markets in New York City since 1960. And so the mayor, the new mayor, campaigned on some pretty high profile policies to address it. $70 billion in new city funded capital investment in affordable housing, public housing, accelerated land use approvals for these kinds of projects, a rent freeze for rent stabilized apartment, and increased taxes on companies and wealthy residents living in the city.

So in the Eye of the Market this month, we look at the housing shortage and some of its demographic and economic costs, and at some policies enacted by the Adams administration to try to jumpstart housing development. And then we focus on Mamdani's policies and the challenges they face. And then we conclude with a little bit of research on rent freezes and what they do.

The short answer, in case you have to go someplace, is that if Mamdani's $70 billion housing plan doesn't take flight for whatever reason, New York City is going to have to keep hammering away at restrictive zoning policies that impede development and forge more public-private partnerships like other cities, to improve housing abundance and affordability. And also, New York City is going to have to, at some point, design solutions to the worsening problem of rent stabilized units that aren't getting renovated because of the cost recovery rules that were put in place in 2019.

So let's dive in, and I hope you guys are interested in this topic, because I sure am.

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New slide: Text: The NYC housing stock. Graph title text: Total NYC housing stock and renter occupied units. Below the graph, text: Source: NYC Housing Vacancy Surveys, NYC HPD, N.Y.T., J.P.M.A.M., 2024. The graph's X axis lists years from 1965 to 2020, in increments of 5, from left to right. The Y axis begins at 0.0 and increases in increments of 5, up to 4.0. The Y axis is labeled Millions. A blue line is labeled total housing stock, a yellow line is labeled total renter occupied units, and a red line is labeled rent stabilized plus rent controlled. The lines show that total housing stock has increased from 1965 to 2020, that total renter occupied units has only slightly increased from 1965 to 2020, and that rent stabilized plus rent controlled has decreased from 1975 to 2020. The red line begins in 1975. None of the three lines uniformly increase or decrease throughout the graph's time period.

Text: Of 2.3 million occupied rental units, 41% are rent stabilized, 7% are public housing, 3% are rent controlled and the rest are unregulated. Another 15% to 20% now have protection under the recently passed Good Cause Eviction law which protects tenants in unregulated apartments from eviction or lease termination without a specific, legally defined quote good cause unquote, such as non-payment, lease violations or creating a nuisance, while also limiting rent increases and requiring lease renewals.

(SPEECH)

New York City is a renter city. Around 70% of the units are rented rather than owned. And of these rental units, around 40% are rent stabilized, 7% are public housing, 3% are still rent controlled, and the rest are unregulated.

It sounds like a lot of them are unregulated, around half, but 15% to 20% of those now have protection under something called the Good Cause Eviction law, which protects tenants even in unregulated apartments from eviction or lease termination without some kind of good cause.

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One remarkable thing about the NYC apartment rental stock: it is largely unchanged since 1965. Exclamation points in parentheses. Text: with almost all of the growth in the housing stock taking place in owner-occupied units.

(SPEECH)

What's really interesting and amazing when you look at the charts that we have in the piece on this, the New York City apartment rental stock is most-- in other words, the number of units is almost unchanged since 1965. I mean, that's kind of amazing.

Most of the growth-- almost all the growth in the housing stock has taken place in the owner occupied units. New York City housing stock being unchanged since I was born in the early '60s is an amazing stat and tells you everything you need to about why we have a housing shortage over.

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New slide. Text: The housing shortage. Graph title text: Payroll employment and housing units in NYC. Below the graph, text: Source: New York City Comptroller, February 13, 2024. The graph's X axis lists years from 1980 to 2020, in increments of five, from left to right. The graph's Y axis begins at 2.9 and increases to 4.7 at the top, in increments of 2. The Y axis is labeled Millions. A blue line is labeled employment and a gold line is labeled housing units. The blue line increases from 1980 to 2010, then jumps up sharply, then decreases sharply, then jumps up sharply again. The gold line's increase is more gradual. Text: Housing to employment ratio fell from 89% in 1980 to 79% in 2023.

(SPEECH)

Since 1980, when I graduated high school, the housing into employment ratio has fallen from about 90% to about 80%. In other words, the ratio of housing units to employment have been falling.

And then here's the really telling stat.

