de Blasio's Mad Housing Pipe Dream for NYC

The shoo-in to next mayor of New York City, Bill de Blasio, has no understanding of how supply and demand works. NyPo's Bob McManus explains what de Blasio would like to do to NYC's housing market:

Rent regulation itself is a coercive subsidy program, undertaken on behalf of tenants at the expense of landlords who otherwise could be renting at competitive rates — many of them no doubt using a portion of their proceeds to build more housing, and so on. Pretty soon, problem solved.

But there are a million regulated rental apartments in the city, housing some 2.2 million New Yorkers — a powerful voting bloc. So the deregulation arguments are regularly lost, and the desert persists.

Now comes de Blasio [...] with no-carrot, more-stick housing-subsidy schemes laid directly on landlords and developers in the mad expectation that they’ll build more below-market housing than they historically have.

Specifically:

De Blasio touts a “temporary” freeze on regulated rents[...]

It’s madness on its face: Price controls have never increased the supply of a scarce commodity, not in the history of human commerce. And most potential developers already distrust the city, with good reason; a rent freeze would give them just one more reason to stay out of the market.

 De Blasio also wants to force developers seeking to build in certain parts of the city to provide — at their own expense — at least one low-income unit in a new building for every five market-rate apartments they build. [...]

At present, developers include low-income apartments in new projects — with the necessary subsidies spread across the municipal tax base through tax abatements, credits or tax-exempt financing. This approach is no panacea, but it does yield some limited results (e.g., Bloomberg’s 150,000 units) — and it spreads the pain across the tax base.

The same can’t be said of “mandatory-inclusion initiatives” like what de Blasio proposes, at least in cities that have tried them. There, the burden rests solely on developers, who stay resolutely away.

One result: San Francisco’s coercive program, reports The Wall Street Journal, has produced 1,460 apartments since 1992 — an average of 70 a year.

Yet de Blasio is promising 50,000 units, straight away. Pipe dream.