Chronicle of a Crisis Foretold: Zohran Mamdani and the Tall Tale of Rent Control

As New York City's housing crisis heats up, politicians like Zohran Mamdani think rent control, subsidies, and affordable housing policies are the magic elixirs we need. But before we take a sip from this enticing potion, let's glance at what happened in San Francisco, Berkeley, and Santa Monica—three cities where similar spells were cast with disastrous consequences.

1. San Francisco: Where Rent Control Expires in Disguise

In the land of tech billionaires, you might think rent control would keep the roof over everyone’s heads, right? Wrong. With the median rent for a one-bedroom apartment soaring to $3,500 in 2020—an upsurge of over 50% since 2010—these protections have lost their charm. Since the 1970s, about 20,000 rental units have vanished due to abandonment or conversion. Homelessness in the city shot up nearly 30% between 2017 and 2019, reaching approximately 8,000 homeless individuals. Clearly, the market isn’t playing nice under such strict regulations.

2. Berkeley: When Rent Control Becomes a Housing Black Hole

Take a seat in the historically "progressive" Berkeley, where rent control since the 1980s has resulted in a staggering 25% decrease in rental housing. Average rent for a two-bedroom apartment hit nearly $3,000—good luck competing with other cities! And speaking of competition, homelessness has surged by 43% from 2017 to 2019. Welcome to the cozy reality where low-income families are fighting tooth and nail for the dwindling stock of affordable rentals, all thanks to "protection" laws.

3. Santa Monica: The Showcase of Inefficiency

Santa Monica: sun, surf, and, regretfully, rent control. Here, the average rent for a two-bedroom unit has climbed to around $3,000, a jaw-dropping 60% increase over just a decade. Moreover, 30% of these rent-controlled units are in such disrepair that landlords have simply walked away. The city has witnessed a 20% decline in available rental units since the '70s. The result? An increase in homelessness by 28% between 2018 and 2020 as more people find themselves priced out of the market.

Reality Check: What NYC Can Learn

Now, if Mamdani has plans to unleash similar policies on New York City, we’d better brace for impact. Here’s what’s likely to unfold:

Housing Supply Crunch: Just like in San Francisco, developers may back away from new projects due to stifling regulations. NYC is already grappling with a housing shortage, and curtailing supply would only exacerbate soaring rents.

Worsening Housing Quality: As seen in Berkeley, fewer incentives for landlords to maintain properties means deterioration of living conditions. Rent-controlled units could quickly transform into subpar housing.

Rising Homelessness Rates: Echoing Santa Monica, increased restrictions could push more people into homelessness, as the inventory of affordable housing shrinks faster than a subway car during rush hour.

New York City is already facing a deepening housing crisis marked by a severe supply crunch, deteriorating housing quality, and rising homelessness. Since 2010, the city has added only about 260,000 new housing units despite gaining over 630,000 residents—far below what's needed to meet demand, especially in transit-rich neighborhoods where restrictive zoning limits new construction. At the same time, a growing share of rental units are falling into disrepair, with issues like leaks, heat outages, and rodent infestations becoming more common. This worsening quality, coupled with soaring rents, has driven homelessness to record levels, with over 80,000 people—including more than 25,000 children—now relying on the shelter system. The influx of asylum seekers and a shortage of affordable and supportive housing have only intensified the crisis.

The housing crisis in New York City—characterized by a supply shortage, rising homelessness, and deteriorating housing conditions—is not primarily a result of market failure, but rather a consequence of extensive government intervention that distorts the natural functioning of housing markets. The core problem lies in restrictive policies such as stringent zoning laws, environmental regulations, and rent control measures that hinder the construction of new housing, disincentivize maintenance, and freeze inefficient housing arrangements. Cities like Houston, which allow builders more freedom and operate without zoning laws, demonstrate that when housing supply can keep up with demand, prices remain stable—even amid population and income growth.

To meaningfully address NYC’s housing crisis, the solution is not more government spending or public housing projects, but rather to reverse the policies that created the problem in the first place. This includes repealing rent control laws that discourage new construction and trap tenants in mismatched housing, and loosening zoning and permitting restrictions that make building new homes an expensive, time-consuming ordeal. By removing these barriers and allowing the free market to adjust supply to demand, affordable housing can emerge organically—especially through the natural aging of housing stock and innovations like mobile homes or mixed-use development. In short, unleashing market forces would restore the housing ecosystem's ability to self-correct, making homes more affordable and accessible for all.

Buying into rent control nostalgia might feel good, but historical patterns show it usually backfires. Politicians may promise to protect tenants, but in reality, these policies could lead to higher rents, less housing, and increased hardship. The truth is simple: you can’t always have everything you want. In the case of rent control, the trade-offs scream louder than any campaign promise. So, perhaps it’s time for policymakers to grow up and face the reality of free markets. After all, we can build better housing solutions without shackling the very market mechanisms that could save us from crises.