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New slide. Text: The housing shortage. Graph title text: NYC rental vacancy rate. Below the graph, text: Source: NYC Housing and Vacancy Survey reports, J.P.M.A.M., 2023. The graph's X axis lists years from 1945 to 2025, in increments of 10, from left to right. The Y axis is labeled Percent, dots indicate 2023 vacancy rate by asking rent. The graph's Y axis begins at 0% and increases to 5% in increments of 1. A blue line rises and falls several times from left to right, ending between 1% and 2% near to 2025. An arrow pointing to a dot on the graph near 2025 is labeled two thousand four hundred plus dollars. Another dot is labeled one thousand one hundred dollars to two thousand three hundred ninety nine dollars. Another dot is labeled less than one thousand one hundred dollars.

(SPEECH)

Vacancy rates in the city are only 1.4% Now, to put that in context, most academic research, civic planning research, says that vacancy rates need to be around 5%, maybe a little higher, so that there's enough inventory for people to move into the city or move within the city. And the vacancy rates in New York are now just 1.4%, and if we strip out the $2,400 plus rental category, the rental rates are below 1%. So that is a housing shortage.

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New slide. Text: The housing shortage. Chart title text: NYC new housing production by decade. Below the chart, text: Source: NYC Department of City Planning, Dec 5, 2024. The chart's x axis is labeled from left to right with the nineteen twenties, nineteen thirties, and so on, with each decade represented by a vertical bar, ending with the twenty tens on the right. The chart's y axis begins at 0 and increases in increments of 100, with 800 at the top. The y axis is labeled Housing units, thousands. The highest bar is the bar for the nineteen twenties. Text: NYC added 37k housing units in 2024, around 25% more than in 2023. However, to resolve the housing shortage, housing production would have to double to levels last seen in the nineteen fifties and nineteen sixties.

(SPEECH)

New York did add more units in 2024 than 2023, but to really resolve the housing shortage, housing production would have to double and stay there to levels that were last seen in the '50s and '60s, which was a very different environment in terms of construction and employment.

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New slide. Text: The housing shortage. Chart title: Number of newly permitted housing units in NYC. Below the chart, text: Source: New York City Rent Guidelines Board, May 2025. The chart's X axis has years from left to right from two thousand to twenty twenty four, in increments of four. The chart has vertical bars for those years and also vertical bars for each year in between the labeled years. The chart's y axis begins at 0 and increases to 70, in increments of 10. The Y axis is labeled Thousands. The vertical bars show a sharp drop from two thousand eight to two thousand nine, and twenty fifteen and twenty twenty two have particularly high vertical bars. Text: The number of NYC permits issued for new housing units in twenty twenty four was at its lowest level in the twenty first century aside from the years following the two thousand eight financial crisis. Slow permitting is a statewide issue as well. In twenty twenty four, North Carolina authorized twice as many new units as New York State with half the population.

(SPEECH)

And another way to think about what's going on is the number of permits that were issued for new housing units last year was at its lowest level in the 21st century, aside from the years following the financial crisis.

Slow permitting is not just in New York City. It's a New York State issue. North Carolina issues twice as many permits as New York State with half the population. So this is not a great state for permits.

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New slide. Text: The 2019 act. Graph title text: Apartment and building improvement filings at rent stabilized properties. Text: Number of filings parentheses both axes close parentheses. Below the graph, text: Source: Rent stabilization association of NYC, R.E. board of N.Y., February 2024. The graph's x axis is labeled twenty fourteen, twenty sixteen, twenty eighteen, twenty twenty, and twenty twenty two. The graph's left-side Y axis begins at 500 and increases to 4,500 in increments of 500. The graph's right-side Y axis begins at 50 and increases to 300 in increments of 50. A dotted vertical line between 2018 and 2020 is labeled Housing Stability and Tenant Protection Act. A blue line is labeled Individual Apartment Improvements, with a blue line pointing left below it. A gold line is labeled Major Capital Investments with a gold arrow pointing right below it. The blue line ends much lower than it began, and the gold line ends lower than it began. Text: Landlords are warehousing 25k to 50k rent stabilized units parentheses intentionally left vacant and not available for rent close parentheses. The City Journal cited an example of why some units are warehoused in the wake of the 2019 New York Housing Stability and Tenant Protection Act parentheses H.S.T.P.A. close parentheses which caps post-renovation rent increases. Assuming a dilapidated rent stabilized unit on East Sixth Street whose rent can only be increased by 347 dollars per month and a hundred eleven thousand dollars of renovation costs, a landlord's payback period would be 27 years even before assuming any return on capital or financing cost.

