The Journal. - Will a Rent Freeze Fix NYC or Make it Worse?

Episode Date: September 27, 2026

During a Journal Live Event in New York earlier this month, Ryan Knutson spoke with two experts about the city’s forthcoming rent freeze. Emily Eisner, the executive director and chief economist at the Fiscal Policy Institute, and Kenny Burgos, the CEO of the New York Apartment Association, discuss the housing affordability crisis and the pros and cons of the rent freeze. Further Listening: - Kathy Hochul on Mamdani, Trump and Where Democrats Went Wrong - Is NYC’s Mayoral Race All About Rent? Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Earlier this month, I asked a crowd in Manhattan, one of New York City's most classic questions. How much do you pay in rent? I want to see it by a show of hands. How many people hear rent? Look at that. That's amazing. That's like most people. Does anybody want to say how much they pay in rent?

Anybody pay the least? Anybody want to brag about their situation? Two bedrooms for 1,200? You served... And you live in New York City? on the Upper East Side. Is that Monica from Friends with the rent control department? There's a housing crisis in America,

and New York City is no exception. In response, New York City is implementing a rent freeze next month. That means that for about a year, it will be illegal for many landlords in the city to raise the rent on their tenants. But rent freezes are very controversial. Some economists think a rent freeze is a good tool to address a broken house,

housing market. And others think it's actually harmful. The rent is too damn high. Agree or disagree? Agree. Dugree, but for who? Because my friend, we got $1,200 rent for two-bedroom. At this live taping at The Journal, I sat down with two housing experts who have two different takes on the housing crisis. You can watch a video of our conversation on Spotify. Welcome to The Journal, our show about... I'm Ryan Knutson. Coming up on the show, what's wrong with the rental market

and how to fix it. This episode is brought to you by IG Private Wealth. When your financial life gets more complex, having a clear plan matters. IG advisors build personalized, integrated financial plans that connect your investments, tax strategies, retirement income, and estate planning into one coordinated plan.

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New York City is a complicated housing market. So let's start off with some basics. Rent Control has existed in New York in some form or another for nearly a century. At first, rent control kept many landlords from being able to raise rents at all. And then in the 1970s, rent regulations evolved into something called rent stabilization, meaning rents could go up, but only by an amount set by the city's rent guidelines board, or the RGB. Most apartments in New York used to be rent-stabilized, but that number has shrunk over the last few decades. And today, there are about 1 million rent-stabilized units in New York, which is about half of the city's rental supply. At our live event in New York a few weeks ago, I discussed the housing crisis with Emily I,

and Kenny Burgos. Emily is the executive director and chief economist of the Fiscal Policy Institute, an independent think tank focused on economic policy in New York. And Kenny is the CEO of the New York Apartment Association, which represents landlords,

including those that own and manage thousands of rent-stabilized homes. How bad is it? How would you characterize how bad the housing situation is in New York City? Okay, I would characterize it as quite bad, but I kind of do want just take one step back quickly and say that the median rent in the city is about $17 to $1,800 a month.

And I just think that that's usually strikes people as quite low when they hear it. So I just wanted to like level set on that. 30 years ago, it was about $1,000 per month. And adjusting for inflation. So like accounting for all other price changes and wage changes, it's gone up by over 50% now at 6, yeah, 1700, I guess. So there's been a huge shift in the distribution of rents in the city, even after accounting for regular inflation. And it's really squeezing people's incomes and budgets such that now renters, over 50% of renters are paying over 30% of their incomes in their housing costs and something like 30% of renters are paying more than 50% of their incomes and housing costs. So there's a rent is very expensive for a lot of people.

