Signal Vs. Noise: What New York City’s Housing Market Needs Now

ByShimon Shkury,

Forbes contributors publish independent expert analyses and insights. I write about real estate investment, capital markets and research.Follow AuthorJun 10, 2026, 01:00pm EDTJun 10, 2026, 03:44pm EDTApartment buildings in Midtown Manhattan. getty

Everyone agrees New York City needs more housing. The harder question is not whether to build, but how to build enough housing, how to pay for it, and how to preserve what already exists.

That distinction matters.

In every political cycle, housing attracts headlines, slogans, ambitious targets and strong opinions. But the housing market doesn’t respond to speeches. It responds to financing, operating costs, regulations, tax incentives, approvals and, above all, certainty.

That’s the difference between signal and noise.

A signal is a housing policy that improves operating feasibility, preserves buildings, attracts capital and accelerates development. The noise is anything that sounds ambitious but doesn’t address the underlying math.

With that framework in mind, Mayor Zohran Mamdani’s housing agenda deserves a serious look. His administration has advanced an affordable housing plan, called for a rent freeze on stabilized apartments, increased the focus on enforcement against distressed owners, supported nonprofit and tenant-led ownership models, and backed a new surcharge on high-value second homes.

The question is whether these policies can produce and preserve housing at the scale New York City needs.

A Big Housing Goal, And A Bigger Execution Challenge

At the end of May, Mayor Mamdani released his Block by Block housing plan, pledging to build 200,000 new affordable homes and preserve another 200,000 existing homes over the next decade.

The executive budget includes nearly $5 billion in capital funds for affordable housing across FY 2027 and FY 2028, bringing the total housing commitment to more than $22 billion over five years. The plan says the city’s Department of Housing Preservation and Development (HPD) will use federal housing subsidies, including Low-Income Housing Tax Credits, to help create new housing.

According to the 112-page plan, HPD will finance approximately 8,000 homes a year. Thirty percent will serve households earning less than 30% of Area Median Income, and another 20% will serve households earning between 31% and 50% of AMI. The plan also proposes increasing senior housing production to 1,000 new homes a year. On city-assisted projects, the administration will require a $40 per hour minimum wage and benefit standard for construction labor.

The administration’s broader housing agenda includes many priorities: preserving affordable housing, focusing on NYCHA housing and its $78 billion repair backlog; addressing distress in Mitchell-Lama complexes; rezoning key corridors in the Bronx and Brooklyn; supporting emerging developers and faith-based organizations that are building and preserving affordable housing; partnering with philanthropic groups and financial institutions to fund nonprofit owners; and creating financing tools for shovel-ready developments that are struggling to assemble capital.

These are worthy goals.

The issue isn’t whether the goals are important. They are. The issue is whether the capital stack, operating model and approval process are strong enough to turn the goals into reality.

"Decades of underbuilding have produced one of the most severe housing shortages in the city's history," according to the Block by Block plan.Block by Block plan

Political Promises Vs. Economic Reality

During the campaign, Mamdani’s housing platform focused heavily on the rent-stabilized sector, including a proposed four-year rent freeze for the city’s roughly one million rent-stabilized apartments, around 42% of the total rental supply.

That promise is politically powerful because housing affordability is a real crisis. But rent-stabilized apartments are not the same as high-end market-rate units. In many neighborhoods, stabilized rents are already among the lowest in the city. In 2024, pre-1974 buildings with 100% rent-stabilized units outside core Manhattan charged an average rent of $1,287 per month, and in the Bronx the average was even lower at $1,132 per month, according to the Rent Guidelines Board.

The mayor does not have the legal power to freeze rents unilaterally. However, his six mayoral appointments to the Rent Guidelines Board can significantly influence the outcome. The board’s preliminary May 7 vote established a proposed range of 0% to 2% for one-year leases and 0% to 4% for two-year leases, with the final vote scheduled for June 25.

