Why New York’s Housing Crisis Is Worse Than You Think

Why It Matters

The 2019 rent‑freeze law upended New York’s profit‑driven rent‑stabilization model, curbing investment and deepening the city’s housing shortage.

Key Takeaways

• Rent‑stabilized buildings drove massive value‑add profits for investors pre‑2019.
• 2019 HSTPA halted rent increases, collapsing traditional investment model.
• Landlords paid tenant buyouts to trigger deregulation and higher rents.
• Fake contractor invoices inflated renovation costs to meet deregulation threshold.
• Investors now prioritize immediate cash‑flow over long‑term appreciation.

Summary

The podcast with Seth Gler, senior MD at Marcus & Millichap, unpacks why New York’s housing crisis is deeper than headline rent‑freeze debates, tracing the market’s reliance on rent‑stabilized assets and the regulatory framework that shaped investment returns for two decades.

Gler explains the 1990s “individual apartment improvement” formula—spend roughly $40,000 on upgrades to deregulate a unit—creating a massive rent‑gap between legal and market rates. Investors bought 85‑90 buildings annually, funded buyouts for low‑rent tenants, and even used fabricated contractor invoices to meet the threshold. The system yielded low cap rates and high upside until the 2019 Housing Stability Tenant Protection Act (HSTPA) froze rent hikes and outlawed tenant buyouts.

“We’d pay a tenant $50,000 to leave so we could spend another $50,000 renovating,” Gler says, illustrating the cash‑flow‑first model. He also notes that “most of the work was legitimate; the buildings are a century old,” while acknowledging that a minority of deals involved fraudulent paperwork.

With HSTPA in effect, the traditional value‑add play collapsed, forcing owners to seek immediate cash‑flow properties rather than speculative appreciation. The slowdown in capital inflows threatens new construction, exacerbates vacancy pressures, and leaves tenants caught in a rent‑freeze spiral, signaling a long‑term shift in New York’s multifamily market dynamics.

Original Description

What happens when a city facing a housing shortage has 50,000 vacant apartments sitting empty?

In this eye-opening conversation, Jake and Gino sit down with Seth Glasser, Senior Managing Director at Marcus & Millichap's New York Multifamily Group, to unpack the unintended consequences of New York City's housing policies.

From rent stabilization and the 2019 Housing Stability and Tenant Protection Act to skyrocketing compliance costs and collapsing property values, Seth provides a behind-the-scenes look at why many investors have abandoned the market—and why some believe New York may actually present one of the biggest contrarian opportunities in real estate today.

In this clip, you'll learn:

• Why thousands of apartments remain vacant despite a housing shortage

• How NYC's rent laws transformed multifamily investing overnight

• The surprising reality behind 10%+ cap rates in New York

• Why some landlords are choosing not to renovate units

• The ripple effects on tenants, banks, investors, and housing supply

• Whether New York's housing market can recover

• What investors should understand before buying in highly regulated markets

Whether you're a real estate investor, landlord, policy enthusiast, or simply curious about why housing affordability remains such a challenge, this discussion offers valuable insight into one of the most debated real estate markets in the world.

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About Jake & Gino

Jake & Gino are multifamily investors, operators, and mentors who have created a vertically integrated real estate company. They control over $350M in assets under management. They have created the Jake & Gino Premier Multifamily Community to teach others a simple three-step framework for investing in multifamily real estate.

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Want to know more about multifamily? go to:

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