Deep Dive
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Every year, on January 1st, a gaggle of cold-hearty New Yorkers rings in the new year by plunging into the ice-cold ocean at Coney Island. All right, we're going in. We're ready to go. This year, they had a politician jumping in with them, a then little-known mayoral candidate and Democratic socialist named Zahran Mamdani.
He belly flopped into the frigid water, suit and tie and all, and made a promise. I'm freezing. You're wrecked as the next mayor of New York City. Let's plunge into the details. Mamdani was campaigning on a platform of affordability across many sectors, but at the top of his list, it was a promise to bring down housing costs for renters. That's our colleague Rebecca Picciotto. She covers real estate.
New York is a majority renter city, so railing against high rent costs has been a campaign formula for decades of New York City mayors. And this was no different, except that the affordability problem in New York has grown even more dire and renters are feeling it quite viscerally.
Tapping into that frustration helped Mamdani pull off a surprise victory in this week's Democratic mayoral primary. We have won because New Yorkers have stood up for a city they can afford. A city where they can do more than just struggle. Mamdani's strong showing puts him in a good position to win the general election in November. And that's energized many young voters struggling to make it in one of the most expensive cities in the world.
But there's one powerful group that's not so thrilled with Mamdani's success. Developers and landlords are in panic mode in the days since Mamdani's primary victory. They're basically freaking out. Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Friday, June 27th. Coming up on the show, how New York City's housing crisis is shaping its race for mayor. This episode is brought to you by U.S. Bank.
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Hiring, indeed, is all you need. Housing affordability has become a crisis in cities across the country. But the problem is especially acute in New York City. Housing costs in New York City have notoriously been some of the highest in the country. More than half of the city's renters are considered rent-burdened, which means they pay more than the recommended 30% of their income on housing. Rising rents contribute to that.
In the past five years, rents in the city have risen by 20 percent, according to RealPage, to the point where New York's median rent is out of reach for many.
At least for the monthly prices of a two-bedroom rental in New York, a recent estimate found that's now standing at about $5,500, which is a pretty exorbitant price. $5,500 for a two-bedroom. Correct. And, you know, a lot of these two bedrooms are being hunted out by 20-somethings with entry-level wages. And, you know, you're only lucky enough to pay that rent if you actually get the place, right? What does the apartment search look like here in New York?
It's sort of cutthroat. Cutthroat because, as in many big cities, there are a lot of people who want apartments and not much supply. In New York City, vacancy rates dropped to a record 1.4 percent in recent years, the lowest since 1968.
That's turned apartment hunting into a full-contact sport. It is wild out here. It is like the Hunger Games trying to find an apartment. Everyone and their mom tells me that apartment hunting in New York is super competitive, and yeah, they're right. I have exhausted every single platform, Facebook Marketplace, Spare Room, Listings Project, Craigslist, Trulia. Renters spend hours browsing online housing marketplaces. And if they find a listing they like, they'll often attend an open house.
That's right, an open house for a rental. Lines for these open houses can snake around the block. I'm definitely not going to see it because this is the line for the open house. Nah. No, thank you.
And often it's you go to the open house and you think the picture on Street Easy looks good and you go and the two bedroom apartment, actually one of the bedrooms is a closet. So, yeah, I mean, I think like this looked so spacious online. What magic did they work to make this shoebox look like an actual livable apartment? Yeah. Those lucky enough to find a place often have to sell themselves to landlords and potential roommates to actually land it.
People write letters and share photographs to stand out in their rental applications. I am in the process of apartment hunting. And tell me why this application is asking for a cover letter. This is not a job.
Renters are in these Facebook groups where they're basically branding themselves and campaigning to be the roommate of a complete stranger who happens to have an open bedroom in Bed-Stuy. And so they're carefully curating their Facebook posts, message themselves as the perfect roommate and have friendly looking selfies. And it's become a little bit more of a, as one renter described, a pageant contest than an apartment hunt.
Meanwhile, landlords' profits for buildings with rent-stabilized units were up 12 percent between 2022 and 2023, according to the city's most recent report. So how did Mamdani tap into this widespread frustration over housing in his campaign?
So he put cost and affordability at the center of his messaging. And he was on TikTok and Instagram, like specifically targeting young voters with fuzzy proposals like rent freezes. The number one cost in New Yorkers' life when they're thinking about that is housing. About two and a half million New Yorkers live in rent-stabilized housing across New York City. Their rent increases are set by the mayor. This mayor has jacked their rent up 9%. I would freeze their rent.
A rent freeze would make it illegal for landlords to raise rents on stabilized units. It would apply to about a million apartments in New York City. That's about half of the city's rental stock. Mamdani also has other proposals to try to make housing more affordable — for example, by building more units. He's promising to build 200,000 new publicly subsidized housing units, invest $70 billion in new capital for affordable housing.
The rent freeze in particular seemed to resonate with people, especially young rent-strapped voters. I want Zoran Mandani to be the next mayor. He wants to make it more affordable to live in New York City. I like that he cares about affordability, which honestly I think for me is the biggest issue in the city right now. Ultimately, these voters want to feel relief.
as soon as possible. And so that's why something like a rent freeze, you know, that's gotten a lot more attention than some of his other kind of longer-term proposals. The sort of appeal to young voters propelled him to the front of the race and kind of turned him from an unknown name into potentially the city's next mayor. But talk of a rent freeze sent a chill through the real estate industry, which had largely backed Mamdani's top competitor, former New York Governor Andrew Cuomo.
New York landlords are especially upset. Rebecca's been on the phone with a number of them.