(SPEECH)

So let's talk about this 2019 Act. It was called the New York Housing Stability and Tenant Protection Act. And I understand why they did it, because for the decade before 2019, units were rolling off rent stabilization once they reached a certain rent level. And so the city wanted to stop the bleeding of units leaving rent stabilization.

So what they did is they put caps on how-- so you couldn't take units off of rent stabilization anymore, and they put caps on how much you could increase the rent, even if you spend money renovating them. And remember, a lot of times rent stabilized units need a lot of renovation when the tenants leave because they're in pretty dilapidated shape. Let me give you an example. Let's assume a dilapidated rent stabilized unit on East Sixth Street.

A lot of units like that need anywhere from $100,000 to $110,000 of renovation costs. I mean, it's a gut renovation in terms of window framing and painting, bathrooms, appliances, kitchen, floors. 100 to 110 grand is kind of a low budget renovation. According to this law, you can only increase the rent by $347 a month. And when you do the math, that's a payback period of 27 years for the property owner, even before assuming any kind of return on capital or financing costs.

Obviously, who's going to do that? Not a lot of people. Not a lot of property owners. And so you can see in this chart that we have in the piece that once that Act went in place, the applications to do major capital investments in buildings or individual apartment improvements plummeted. And what started going up was landlords warehousing these apartments-- and warehousing means you're intentionally leaving them vacant-- and not renting them out.

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New slide. Text: Building falling into disrepair. Graph title text: Operating cost versus rent stabilized rent increases. Below the graph, text: Source: Jason Barr parentheses Rutgers close parentheses, 2025. The graph's X axis is labeled 2012 to 2024 from left to right in increments of two. The graph's Y axis begins at 1.0 and increases to 1.8 in increments of 0.1. The Y axis is labeled Index parentheses 1 equals 2012 close parentheses. A blue line with dots is labeled operating costs. A red line with dots is labeled 2 year rent increases. A gold line with dots is labeled 1 year rent increases. All three lines end higher than they began, but the blue line ends much higher than the other two lines.

(SPEECH)

Another reason why they're doing that is because the rent increases that have been provided on a one and two year basis are consistently falling behind operating costs. And so, in a free market, what happens is you have more and more buildings. By some estimate, 20% of all the rent stabilized units have negative NOI. And so I think we shouldn't be surprised to find out that some of those property owners no longer want to rent them, because just not renting them could cost less money than actually renting them.

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New slide. Text: Consequences. Graph title text: NYC median gross rent to income ratio. Below the graph, text: Source: New York City Housing and Vacancy Survey, 2023. The graph's X axis is labeled 1990 through 2025 from left to right, in increments of five. The graph's Y axis begins at 35% and increases to 60% in increments of five. The Y axis is labeled Renters less than 70 thousand dollars parentheses 2023 U.S. dollars close parentheses. The graph ends higher than it began. Text: Misallocation and immobility. The NYC housing shortage has led to suboptimal housing conditions for most residents. As per the C.B.C. report, 25% of NYC households are moderately or severely overcrowded, 66% are undercrowded and only 9% meet standards that align household size and space. NYC severe overcrowding rates are more than twice the national average.

(SPEECH)

So what are the consequences of this? Because of the low growth in the supply, the rent to income ratio has gone from about 33% to 1990, which is around the national average today, to over 50%. And these are for median income families. So that's a very, very painful economic consequence of the housing shortage is that people are paying way too much of their money that they earn on rent. And it also creates other really bizarre things related to immobility.

And the Citizens Budget Commission-- and I tried using really kind of unbiased Affordable Housing Commission, Citizens Budget Commission, Independent Budget Office type sources here. And as per those reports, only 9% of households are in the proper size relative to number of people, where the vast majority of households are either undercrowded or overcrowded. They're overcrowded because they can't afford to move, or they're undercrowded because after the kids leave, they don't want to leave because they have such a sweet deal and they can't afford to move anywhere else.