A lot of people in New York are rent burdened. Yeah, rent burdened. How would you describe the situation for landlords, Kenny? I would say right now we have a scenario where, especially in recent times, we have a high level of distress happening, particularly in the rent-stabilized housing stock. And we'll talk more about sort of how we got there and what's happening. But basically, you have a scenario where you have tenants that are unhappy about the current housing scenario and property owners that are unhappy about the current housing scenario. So that tells you everyone is unhappy. Clearly something has to be fixed here.

affordability is obviously an issue in every city so do you think that new york is just emblematic of what's happening everywhere or is new york uniquely bad i mean new york has always been known to be a very expensive city and affordability has been the buzzword certainly for the past few years and not just a buzzword it's a very real issue we've all seen you know high high inflation coming in the past two years we've seen our own groceries increase you've seen cost increase across the board but i think new york has a unique experience here one because everyone wants to come and live here because it still is the greatest city in the world. But with that level of demand is being met with such a level of scarcity and lack of housing supply that it's forcing people who are looking for rents today

to pay some pretty exorbitant prices. So you said earlier, the rent is too damn high. And my response would have been, yeah, if you are looking for a new free market apartment. But as Emily said, median rent being paid today in New York City, $1,600. And most people are shocked when they hear that. They didn't know that. And that is because we effectively have two different housing markets that are occurring in our city. And obviously, there's an impact on both sides. It's rent stabilization in the free market. And the interplay there creates what we're seeing today.

And I've heard you say that housing is the number one political issue of our time. Emily, do you agree with that? How important do you think this issue is when it comes to sort of all of the, you know, wonderful problems that we have in front of us? Yeah, I mean, we have so many problems. so it's hard to name what's the top problem, but I mean, honest, I don't know how old you are, Kenny, but I think we're roughly the same age, and we basically came of age during the financial crisis when, you know, hundreds of thousands of people lost homes or lost their retirement income.

You know, the housing market has been at the center of American politics, yeah, for my entire adult life and continues to be, I mean, housing, yeah, affordability, I think, is one, is the most important factor in the whole affordability conversation. I agree. I am curious. Was there ever a time when the rent wasn't too damn high? We have been in a housing emergency in New York City since World War II. I can't think of another emergency that we haven't solved in 80 plus years. So we've been operating with this triage and mindset when it comes to housing for generations. And that's part of the problem. And I think we're at a moment where the rubbers met the road. Certainly COVID had an impact. Certainly the inflation we saw had an impact, but recent policy layered on top of that is just causing more insult to injury.

And that's what we're experiencing today. So rent has probably been high for all our lives and our parents' lives, but we're at this moment where it's becoming untenable. It's become untenable, not just for the tenants, but again, for property interest to even manage their buildings. Part of the reason why rents increase, not just on the rent stabilized side of the free market side, is the cost imputed just to operate the housing. You know, I often have these debates with people, and it's interesting their mindset, well, they'll say, well, property owner collected $2,000 rent for 20 years. Why don't they have, you know, I don't do the math, but $800,000, ready for repairs. And it's almost like ignoring as if there was no cost to run that housing. You know, there's property taxes, there's insurance, there's water and sewer bills, there's labor, there's legal.

I mean, it is a full business to operate. Since it's a city of renters, most people don't experience that. They just see the rent they pay. And so we've had this moment where it's becoming untenable to operate the housing. And like Emily said, there's certainly incomes that are not keeping pace where the rents are going. So can a rent freeze fix the housing market? That's next. Hear that?

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called the Housing Stability and Tenant Protection Act, the law made a number of changes, but the biggest ones were that it made it much more difficult for landlords to exit the rent stabilization system. And it put a very tight lid on how much landlords could raise the rent between tenants. So this 2019 law, what was it intended to do? It's touted as the most sweeping tenant protections

ever passed in New York State, but really it changed the economics. And it's a whole host of changes there. The most impactful one, was the implementation of something that we call vacancy control, which is a regulation of an empty apartment. Well, because basically what it is it said that you cannot, when a tenant turns over,

you cannot raise the rent more than a certain amount that's dictated by what the rent guidelines. I'm going to pick on this guy in front, using as an example. I'm sorry. So you hit $1,200 two-bedroom rent. I'm assuming that was a succeeded apartment, just how low the level was.

