Can City Solve Housing Crisis and Keep Vacancy Under 5%? No

As the many candidates for mayor call for huge numbers of new homes — from 200,000 (Zohran Mamdani) to 500,000 (Brad Lander) to 700,000 (Zellnor Myrie) — Kenny Burgos is calling them out.

The CEO of the New York Apartment Association claims that most candidates are not truly pushing “abundance” as a housing goal, because none has identified a target vacancy rate.

Abundance in housing means having far more units than is needed — that is, high vacancy — so renters and buyers negotiate prices down instead of bidding them up.

“A 5 to 10 percent vacancy rate should be the goal for a healthy housing market,” Burgos said on his latest podcast, reflecting the consensus view of economists.

But few city politicians take that position, for one simple reason: A vacancy rate of 5 percent would legally end the city’s “housing emergency” and thus rent stabilization.

“Over the past 50 years, elected officials have attempted to keep the housing stock as close to a 4 percent vacancy rate as possible,” Burgos said.

It’s a classic case of the tail wagging the dog.

Before The Real Deal’s publisher, Amir Korangy, chides me for using an esoteric expression that confuses readers, I will explain. “The tail wagging the dog” means something important or powerful is being controlled by something that isn’t.

In this case, housing policy should determine the vacancy rate, not the other way around. But that isn’t what happens in New York.

Beginning with the citywide rezoning of 1961, elected officials have limited development, which along with strong demand to live in the city has kept the vacancy rate below the all-important 5 percent mark. When the rate surged after Covid, politicians delayed the Housing and Vacancy Survey until it went back down.

Then it kept falling, all the way to a 56-year low of 1.4 percent. That was a turning point in New York City politics. It’s the reason all the candidates are talking about adding supply.

But, as Burgos alluded to, they don’t want to add enough to solve the problem, because rent-stabilization would disappear and about 2 million tenants would storm City Hall like the January 6 mob did on Capitol Hill.

Burgos represents owners of rent-stabilized housing, who obviously would rejoice at being able to charge market-rate rent. That doesn’t mean he’s wrong about rent control being a failed policy.

On his podcast, the lobby group CEO challenged reporters to demand mayoral candidates reveal their desired vacancy rate. Tempting as that might be for journalists, it would serve no purpose because no Democrat could advocate for ending rent stabilization and expect to win the primary.

Better to cheer the plans that have a chance to break the 5 percent threshold, such as Myrie’s and Lander’s, even if the candidates will never admit that is possible.