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New slide. Text: Zoning, Zoning, and more Zoning. From 1961 to 2022, 60% of NYC's 59 Community Districts experienced negative or limited growth in allowable residential building space, either due to downzoning or historic district creation. As of 2022, 39% of all NYC residential buildings were impossible to tear down slash rebuild since they were at or above their allowable floor area ration parentheses F.A.R. close parentheses. Another 24% were within 25% of allowable F.A.R., rendering them uneconomic to tear down slash rebuild as well. To make matters worse, 50% of properties with extra F.A.R. were on lots of 2,500 square feet or less, rendering them difficult to rebuild economically. In 2024, 92% of housing near subway stops outside of Manhattan was three stories or less. If each building were redeveloped by adding double the current stories, quote, the affordable housing crisis would be over, unquote.

(SPEECH)

Now, what does this all boil down to? Three things. Zoning, zoning, and zoning. Those are the top three reasons that New York City is in this mess. And I have a couple of statistics here that I want to share with you. Some of these are just staggering when you think about them. So for 40 years, from 1960 to 2020, more than half of all New York's community districts experienced negative or limited growth in the allowable residential building space because they were either downzoned-- I'll explain that in a minute-- or they had historic district creation.

Downzoning means that you're putting in zoning rules that are more restrictive than what was there before. So think about that. Over 40 years, as this housing situation is worsening, more than half of the community districts decide to make it even more difficult to build. And by the time you get to 2022, 40% of all the buildings in New York are impossible to tear down and rebuild because they're above the allowable floor area ratio for that particular parcel.

Like, that's incredible, that 40% of all the residential buildings are now higher than what you could build from scratch. And so therefore, nobody's going to touch them, nobody's going to fix them, nobody's going to renovate them. And then the last thing is, if I were stuck with someone in an elevator and I just had a couple of minutes before they got off on their floor and they said, tell me about New York City housing. I'd give them this one statistic. And this is kind of amazing.

And I got this from Jason Barr, who's a professor at Rutgers that focuses on these geospatial issues in civic planning. 92% of all the housing near subway stops outside Manhattan, within in the other four Boroughs are three stories or less. Let me say that again. If you trace the subway lines outside Manhattan and you go out into Brooklyn, Queens, Bronx, Staten Island, and you follow those subway lines and you look along those corridors and the streets with the subway lines are, where you're supposed to be maximizing the amount of people that live there to take advantage of all this money that you spend on public transit.

90 plus percent of those buildings are three stories or less. If each one of those buildings were just doubled from one story to two or two to four or three to six, the whole affordable housing crisis would be over. So this is all about zoning. Now, I know Adams left office with a variety of clouds over his head.

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New slide. Text: Finally, the City of Yes passed in 2024. Six images contain maps of New York City. The six images' titles are Transit Oriented Development, Town Center Zoning, Accessory Dwelling Units, Universal Affordability Preferences, Parking Mandates, and Residential Conversions. The different maps have different areas of the city highlighted in colors, and they contain additional text. Text: 1. Transit Oriented Development re-legalizes modest apartment buildings near subway slash rail in low density areas. 2. Town Center Zoning re-legalizes housing above businesses on commercial streets in low density areas. 3. Accessory dwelling unit reform allows one and two family home owners in residential districts to add basement or detached units with a maximum size of 800 square feet. 4. Universal Affordability Preferences allow buildings to add at least 20% more housing if the additional homes are quote permanently affordable unquote to households earnings an average of 60% of Area Median Income in medium and high density districts. 5. New rules eliminate parking requirements in Zone 1 parentheses Manhattan and waterfront Brooklyn slash Queens close parentheses, relax them in Zone 2 and largely maintain them in Zone 3. 6. Expansion of eligible geographies for non-residential to residential conversion.

(SPEECH)

I'm not going to get into those because I don't know enough about them. But what I do know is under his leadership, the city, New York City, finally passed this thing called the City of Yes in 2024.

And it looks like it opens up some avenues here to address some of these zoning issues. And there are a few of them. We have some maps in here that look at where they apply. So they're trying to fix this issue of transit oriented development. And what it does is it re-legalizes modestly larger apartment buildings near subway and rail in low density areas.

Now, some parts of the city negotiated their way out of this thing, but enough parts are in it, it'll be interesting to see what happens. They're also allowing more housing above businesses on commercial streets. They passed this thing called Accessory Dwelling Unit Reform, which allows one and two story family buildings in the basement or in the backyard to build a detached unit of 800 square feet to increase the density. A lot of people have been asking for that.

There's also been a relaxation of some crazy parking rules in parts of Manhattan and the waterfront, Brooklyn and Queens. And then lastly, they have expanded the eligible geographies where you can convert buildings from non-residential to residential. So this was potentially a pretty big deal. We'll have to see exactly how it plays out over time.

