New York Can’t Afford to Sideline Private Developers

"New York City’s housing crisis is fixable, but only if Mamdani lets the private sector do its thing."

By Adam A. Millsap, AIER

New York City’s new mayor Zohran Mamdani made housing affordability a big part of his campaign. On his first day in office, he signed three executive orders related to housing policy, and his subsequent housing ideas have mostly involved more regulation or more taxpayer spending. Mamdani may mean well, but government cannot fix the Big Apple’s housing problem.

Mamdani’s most recent setback is related to the City Fighting Homelessness and Eviction Prevention Supplement program, or CityFHEPS. Roughly 60,000 households participate in the voucher program, and its costs have exploded in recent years, rising from $176 million in 2019 to a projected $1.2 billion in fiscal year 2025. Mamdani promised to expand CityFHEPS eligibility but recently said his administration needs more time to evaluate its options given the city’s bleak budget outlook. But time will not solve Mamdani’s money problem.

New York City is facing a $2.2 billion budget deficit, and in addition to his housing dreams, Mamdani recently announced a plan to provide taxpayer-funded childcare for two-year-olds at a projected cost of $6 billion annually. The truth is that New York City does not have the money to provide the housing it needs.

The only way to make housing truly affordable is to build a lot more of it in places people want to live. New York City cannot do this without the private sector. One recent estimate of New York City’s housing shortfall finds it needs 473,000 more units by 2032. The average cost to build an affordable unit in big cities is around $500,000 per unit. Multiplying the two numbers together equals $236.5 billion, or $34 billion per year over seven years. New York City raised $81 billion in tax revenue in 2025, meaning it would take 42 percent of all the city’s annual tax revenue to build the housing it needs if it wants to go it alone.

Mamdani’s political philosophy will be his undoing. As a self-identified democratic socialist supported by the Democratic Socialists of America (DSA), he sees little use for private developers. The DSA wants housing to be expropriated from its current owners and given to the “working class.” They believe tenants should control housing. As they put it, “Social housing does not offer an equal seat at the table to developers, investors, or city councilors. Social housing prioritizes and makes real the collective will of tenants.” While their long-term vision is an end to “commodified housing”, in the short term they want state-provided and publicly owned free housing available to anyone.

Mamdani seems committed to realizing the DSA’s vision. On his first day in office, he revitalized the Mayor’s Office to Protect Tenants and named Cea Weaver as its director. Weaver has come under fire for some past statements about treating private property as a “collective good” and calling homeownership “a weapon of white supremacy”. While these statements are alarming to people like me who value property rights and the prosperity they generate, they are consistent with how the DSA views housing.

This way of thinking exemplifies Mamdani’s problem. Fewer people will want to build or manage rental housing if the city makes it too hard to remove unruly tenants or those who do not pay. The landlords who do stick around will charge higher prices. New York City already has some of the strictest tenant protections in the country, and these laws contribute to the city’s high housing costs. One study analyzing tenant protections finds that stricter protections reduce the supply of rental housing and increase an area’s median rent by six percent. Another study also finds that good-cause or just-cause eviction laws increase rents by six percent to seven percent, with lower-income renters experiencing larger rent increases.

Raising taxes to generate more revenue is always an option for socialists like Mamdani, but his taxing power is constrained by people’s ability to move. From 2020 to 2022, over $38 billion of adjusted gross income and 485,000 people left New York state. Research shows people, especially wealthy people, move when taxes get too high. Dallas mayor Eric Johnson is already predicting financial firms would flee New York City if Mamdani raises taxes.

Mamdani and his DSA comrades may not like working with private developers, but if he wants to make housing more affordable in New York City he does not have much of a choice. And if he is open-minded, he might learn something, too: Competitive markets often generate amazing outcomes for all involved. New York City’s housing crisis is fixable, but only if Mamdani lets the private sector do its thing.

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