The challenge is that operating expenses in rent stabilized buildings have been rising faster than permitted rent growth. As I noted in a previous Forbes article, a 40% surge in operating expenses over the last five years significantly outpaced the Rent Guidelines Board’s modest 16% allowed rent growth, triggering a rise in struggling rent-stabilized properties. The piece also highlighted how the 2019 HSTPA regulation contributed to this distress by effectively choking off avenues for capital improvements and vacant apartment renovations, leading to close to 60,000 rent stabilized units being removed from the market. In response, rent stabilized property values have dropped an average of 50% in the last seven years.

The administration’s housing plan does acknowledge that many housing providers are struggling with operating costs that have outpaced rents and that rent collection has become more difficult. To help address costs, the Block by Block plan proposes $100 million for a lower-cost insurance program for affordable housing and rent-stabilized properties, as well as extending and expanding the J-51 program for capital improvements, which was included in the 2026 New York State budget.

Those proposals are constructive. But they don’t fully solve the larger issue.

Preservation requires reinvestment and reinvestment requires a feasible operating model.

A 40% surge in operating expenses over the last five years has significantly outpaced the Rent Guidelines Board’s modest 16% allowed rent growth, triggering a rise in struggling rent-stabilized properties.Ariel Property Advisors

Inside 'Fix the City' and the Push for COPA

The administration’s Block by Block plan places significant emphasis on enforcement. Through a program called Fix the City, HPD will work with tenant unions and city agencies to pursue landlords who disregard repairs, speculate on buildings or refuse to change business practices.

The program will include roof-to-cellar inspections, faster emergency repairs, lender engagement, foreclosure pressure, expedited litigation, potential criminal charges against the worst actors and an expanded use of the 7A Program to remove negligent owners and managers and transfer buildings to “responsible preservation purchasers who are supported by both tenants and the administration.”

The housing plan supports the Community Opportunity to Purchase Act (COPA), a City Council proposal that would give nonprofits or certified joint ventures an exclusive window to purchase select properties and an opportunity to match an offer once that window closes. The goal is to move distressed or at-risk buildings into more responsible ownership. Former Mayor Eric Adams vetoed an earlier version of COPA last year.

There is no question that bad actors should be held accountable. Tenants deserve safe, well-maintained housing, and buildings with serious violations require intervention.

But enforcement alone isn’t a preservation strategy.

If a building is being neglected because an owner is irresponsible, enforcement is appropriate. If a building is deteriorating because expenses, debt service, regulations and rent limitations make reinvestment economically unworkable, enforcement doesn’t solve the underlying problem.

That's a crucial distinction.

Distressed buildings need new capital, workable incentives and a realistic path to physical improvement. Otherwise, buildings will change hands without the financial capacity to restore them.

Whether the owner is private, nonprofit, tenant-led or mission-driven, the building still has to pay for insurance, taxes, labor, repairs, financing and long-term maintenance.

Operating feasibility matters more than just an ownership structure.

The Pied-à-Terre Tax on High-Value Second Homes

Mayor Mamdani also campaigned on raising taxes on wealthy New Yorkers to help fund his broader agenda. The only tax increase approved in the State’s FY 2027 Budget was a new pied-à-terre surcharge targeting high-value second homes in New York City.

The tax has been projected to generate approximately $500 million in annual revenue "from 13,000 second homes with market value of at least $5 million.” However, an analysis from NYC Comptroller Mark Levine suggested actual revenues could be lower, roughly between $340 million and $380 million, depending on exclusions, valuation assumptions, rented units and behavioral changes after the tax is imposed.

While the pied-à-terre is part of the city’s funding strategy, it shouldn’t be mistaken for a housing solution. Even the new revenue is small compared with the scale of New York’s production and preservation needs.

The Office of the NYC Comptroller analyzed the impact of the pied-à-terre tax "based on assumptions on exclusions for rented units and behavioral changes following the imposition of the tax.”Office of the NYC Comptroller

Ambition Is Not Execution

New York City has a highly constrained housing market. Roughly half of the city’s rental housing stock is regulated, and the city is projected to face a shortage of hundreds of thousands of units over the next decade. Because so much of the inventory cannot adjust to market conditions, pressure has intensified on the free-market side of the rental market, pushing rents higher.