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New slide. Text: F.AR. changes: much ado about nothing. Graph title text: NYC average allowable residential Floor Area Ratio. Below the graph, text: Source: Jason Barr parentheses Rutgers close parentheses, 2025. The graph's X axis begins at 0 and increases to the right to 25, in increments of 5. The X axis is labeled Distance from Empire State Building, miles. The Y axis begins at 0 and increases to 8 in increments of 1. A blue line with dots is labeled 2025 average F.A.R. post-zoning law change. A gold line with dots is labeled 2024 average F.A.R. The two lines both end lower than they began and the two lines' points are near each other.

(SPEECH)

They also passed something called an FAR Reform, which is a floor area ratio reform. Almost every developer that I talked to-- that I've ever met talks to me about the limitations that they can't build as high as they want.

This law is much ado about nothing. By the time you crunch all the numbers, the places where the FARs were increased were so marginal and narrow and with all sorts of carve outs and exclusions that they didn't really accomplish much there.

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New slide. Text: Mamdani policies and priorities. Housing priorities. Construct 200k units of subsidized, union-built, rent-stabilized apartments over 10 years. Accelerate land use approval process for 100% affordable housing developments. Double spending to preserve public housing parentheses renovations and buildings on underutilized city-owned land close parentheses. Enacted policies. Revamp of the Mayor's Office to Protect Tenants which defends tenant rights and advocates for habitable building conditions. The mayor plans to conduct quote Rental Ripoff unquote hearings to solicit feedback from renters. Two task forces to accelerate residential construction on city-owned land and to remove bureaucratic and permitting barriers that increase housing costs and slow construction.

(SPEECH)

So now let's talk about Mamdani and his housing policies and priorities. So what are they? Build 200,000 units of subsidized union built, rent stabilized apartments over 10 years. If they could do that, that would substantially alleviate the housing shortage in New York.

They want to accelerate land use approvals for these kinds of developments, and they want to double spending on existing public housing. Now, that I can understand. The latest reports from the city are that the city is $78 billion in arrears on repairs to public housing. So I can understand why the mayor wants to spend some more money on that. The mayor's also launching rental ripoff hearings to solicit feedback from renters, and more task forces to accelerate construction and remove permitting barriers and things like that.

So what do I think of these things? Well,

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New slide. Text: Borrowing constraint number 1. Chart title: Debt service as a share of tax revenues. Below the chart, text: Source: New York City Office of the Comptroller, November 29, 2024. The chart's X axis has years from 2021 to 2034, with a vertical bar above each. The chart's Y axis starts at 0 percent and increases to 16 percent in increments of 2 percent. The Y axis is labeled Percent. The bars above 2021 through 2024 are dark blue and are labeled Historical. The bars above 2025 through 2034 are light blue and are labeled Forecast. A gold dotted line near the top of the chart is labeled 15% debt affordability ceiling. The charts' vertical bars trend to increase toward the right.

(SPEECH)

the first constraint the mayor's going to run into, unless he can convince the federal government and the state government to cover a lot of the cost of this plan, is that the city can't afford it. And there's two big constraints to think about. One is that the city typically applies a cap of 15% of debt service as a share of tax revenue, and based on the projections from New York's own comptroller, New York's headed to about 14.3% or something within a few years.

So there's not a lot of room to all of a sudden borrow $70 billion in the GO market to finance this. The second thing that's even more binding-- there's a state constitutional limit on the borrowing power of New York City.

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New slide. Text: Borrowing constraint number 2. Chart title: NYC remaining debt-incurring power, 2028. Below the chart, text: Source: New York City Office of the Comptroller, November 29, 2024. The chart's Y axis begins at 0 dollars and increases to 160 dollars in increments of 20. The Y axis is labeled U.S. dollars, billions. The chart has one rectangle divided into four layers, stacked on top of each other. The lowest layer is labeled General Obligation bonds. The next layer is labeled T.F.A. bonds. The next layer is labeled Other. The top layer is labeled Remaining Borrowing Capacity.

(SPEECH)

And a bunch of that is already taken up by existing GO bonds, some TFA bonds, and some other bonds. So there's only about $30 billion left there, and presumably the mayor wouldn't want to exhaust the entire amount of remaining borrowing capacity just to finance part of this plan.

So the borrowing constraints are real here and not just imagined.