So someone probably had that apartment, if it wasn't him, a parent, or a friend, for a few years of decades before. What the 2019 rent law says is, his apartment when he decides to leave has to be rented at that base level of $1,200. But before that even happens, a landlord has to make sure that it's brought up to the newest standard of code, and code change every year, which should be required. But it's a significant cost, especially for apartments that are $700 and have been in occupancy

since 1970. It's very common in rent stabilization. So you're asking property owners to spend $50, $60, $100,000, not see the return on that investment, but then the baseline rent begins at a number that's likely below the operating costs per month. For reference, the rent guidelines board, which is the regulatory body in New York City that imposes the rent freeze or the annual rent changes, their data says it costs 1350 on average just to operate the apartment. So we're seeing more and more vacancies occur. So you have empty apartments, but on top of that, it's pulling the building's valuations down,

which means banks won't lend on these buildings, which means the tenants living in the buildings are now undergoing even worse conditions because there's no money to be put into these properties. Do you think that that broke the New York City housing market? 100%. Okay, so first of all, Kenny kindly said that the 2019 reforms to the rent-stabilized housing were the greatest sort of tenant protections ever passed in New York State. I think that's true. And it also makes it much harder and sort of reduces the incentive for landlords to try to boot out tenants.

So one of the reasons that this was implemented was because there was tenant harassment that would cause tenants to leave so that a landlord could raise the rent. That's a really unpleasant experience that hopefully none of you have ever had, and you're much less likely to have it now because of that 2019 reform. So I share Kenny's concern about the housing, maintaining the stock of housing and making sure it's up to code and stuff. But I think additionally, and I haven't even gotten into this, most of the data on the rent-stabilized housing stocks suggest that its finances are okay.

Now there's a slight uptick in building problems associated with the pandemic, and that's because people deferred maintenance while we were all inside sheltering. And that makes sense to me. But I don't think we have recent enough data to see if that has actually continued. There's some natural churn, and then there's some apartments that need some remedial help that we do need to give some capital funds to. I agree with you that some of the departments need some help with capital spending. But it's a small number. It's not like there's a huge capital strike happening that's taking all the rent-stabilized units off the market. It's a small number relative to the size of the market.

I have one property owner in Upper Manhattan alone that has 75 empty apartments. 75. If you go on Street Easy right now and look for an apartment below $2,500, you maybe find 15. He could meaningfully quintuple 5x that amount just on his vacancies. But again, we ignore the solutions in our face because we want to force this affordability without subsidy. I want to talk about the rent freeze specifically. So, Emily, you recently wrote an op-ed, the economic case for a rent-freeze. So can you make that argument in 30 seconds?

Okay. I'll try. A rent-freeze is, I don't want to say easy, but it's like a thing you can do right now to bring down costs for people in a context where people's budgets are really suffering, and affordability is such a huge issue we know. It's what every politician is trying to look for answers for. And I think that, you know, Kenny's point about it being really costly for landlords is well taken. My view is that the difference between a 2% rent increase and a 0% rent increase is just not that big a deal,

even for four years. There was a Moody's report that came out in June or July that said that at most 6% of the landlords, will face serious risk of default with a four-year rent freeze. Like, the finances of these buildings are just not as bad as the landlord groups like to say they are. And so, yeah, so basically, I think it's, like, not that radical of a policy despite what you might hear.

And also, I will say it's not a sufficient policy. Like, we need much more to actually solve affordability crisis. Kenny, what's your, what's your case against it? Against the rent freeze? Yeah, against the rent freeze. I'll give you a case for rent freeze, actually. There are already rent freeze programs that have existed that we endorse. Scree and jury program, the city has operated 50 years for seniors and disabled folks. It freezes their rent and credits a property on their property taxes. Why is that a good program? It accounts for costs. If you have a voucher and a rent stabilization, even if the RGB increased rents 4%, 5%, your rent doesn't increase

if your income hasn't moved. That's a rent freeze. That is tenant protection. That is what the government is supposed to do. Provide affordability where it's needed, because it is needed. But making private property owners provide it without subsidy shouldn't be happening. We don't do that with anything else. We created a great program in the 60s, notice SNAP. Families can't afford food. We give you an EBT card or a SNAP benefit card to shop with dignity at a supermarket.

We don't tell a supermarket owner bring your beef and your milk and your rice and your eggs down to $1. So this is how we have to address affordability as to programs from the government. So the Red Freeze is going to go into effect in October. for a year. It's going to apply to one or two year leases. So what are you hearing from your members? How are they preparing for this thing, which is coming right around the corner? There's not much to prepare. I mean, they're regulated by this body. They work under the guidance to RGB every year. They're mandated by law to provide a renewal lease at a 0% now. And so they're going to have to make hard choices just based on the operations of their buildings.