The rent freeze does scare them. Landlords say that this is something that will suffocate their operating revenue, make it harder to keep up these rent-stabilized units, which are already dealing with, you know, some of the fallout of a 2019 rent law that capped rent increases on these units. In 2019, New York State passed legislation that imposed stronger limits on how much landlords can increase rents and made it easier for tenants to sue landlords for overcharging them. So
So landlords are still reeling from all the rent regulation they have to deal with. So, you know, campaigning on a rent freeze as your top line housing proposal, it scared a lot of people away for those reasons. Because it sounds like the landlords are saying, you can freeze the rent, but what about our costs? Who's going to freeze those?
Exactly. And, you know, with tariffs and deportations putting strain on material costs and labor, their costs are primed to increase even more. And if they can't raise their rents in kind, that's what's scaring a lot of them. And since Mamdani's win, that fear has led the real estate industry to mobilize. What their options are is coming up. ♪
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Yeah, I mean, in the course of the past few days, you know, it's early. So there's not a, you know, five point plan just yet. That said, a lot of developers are, some are threatening to exit the New York market and expand in places they see as more business friendly, like Miami, Dallas. But relocating your business is an expensive thing to do. So a lot of people are committed to staying in the market. And instead, they're shopping around for new candidates.
One option is backing the current mayor of New York, Eric Adams, who's running as an independent candidate.
I've spoken to developers who are, you know, setting up meetings with Mayor Adams. On Wednesday afternoon, more than a dozen real estate and tech leaders met to kind of discuss the path forward. You know, they didn't come to a decision ultimately, but phones are ringing off the hook and people are figuring out, you know, how do we strengthen the lobbying machine for November? What about the idea of trying to work with Mom Donnie to cut some deals?
Yeah, there are certainly people who, you know, if the momentum behind Mom Donnie stays at the pace that it's at, and if he kind of stays on a glide path to win the November general election, they are coming to terms with the fact that they will want to strike some deals. And as they're setting up meetings with Mayor Adams, they're also setting up meetings with Mom Donnie's team to say, you know, like, make your pitch. I see. So they're weighing...
Fight, flight, or deal. Perfect way to put it. It's possible that Mamdani could find some common ground with the industry, especially developers. That's because they all agree on at least one thing. New York City needs more apartments. And right now, they're too hard to build.
There's a couple of sort of unique features of the New York development market. One is there's just limited land and desirable spots, you know, near transit and downtown hubs and things like that. But there's also this complex network of zoning policies that further limit the amount of housing units you can build. So even if you find the land you want, you might not be able to build the, you know, 200 unit apartment building that you want.
Then there's a lot of sort of high construction costs that go along with very particular building codes and regulations that New York has. Tariffs and deportations could exacerbate those further. And then when you maybe get your apartment built, the operational costs can be pretty heavy and property taxes in New York are also pretty high. So all of those factors...
make it difficult for some of these projects to pencil out, and that has ultimately stifled supply in the market. Developers have been talking about these challenges for years, and some of Mamdani's less-talked-about proposals do aim to make development easier.
He wants to open up government-owned land for housing development, fast-track these land use reviews that are so burdensome to developers. He wants to streamline zoning rules, eliminate parking minimums, which means that developers wouldn't have to build parking spaces to get their projects approved by the city. So he has a lot of less sexy ideas.
supply side solutions that are actually some of the long held wishes of the development community. The zoning reform, faster land use reviews, reduced parking spaces for project approvals, freeing up public land for housing. These are all things that developers would likely get on board with. You know, I think they could work out some deals here.
Has Mamdani said anything about kind of his willingness to work with the industry? Yeah, I mean, he's said that he's willing, he sees the value of and the need for kind of private sector development to, you know, fill this housing gap that the public sector just might not have the capacity to do on its own.
So he's absolutely looking at the private sector as a partner here. Whether they want to partner back, that's up to the coming months. So there is some nuance to Mamdani's actual policies and positions on housing. Nevertheless, there's this very real image problem in the eyes of the real estate industry, and that's that New York has just voted for a socialist who wants to freeze rents.
Yeah. In the months ahead of the November election, Mom Donnie is going to have an uphill battle to win over some of the city's most important power players. And it's mainly because of this political brand that actually won him young voters in the primary. So in the months ahead...
As far as Mamdani's platform, the challenge is going to be balancing this political brand, not necessarily overhauling his policies. You know, again, the Democratic Socialist messaging that won him this crucial young voter base in the primary, that's what's scaring away the real estate community that he's likely going to need for the general. So that's the balance here. That's the challenge that he has in the coming months.
I would imagine there are many lessons that one could take from this primary election, but it certainly seems like one of them is housing affordability is really, really important to people.
And is that just in New York City? No, I mean, we saw this in the presidential campaign that on the national level, as housing costs were skyrocketing and becoming a, you know, even larger portion of voters' budgets, politicians put it at the front of their platforms. Like, housing has always been a high cost for people, but it's become sort of a...
visceral, emotional thing for voters. You know, you feel it in your monthly budget. And as a result, politicians are looking for ways to speak to those affordability issues. You know, the cost of living has become a national political conversation. And the biggest part of those costs are often housing. That's all for today, Friday, June 27th. The Journal is a co-production of Spotify and The Wall Street Journal.
Additional reporting by Redmond Bernhold, Peter Grant, Maggie Grether, and Greg Ip. The show is made by Catherine Brewer, Pia Gadkari, Carlos Garcia, Rachel Humphries, Sophie Codner, Ryan Knudsen, Matt Kwong, Colin McNulty, Jessica Mendoza, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez-Espinoza, Heather Rogers, Pierce Singey, Jeeva Gavirma, Lisa Wang, Catherine Whalen, Tatiana Zamise, and me, Annie Minoff.
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