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New slide. Text: NYC debt burdens are already very high. Chart title: Net municipal obligations per taxpayer. Below the chart, text: Source: University of Denver, J.P.M.A.M., 2025. The chart's Y axis begins at negative 60 dollars and increases in increments of 10, ending at 10 dollars. The Y axis is labeled U.S. dollars, thousands. From left to right, in line with 0 dollars on the Y axis, a black line stretches across the chart. Many vertical bars are on this line, each labeled with the name of a U.S. city. New York City's bar is the most negative bar. Most of the bars are negative, and only four cities have bars that rise above the 0 dollar line of the chart.

(SPEECH)

Then you have to remember, New York City debt burdens are already very high. We have six different charts in the piece that look at different measures of debt per capita, debt to personal income, debt to revenues. Just want to show you one of them here from the University of Denver.

New York has the highest net municipal obligations per taxpayer compared to a whole bunch of other cities, even worse than Chicago, which is saying something because they normally win gold medals in this kind of thing. So that's the other real world constraint on what the mayor might do is that the New York City debt burdens are already pretty high.

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New slide: Text: Rent freezes: short term gain, long term pain. Chart title: Meta study of empirical analyses on the effects of rent control. Below the chart, text: Source: Journal of Housing Economics. A. Kholodilin, parentheses D.I.W. Berlin close parentheses, February 2024. The chart's X axis has areas labeled Controlled rents, Mobility, Construction starts, Housing quality, Uncontrolled rents, Housing supply, and Misallocation. The chart's Y axis begins at 0 percent and increases in increments of 20 percent to 100 percent. The Y axis is labeled Share of 100 plus studies. The labeled areas on the X axis have 1 to 3 vertical bars, which are blue, red or gold. Red is labeled Decreased as a result of rent control. Gold is labeled Neutral effect from rent control. Blue is labeled Increased as a result of rent control. A red bar is the highest in Controlled rents,Mobility, Construction starts, Housing quality, and Housing supply, while the red bar is the lowest in Uncontrolled Rents. Misallocation only has a high blue bar. The blue bar is the highest bar in Uncontrolled rents. The gold bar is not the highest in any of the areas it appears in, which is all of them except for Misallocation.

(SPEECH)

Now, there's a lot of discussion about a rent freeze. Short term rent freezes are probably not a big deal, but longer term rent freezes can be.

And there's been a ton of research on this topic, and a study just came out that combined a hundred rent freeze and rent control studies. And the authors describe the results as unambiguous. And that's not a word that most of the people who write these studies usually use. Unambiguous means almost all the studies pointed in the same direction. So what did they find? That rent freezes and rent control, definitely they control rents. By law, they prevent you from raising the rent, so that's good.

But labor mobility collapses, new construction starts decline, housing quality gets worse, the housing supply goes down or stops growing. Rents skyrocket in the uncontrolled part of the city, and then you have worse misallocation. So you pay a price. You can do it and you can protect people in the short term, but you pay a longer term and medium term price for this kind of thing. And again, these results were pretty consistent.

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New slide. Text: Tax rates? NYC is already at the top. Two charts and a table appear on the slide. The leftmost chart is titled Top 15 marginal personal income tax rates. Below that chart, text: Source: J.P.M.A.M., January 2026. The X axis has multiple vertical bars and the Y axis begins at 0% and increases to 15% in increments of 3%. The Y axis is labeled State plus local tax rates. The vertical bars are labeled with the names of different U.S. cities. Areas of the bars enclosed in black borders are labeled as being local, while areas not enclosed in borders are labeled as being State. New York has the highest vertical bar.

The second chart is titled Top marginal corporate income tax rates. Below that chart, text: Source: Citizens Budget Commission, January 2026. The chart's X axis has vertical bars labeled with different U.S. cities and states. The chart's Y axis begins at 0 percent and increases in increments of 3 percent, ending at 18 percent. The Y axis is labeled Percent. Blue portions of bars are labeled State, gold portions are labeled City, and red portions are labeled M.T.A. The red portion of a bar labeled N.Y.S. asterisk has an arrow pointing to it and a label with text: Asterisk, New York State within M.T.A. region. The vertical bar labeled N.Y.C. is the highest bar.

