Rent Freezes and Upzoning in New York and San Francisco

San Francisco's upzoning plan will lead to an even larger proportion of rental units in San Francisco that will not be subject to rent control.

There are many explanations for Zorhan Mamdani’s resounding victory in New York City’s Democratic mayoral primary, but if you had to sum up his message in one word, that word would be “affordability.” For most New Yorkers, as well as most San Franciscans, the most significant way the crisis of affordability effects them is through the cost of housing.

Mamdani addressed the specific issue of housing affordability through two major campaign promises. The first was a rent freeze. The second was to build 200,000 units of genuinely affordable housing and rent regulated over the next decade. While I applaud Mamdani’s focus on affordable housing rather than buying into the YIMBY/urban effective altruism-longtermist approach to housing that would be a boon to wealthy people seeking to move into the city as well as to real estate speculators, I believe that 200,000 figure is a good start, but would be happy to see it doubled.

Mamdani also promised to invest in repairing and improving public housing. The state of public housing in New York is shameful so this third promise is a good idea, albeit a long overdue one.

The proposed rent freeze has become the most controversial of element Mamdani’s housing platform. It is somewhat misunderstood, but is nonetheless important. Mamdani is proposing freezing not for the 67% of New Yorkers who are tenants, but for the 44% of those tenants who live in rent regulated apartments. In other words, Mamdani’s proposal would freeze the rent for 28% of New York’s housing stock. That is not insignificant, but would have little effect on many of the younger voters who constitute Mamdani’s base and, in many cases, do not live in rent regulated units.

Those who believe freezing the rents would bring New York to a screeching halt, lead to chaos on the streets and is the first step to the gulag, should keep in mind that the rent board has frozen the rents for rent regulated units in 2015, 2016 and 2020 and the city survived.

A much more difficult challenge for Mamdani will be finding a way to increase the number of units that fall under rent regulations, although his affordable housing goals, if reached, would be a step in that direction. There is no easy way to do that, but it would stabilize more communities and keep more rental units affordable. This challenge is particularly relevant in San Francisco as well where a key, but sometimes underreported, aspect of Mayor Daniel Lurie’s upzoning plan is to create tens of thousands of new housing units that would not be rent regulated.

The proportion of San Franciscans who rent their homes, 65%, is almost the same as in New York. However, roughly 60% of those units are rent controlled, meaning about 38.5% of San Francisco’s housing stock is rent controlled, slightly more than in New York. However, 75,000 rental units are currently not covered by rent control. The rent control laws in San Francisco, as in New York, are complicated, but the simplest way to understand them is that any unit built after 1979 is not covered by rent control.

The upzoning plan, which proposes to build 82,000 or so units over the next 8-10 years, would include some condos and some other housing that would be owner occupied, but a substantial proportion on those units of housing would be rentals. None of those new rental units, and naturally none of the other units, would be subject to rent control. This means that one of the most powerful tools for keeping housing affordable and preventing homelessness would not be available to anybody who moved into any of these new units. Their might be some carveouts if genuinely affordable housing were created, but the upzoning plan does not exactly prioritize affordable housing.

There is a political impact of this as well. Rent control is an excellent way to keep working and low income families in their homes, and therefore, their communities for years or decades. If fewer units in San Francisco are rent controlled, tenants will have less political power and it will be considerably easier to push working class and poor San Franciscans out of the city. This seems largely consistent with the (un)stated goals of Lurie’s upzoning plan.

In cities like San Francisco and New York election outcomes change policies which, in turn, change the politics of the city. Mamdani’s ambitious agenda, even if it only succeeds in part, will keep tenants and workers in the city and deepen the demand for a more affordable city that catapulted Mamdani to the Democratic nomination, and very likely, the mayoralty. Mamdani’s success will be even more pronounced if he can find a way to increase the proportion of rent controlled units in New York.

In a very different way, Lurie’s policies of upzoning, creating thousands of apartments that are not rent regulated and pushing out rent controlled tenants and small business during the demolition that will inevitably precede at least some of the upzoning will have the opposite effect and will make housing left unchecked.

Lurie’s upzoning plan, if unchecked, will remake San Francisco’s demographics as low income tenants will be forced out and wealthier people will move in which, in turn, will push the city even further rightward. This should not be understood as an unintended consequence, but rather a primary goal, of Lurie’s upzoning vision.