Walkup says the rent freeze helps stabilized tenants but does nothing for the supply problem driving affordability across the city
New York City's Rent Guidelines Board made history Thursday, voting 7-1 to freeze rents on both one-year and two-year leases for the city's approximately one million rent-stabilized apartments. The decision fulfilled a campaign pledge from Mayor Zohran Mamdani.
For stabilized tenants, whose rents had been on track for increases of up to 2% on one-year leases, the relief is real. The freeze applies only to rent-stabilized units, roughly a million apartments in a city of millions.
For the free market, the purchase market, and the supply problem underneath it all, one real estate analyst believes Thursday's vote doesn’t help much.
John Walkup (pictured top), co-founder of UrbanDigs, a real estate data analytics company focused on the New York City market, said the vote is beneficial for the tenants it covers, but the overall positive impact is limited.
"I don't think it does much, unfortunately, to solve the housing affordability problem at large," Walkup told Mortgage Professional America. "The broader affordability issue is still, in my opinion, a structural mismatch between supply and demand. Did this increase supply? And the answer is no. So while this is helpful on the affordability issue for the tenants, it does not increase supply. So it's not really a long-term affordability solution."
A rental market divided
Walkup said the vote creates a divided dynamic in the city's rental market. Landlords with rent-stabilized units face frozen income against rising operating costs, with no mechanism to recover the difference.
"If you're planning on investing here, where are you going to put your money? In the free market," he said. "Is there a lot of building happening? No. So the prices for the free market one are probably going to be the beneficiaries of this."
Stabilized tenants have little reason to move now that their rents are locked, Walkup said. That removes supply from the free market, since fewer people cycling out of stabilized apartments means fewer available units for those renting at market rate.
"If your rent is frozen, you're not really going to move," he said. "So people aren't moving out of those. I think the pressure valve is going to be more likely seen in the free market rent, which is going to benefit free market landlords at the pain of stabilized landlords."
The situation is difficult for stabilized landlords who want out, Walkup said. Selling into a market where investors are gravitating toward free market assets creates a buyer pool problem that is unlikely to be resolved while the freeze holds.
"Rents staying the same, but everything else is increasing, whether that's insurance or heating oil, gas, whatever that might be," he said. "These costs are increasing, and rents are not. So how is the city going to maintain that stock of buildings if the owners can't afford to do it themselves?"
An opportunity for brokers
Rising rates in free-market apartments could be the push that some renters need to move into the home purchase market. The New York City purchase market has been through a difficult stretch, Walkup said.
Volume dropped sharply as mortgage rates climbed from historic lows in 2021 to over 7% at the peak. What surprised him was that prices did not follow volume down.
"The difference between the post-pandemic 2021, early '22, and then '23, '24, '25 was really significant," he said. "And the volume of the last three years has paled in comparison. Prices ticked down here and there, but nothing to the extent that we saw in something like 2008."
Median rent in Manhattan was approximately $5,500 in May, Walkup said, already setting records before Thursday's vote. With free market rents likely to climb further, some renters may start to consider buying instead.
"Our theory is, will that push renters into purchasing? Probably," he said. "The situation or the backdrop for prices to rise is really in place on the purchasing side, even though you don't necessarily have that volume."
Walkup said the dynamic he is watching most closely is what happens if rising rents and steady purchase prices eventually converge. That could make the affordability strain the Big Apple even greater.
"If you do see rents start increasing meaningfully after this decision and you see prices in the purchasing market have been staying the same — if we get that volume from the renters moving to the purchasing market, is that enough to sort of juice prices higher to the upside?" he said. "That would be an interesting development, and that would just basically exacerbate the affordability situation on the purchasing side."
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