Mamdani’s road to housing hell is paved with rent freezes

As housing affordability becomes increasingly elusive, there are few things more politically alluring than telling voters their rent will not increase. It was a campaign promise that helped propel Zohran Mamdani to become Mayor of New York City (NYC). Last week, he delivered on that promise by pushing the city’s already-stringent rent control system to its logical extreme: a rent freeze.

At first glance, it looks like Mamdani is providing relief to tenants. Unfortunately, what makes for good politics typically makes for bad public policy. Decades of research indicate that rent control comes at a steep long-term cost, especially for those whom it was intended to help.

Nobel Prize-winning economist Assar Lindbeck was hardly a fan of laissez-faire economics. As a Swedish social democrat who favored an expansive welfare state, Lindbeck nevertheless famously observed that “In many cases, rent control appears to be the most efficient technique presently known to destroy a city, except for bombing.”

While bombastic in tone, his declaration was not hyperbole. As CEI Senior Economist Ryan Young explains, it reflects the straightforward economic principle that price ceilings suppress the price signals that communicate information and coordinate supply and demand.

When housing is priced below market value, more people seek apartments while fewer people have an incentive to provide them. The result is not merely lower rents for some tenants, but a shortage of housing itself. The question is whether this prediction holds outside the pages of an economic textbook. The answer is a resounding “Yes!”

A recent meta-analysis synthesizing about 200 empirical studies on rent regulation across countries and time periods found a strikingly consistent pattern: rent control reduces the supply of rental housing, discourages new construction, and tightens housing markets over time.

One well-documented example of this dynamic comes from San Francisco’s rent control expansion, where the rent-controlled unit supply fell by roughly 15 percent and rent levels for the entire city increased by 5.1 percent. This mechanism has been extensively discussed in the policy literature, including research by former CEI Senior Fellow Joel Zinberg, which has long emphasized that rent controls undermine affordability by discouraging new housing supply over time.

As housing becomes scarcer, allocation shifts away from prices and toward incumbency. Tenants in regulated units are largely shielded from market pressures. Meanwhile, new entrants compete for a smaller pool of available housing in the unregulated sector. Rent control thus shifts costs onto those without access to regulated apartments, which benefits a smaller group of incumbent tenants at the expense of everyone else.

Los Angeles and NYC case studies show that rent control also raises prices in the uncontrolled sector, where rents have been estimated to be significantly higher than they would have been absent regulation.

Another study of NYC’s rent stabilization system concludes that its benefits are driven by incumbency, with rent discounts accruing broadly across the income distribution. Notably, these gains extend beyond low-income households to include higher-income tenants as well, particularly those in Manhattan and gentrifying neighborhoods. In other words, rent control is poorly targeted at the working class that Mamdani purports to help.

Yet those benefits to incumbent tenants only last if landlords continue to invest in maintaining their buildings. Rent control constrains the revenue available to property owners while the costs of maintenance keep rising.

As former CEI Fellow Kathryn Ciano noted, when landlords are unable to recover costs through rent, they have weaker incentives to maintain and repair units. Consequently, deferred maintenance becomes more common over time. As returns on investment decline, so does the incentive to repair, upgrade, or modernize regulated housing.

The result is predictable: less reinvestment in housing stock. Research is consistent with this mechanism, with a study of NYC rent control finding elevated maintenance violations and reduced reinvestment in rent-regulated housing relative to comparable unregulated stock. Markets also quickly recognize these diminished incentives. Following St. Paul’s adoption of rent stabilization, affected properties lost roughly 6 to 7 percent of their value within a year, reflecting lower expected returns on rental housing.

Evidence from Cambridge, Massachusetts provides a useful case study in reverse. When rent control was removed, building permits rose by roughly 20 percent and construction spending doubled over the following decade. This pattern is not new. A RAND Corporation analysis from the early 1980s likewise identified deterioration in maintenance incentives and housing quality under rent control.

Whether it is international research or NYC-specific evidence, rent control is found to reduce housing supply, weaken incentives for construction and maintenance, and increase rents for non-rent-controlled housing. NYC has lived under these dynamics for decades, and the results are well documented: persistent scarcity, distorted allocation, and declining investment in housing stock.

Mamdani’s rent freeze takes that failed framework further by removing even minimal price adjustment, thereby tightening an already constrained market. If New Yorkers think housing is tight now, they may soon learn what a truly frozen housing market feels like.