That is the structural mismatch at the center of the crisis.

Creating 200,000 new affordable homes is an important and laudable goal. But the central question is not whether the goal is worthy. It is whether the funding, approvals, labor costs and execution structure are sufficient to deliver it.

Affordable housing in New York City is extraordinarily expensive to develop. Building 200,000 affordable homes would cost approximately $150 billion. The city’s stated housing commitment is significant, but public funding of $22 billion over five years alone won’t cover the cost.

Ambition is necessary. But ambition without a capital plan isn’t execution.

Free-market units make up less than half of the rental units in New York City. "Because so much of the inventory cannot adjust to market conditions, pressure has intensified on the free-market side of the rental market, pushing rents higher."Ariel Property Advisors

Free-Market Housing Still Matters

The Adams administration emphasized market-led housing development and supported private-sector incentives through tools such as the City of Yes, targeted neighborhood rezonings and the 485x and 467m tax abatements. These policies helped create a more constructive environment for new housing production and office-to-residential conversions.

The success of the incentives is evident in the data. Ariel Property Advisors’ research shows that development site sales, including sales for office-to-residential conversions, rose above $7 billion in 2025, a 94% increase from 2023. REBNY reported 16,815 proposed multiple-dwelling units across 281 proposed multiple-dwelling buildings in Q1 2026, a 20% increase from the previous quarter and 251% above the overall quarterly average since 2008.

That doesn’t mean every market-led policy is perfect. But it does show that incentives, approvals and private capital matter.

The 485x tax abatement is an important tool, which also embeds a portion of the development to affordable housing, but the scale limits the program as it encourages smaller rental developments under 100 units. If the city wants more production at scale, it should examine whether the program’s wage requirements can be adjusted by the state to encourage larger projects as well.

The Mamdani administration’s plan places greater emphasis on public development, social housing, nonprofit ownership and stronger tenant protections. These priorities may have a role. But they can’t replace the need for private capital, especially if New York wants to produce housing at scale.

Free-market housing isn’t the enemy of affordability. In a supply-constrained city, it needs to be part of the solution.

Preservation Must Be Part Of The Strategy

New York also needs a more practical preservation strategy.

As a result of HSTPA and the broader operating environment, many rent-stabilized apartments have become financially and physically stressed, particularly in B and C locations where tenants need stable housing the most. When the incentives to invest and reinvest are misaligned, buildings deteriorate and units sit vacant.

That is not a sustainable outcome for tenants, owners, lenders or the city.

One idea worth serious discussion is a carefully structured, one-time rent reset for long-vacant rent-stabilized units, tied directly to verified capital improvements, code compliance, affordability protections and continued stabilization.

This is an economic alignment tool, not a giveaway.

Existing tenants would remain protected. Up to 60,000 vacant units could return to the market. Buildings would receive capital. The city would preserve regulated housing without relying entirely on public subsidy.

That is the kind of practical compromise New York needs more of.

The Real Signal: Alignment

Mayor Mamdani’s plan recognizes real problems--affordability pressure, distressed buildings, rising costs, NYCHA’s repair backlog and the need for more housing. Those issues deserve attention.

But the plan doesn’t fully address the central market question: how will developers, owners and lenders be incentivized to invest, reinvest and take execution risk?

New York needs more housing, but it also needs better preservation policies. It needs tenant protection, but it also needs capital for building repairs. It needs public investment, but it also needs private capital. It needs enforcement, but it also needs feasible operating models. It needs ambitious goals, but it also needs faster approvals, tax certainty and predictable rules.

The best housing policy is not pro-landlord or pro-tenant. It’s pro-housing, pro-preservation and pro-execution.

The real signal is alignment: alignment between tenants, owners, lenders, the city and the state; alignment between narrative and reality; and alignment between what we want and what we are willing to fund.