So this is where you get more deferred maintenance. This is where repairs should be happening. Maybe they get put off. Maybe you put a Band-Aid solution on it. you're working just within the confines of the revenue of that building. And again, I repeat, you have banks that are exiting this market. Like, banks are completely leaving this market any opportunity. Ocean First just recently got merged. Immediately the first thing they did was offload their rent-stabilized loans. They don't want to be in this space because the banks and the regulators can see very clearly

there is no economic case to put money in this housing stock where they will see a return. We've spent this time talking about the $1 million rent-stabilized units, but there's another one million that are not. How do you think that this rent freeze is going to affect the rents in the free market units? You sort of alluded to this earlier, but sort of the economics of the situation are, as you said, in a constrained supply environment, the landlords have a lot of power to raise rents. We haven't talked about the, or I guess I talked a little bit about vacancy rates, but, you know, the vacancy rate in the city is like one and a half percent.

There's really very few options for where tenants can go if they need to find housing and that gives landlords a lot of power to raise rents. So in that context, basically the point of rent regulation is to like stabilize rent so that landlords can't just jack rents up and up and up. What will happen with market rate units, often people talk about like, oh, they're just going to like compensate and raise the rates of the market rate units. That doesn't quite make sense to me economically. Like someone has to be willing to pay that amount.

I guess as I just said, like people might just have to eat it. it's more likely to me that people will leave than people will just eat the cost. I don't see a strong case for there to be like a pushing up of the market rate rents. Kenny, what do you think? I disagree. I mean, we're already seeing again asking rents have gone up and you don't have to connect that to the recent rent freeze. But again, if you have a constrained supply environment and more importantly, if you have, people may not know, a mixed regulated building, and we have owners who have told us this, if half my units are rent regulated, I mean, I have

no control what those rents are, but the other half of free market, and again, my property taxes are up, my insurance is up, all my costs are up, but the city says your rent regular departments are 0% for the next two years. Guess who's paying for that increase? The free market neighbors. This is why you have this two-tiered system in New York City where there are people paying $800 for a three-bedroom apartment, and if you look for a three-bedroom today, you're probably going to be paying $7,000. Like the cost just gets pushed out somewhere. You can't ignore the cost, And I think this is what has been a policy for so long. And now we're paying the prices.

Okay, we are just about out of time. So I'm going to ask one final, very complicated question. This is obviously a supply and demand issue. There's not enough supply of housing, and there's a lot more demand for the housing that is constrained. So what is the best idea out there to try to increase the supply of housing? Build, baby, build. But on top of that, you've got to get these vacant units back online.

And it's not to say that we're looking for the end of, rent stabilization or rent control, but it's about the tenancy. You have to get the owner, the ability to invest in that unit, get them back online, and then you protect the tenant. That next tenant of that apartment gets a new release every year, pays a small increase or nothing, if the mayor continues on with how he likes. So it's like protect the tendency, but let's get the supply back online because you bring 60,000 units back to New York City. In modern history, we have never built that many units in a single year. And I can tell you right now, our property owners can bring those apartments in months, not years. I have projects that I worked on as a staffer in the city

council that are just now coming up because it's going through layers of bureaucracy and Euler processes and seeker reform, which thankfully that's changed in New York. But if we wait simply to build new housing that costs 800,000 plus per unit, we're not only going to be waiting for a long time. We're also going to be landing at rents much, much higher than the median rent in New York City today. Yeah, I agree, build, baby, build. I mean, I think that the mayor is taking an all hands-on-deck approach to adding housing supply to the market. That includes regulatory changes, permitting reforms. The state government is also doing a bunch of work on this.

And then I would just add, like, adding capital funds into the housing market to both make improvements to affordable housing units and add new units to the market. Amazing. Well, thank you guys so much for being here. That's all for today. Sunday, September 27th. The journal is a co-production of Spotify. and the Wall Street Journal.

Additional reporting in this episode by Rebecca Pichodo. Thanks for listening. See you tomorrow.