Authored by Tom Wilson via The Mises Institute,

Housing costs in New York City have reached a level that many people can no longer afford. The response has been to push for more control—limits on rent increases and expanded tenant protections. The intention is clear. However, housing markets respond to incentives, not intentions.

Under Zohran Mamdani, New York City is moving further in that direction.

The focus is on limiting rent increases, expanding tenant protections, and increasing the role of government in the housing market.

The policy has not fully taken effect yet. Once these rules interact with rising costs, the housing market will respond to the incentives.

Rent control keeps rents down, but it does not keep costs down for the landlord.

There is no cap on insurance premiums. Property taxes can still rise year after year. Maintenance and labor costs continue to climb as well. As those costs rise, landlords are forced to adjust. Some delay maintenance. Others see their margins get too thin to justify the risk.

Single-family rentals are often taken off the market.

The landlord notifies the tenant that the lease will not be renewed, repairs the property, and sells it to an owner-occupant. Each time this happens, the number of available rental units declines.

As supply shrinks, the market tightens.

Landlords become more selective, prioritizing tenants with strong credit, stable income, and clean rental histories. For renters with past evictions or setbacks, finding housing becomes more difficult. A second chance is harder to come by.

Rent control also removes flexibility.

If the city allows a fixed annual increase, the landlord must take it each year or lose it. There is no ability to hold a rent flat during a difficult period and recover it later. What was intended as protection begins to limit discretion.

These outcomes are not unique to one city. They follow the structure of the policy itself. When rent is constrained but costs continue to rise, the system adjusts in predictable ways.

In Portland, similar policies have already been tested. After Oregon implemented rent caps and expanded tenant protections in 2019, the number of single-family homes available for rent fell by roughly 14 percent over the following years, with thousands of units leaving the market, as shown in this analysis of Portland’s rental supply.

That decline came from the same pressures building over time. Costs were not capped, but rents were. This reduced flexibility and increased risk.

Small landlords, who often operate on small margins, were the first to respond. Many chose to exit rather than continue operating under those conditions. Properties were sold, frequently to owner-occupants, and removed from the rental market entirely.

The result was fewer available units, tighter supply, and increased competition among renters. The policy did not eliminate pressure in the system. It shifted where that pressure showed up.

To make housing more affordable, the focus must shift to supply. Rents rise when demand outpaces the number of available units. Constraining rent has been shown to reduce supply and further the imbalance. Increasing supply is what addresses that imbalance.

That means reducing the barriers that slow construction. Zoning restrictions, permitting delays, and regulatory costs all limit how quickly new units can come to the market. When those constraints are reduced, supply can expand and pressure on prices can ease.

This approach works by allowing the market to adjust. As more units become available, competition among landlords increases, and rents stabilize without the need for rigid controls.

It is not a quick fix. It does not produce immediate results that can be pointed to in the next election cycle. However, it addresses the underlying problem rather than shifting the pressure somewhere else.

Demand for housing in cities like New York remains strong. Jobs, population density, and limited space all place constant pressure on available units. When supply cannot expand to meet that demand, prices rise.

The question is not whether a politician’s intention is good. The market does not care about intentions. It responds to incentives.