A recent Citizens Budget Commission (“CBC”) survey showed New York City dwellers aren’t as happy as they used to be.
Released earlier this month, the poll asked residents to rate their quality of life. And while the findings did show some positive changes over 2023, it still showed that the Big Apple isn’t what it once was.
“Straight From New Yorkers 2025” paints a stark picture: New Yorkers remain much more dissatisfied with the quality of life, City services, and public safety than they were before the [COVID] pandemic.
Back in 2017, for instance, 51% of respondents rated their neighborhoods as excellent or good places to live. Today, it’s 34%.
Just 11% think their tax dollars are being well spent, down from 21%. Good vibes about the subway fell 19%… rat control by 18%… and bus services 11%.
2020 was a game changer for everyone, but especially for big liberal cities like New York. Individual freedoms went out the window, and businesses suffered as well under draconian legislation. Plenty of “mom and pops” simply didn’t make it and closed their doors after years in business.
Add in waves of illegal immigrants since then, and the place soon spiraled into a morass of homelessness and crime.
That’s why, according to CBC data, some 125,000 residents have fled since 2020.
Now, Mayor Eric Adams has gotten tougher on crime this year, leading to a dramatic drop in murders and shootings. But those problems – and so many others – could soon skyrocket again considering NYC’s newest anti-capitalism threat.
I’m sure you all saw that Zohran Mamdani, an avowed democratic socialist, won the Democratic mayoral primary last week. He believes in establishing:
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City-owned grocery stores
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Free bussing for all
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Free childcare for children under five years old (yet higher wages for childcare workers)
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A $30 minimum wage by 2030
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Protections for illegal immigrants
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Freezing rents for approximately 2 million apartments
New Yorkers, it seems, have recognized that their previous government-heavy policies have failed them. But their solution is to go even more extreme.
I’ll spare you the suspense: It won’t work.
Killing the Goose That Laid the Golden Eggs
Many New Yorkers who didn’t vote for Mamdani are panicking at this mayoral development. As The Times wrote on Sunday:
[Tom] O’Donoghue, who runs a luxury construction firm in the Hamptons – the summer playground for rich New Yorkers – said his clients were in ‘complete disbelief’ that a socialist was suddenly the favourite to win November’s general election.
“How in the world could this have happened?” they and so many others throughout the country want to know. “How did enough New Yorkers think it was preferable to speed up their anti-capitalist decline instead of reverse course?”
The Times also notes that “New York is home to approximately 350,000 millionaires and 123 billionaires, according to Forbes. And many are seriously thinking about leaving the city.”
That matters because – by New York City’s own data – approximately 70% of all city taxes are paid for by the top 10% of wage earners. And you want to run these people out of town?
That means less tax revenue for the grab-bag of goodies Mr. Mamdani is proposing. One of which happens to be a $100 billion dollar investment in affordable housing. That would be just shy of the city’s total budget for fiscal year 2026, which is approximately $115.9 billion.
More spending with less tax revenue.
Good luck with that…
Prepare to Backfire
We could probably spend several thousand words explaining why Mr. Mamdani’s proposals are either uninformed or prone to backfire. But, for the sake of brevity, we’ll pick the one proposal that falls squarely in our realm – rent freezes and the likely impact on housing costs.
We’ll give Mr. Mamdani this: He is correct that housing is expensive.
As of May, the median asking rent for the city was $3,397. Meanwhile, Realtor.com tells us that median rent across the top 50 metros in the country is some $1,700. Of course, New York isn’t just any city. It’s the American city. Rent in NYC has always, and will always, be more expensive.
But fair enough. Rent is expensive. Having accurately diagnosed the problem, Mr. Mamdani promptly proposes a solution that will simply make it worse – freezing rent for millions of units.
Take it from somebody who has actually built more than a hundred buildings over the years. If your goal is to incentivize new housing units, this ain’t it.
Unless you’ve actually done it, it’s difficult to explain the headache developers go through just to get four walls and a roof put up. As I explained in an interview at the end of last year:
Take it from somebody who has actually done this work. Real estate developers are unsung heroes of the economy. There’s a byzantine system of federal, state, and local regulations you have to deal with. Something always goes wrong. There’s always a delay.
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I’m not complaining. And I’m not saying anybody should feel bad for me. I’m just making the point that, with all that headache, it’s a miracle anybody builds anything at all!
Now, take that general observation and ratchet it up to account for the byzantine regulatory apparatus that is New York governance. It can be a nightmare.
And the only thing that continues to incentivize new building is the potential for a return on investment. Freezing rent kills that. Without the ability to raise rent to account for new costs (maintenance, taxes, insurance, etc.) the new incentive is to simply not build anything at all.
Fewer new housing units mean less supply. Less supply means prices for existing stock goes up. And that means the New York affordability crisis gets worse. It really is that simple.
You don’t have to take my word for it. Just ask the market.
Vornado Realty Trust – a real estate investment trust with high exposure to Manhattan office space – was down as much as 10% in the two days after the election victory.
Mr. Mamdani is a talented politician – no doubt. But he is illiterate when it comes to real estate and residential markets.
This will not end well – not for New York and not for its citizens.
You heard it here first.
Regards,
Brad Thomas
Editor, Wide Moat Daily
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