The table is titled Effective property tax rates per square foot. The table compares the rates of different U.S. cities, and is divided into Industrial, Office, Rental and Multi-family. According to the table, N.Y.C. has the highest Industrial rate, second-highest Office rate, highest Retail rate, and highest Multi-family rate. Below the table, text: Source: Altus Group, Rosenberg and Estis, 2024.

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Tax rates. Everybody listening to this call should know, the mayors can't raise income tax rates. There are state legislatures that have to do that, and then the governor has to sign bills that approve it. It's a little miniature version of what it takes at the federal level. And by the way, even if the mayor convinces members of the state legislature to raise tax rates, the top marginal personal income tax rates in New York are already the highest in the country, and the top marginal corporate income tax rates in the US are also the highest in the country, particularly adding the MTA surcharge for some of the downstate regions.

So if the mayor pushes for higher taxes, I think he's going to run into a buzzsaw, at least in parts of the state legislature, given those facts. Now, the mayor and the city council do have the flexibility to unilaterally raise property tax rates. But New York also has the highest property tax rates per square foot for industrial, retail, and multifamily properties. So there's not a lot of wiggle room here to try to raise taxes to finance this plan.

So there's a lot more information in the piece on scaffolding laws and construction and insurance and all that kind of stuff. But just to wrap up here,

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New slide. Text: Wrapping up. If Mamdani's 70 billion dollar housing plan does not take flight, N.Y.C. will have to keep hammering away at restrictive zoning policies and construction costs that impede development, and forge more private-public partnerships to improve housing abundance and affordability. Building on the foundation of City of Yes plan would be a great place to start. That was the core message in New York Governor Hochul's quote Let Them Build unquote plan announced last month, a sign that New York might finally cut some of the red tape which consistently places the state close to last in cost of doing business surveys. Let's not jump the gun, however. A similar plan failed to pass the New York State legislature in 2023. A recent article in the Georgetown Journal on Poverty Law and Policy concluded that the 2019 H.S.T.P.A. Act and the Good Cause Eviction law are counterproductive. Rather than helping the most vulnerable, these policies exacerbate housing scarcity, push out small landlords and make it harder for low-income renters to find and maintain stable housing. Could there be an epiphany in City Hall? Highly unlikely. Based on his statements, this is not a policy view that N.Y.C.'s new Democratic Socialist mayor is likely to adopt, suggesting that the city's government and owners of one million N.Y.C. rent stabilized units may remain at cross purposes for years to come. If so, the stock of N.Y.C. rental units may remain stuck at levels which haven't grown by much in over 50 years.

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for whatever reason, if Mamdani's plan does not take flight-- and again, if it does, it would make a big dent in the affordable housing shortage in New York. But if it doesn't take flight, New York's going to have to go back to the hard work and hammering away at restrictive zoning policies, construction costs that impede development, and forge more private-public partnerships to improve the stock and the affordability of housing.

The City of Yes plan is a good start, and Hochul of all people announced to Let Them Build plan just last month, which was a sign that New York might be finally interested in cutting some of the red tape, which consistently places New York close to the last in the country in the cost of doing business surveys. Now let's see what happens. A similar bill failed to pass the legislature in 2023, but it's an interesting sign that Hochul is moving in that direction.

So to close here, there was an article in the Georgetown Journal on Poverty Law and Policy, a pretty progressive publication, that concluded that the 2019 Act and the Good Cause Eviction laws are counterproductive. They make it harder for the most vulnerable families to find housing, it pushes out small landlords, and it makes it harder for low income renters to find a place to live because it effectively contributes to shrinking supply. Could there be some kind of epiphany in city hall among the mayor and his people on this?

I doubt it, based on his public statements. That's not likely the view the new mayor is going to adopt. We'll see. And if he doesn't, the city's government and owners of a million rent stabilized units are going to remain across the table from each other for years to come. And if that's the case, the stock of New York City rental units may be stuck at levels which haven't grown by much in over 50 years. So that's the story on the new mayor and housing policies, the housing shortage. Thank you for listening.

The next Eye on the Market, coming out in early March, will probably be scheduled to be our annual energy paper. It's a whopper this year with lots of interesting things. And then between now and then I'm going on my bucket list catamaran trip to fish in the Seychelles for dogtooth tuna.

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He waves.

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So long, everybody. See you in March.

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Text: February 2026. Supply and the Mam: How will a Democratic Socialist address New York City's housing supply shortage? An aerial photo of New York City at night, illuminated by many lights.

Logo: J.P. Morgan.