Since June of 2019 the industry has taken it on the chin year after year. This article is going to make an argument that the worst is behind us and although it might be hard to see, the future will be better than that past.
- Mamdani & The Mainstream Media
Mamdani’s rise to power has drawn national attention. His campaign to “freeze the rent” has given the industry more free media attention than we could have gotten on our own. Rent stabilization used to be a topic of conversation reserved only for New York and California – now everybody can learn about it and comment on why freezing the rent is a great soundbite but horrible public policy. Thank you Mamdani for getting the word out!
He won his election by focusing on one issue: affordability. This strategy has now become a national playbook for the 2026 midterm elections—even Trump floated the idea of a 50-year loan!
But freezing rents and changing amortization schedules will only make the problem worse. The solution is simple: increase the housing supply. End of story.
I predict Mamdani will follow the familiar political arc: over-promising and under-delivering. In four years, the city will likely be less affordable than it is today. Get ready for the pendulum to swing back in 2029.
- Regrets About HSTPA
“I particularly believe the 2019 State rent regulation laws need to be re-evaluated and altered to encourage investment in buildings,” said Bill de Blasio.
When the father of HSPTA expresses some regrets six years later, you know things aren’t going well. Admitting you have a problem is the first step to recovery.
- Albany
Hochul already shot down free buses – don’t be surprised if she throws more cold water on the mayor’s idealistic budget busting fantasies.
Hochul will have her hands full when Elise Stefanik starts to campaign for her job next year. Hochul will have to walk a fine line of balancing moderate policy after endorsing an extremist. It might be quick, but the pendulum could swing back to the right in Albany in 2026 which would be a major win for downstate real estate.
- Legal:
Two things to be aware of – one good and one bad.
- Vacancy reset lawsuit – The Institute for Justice is backing SPONY and others in a constitutional takings challenge aimed directly at HSTPA’s vacancy framework. This was sparked by Justice Clarence Thomas’s 2024 dissent, essentially inviting a broader attack on the law. We’re years from resolution, but you have to start somewhere — and this is the first real shot at undoing a core problem, rather than trying to take down HSTPA in its entirety.
- COPA– This gives HPD and qualified non-profits a first and last right of refusal to buy a building. This bill has gotten watered down significantly from its original form to something more targeted and specific which is good, but still, lawyers will poke holes in its constitutionality. The industry should be aware but not panicked over this. Assume that some version of this bill will pass. What it looks like and when it passes is anyone’s guess. Could this be the straw that breaks the camel’s back? Does this overreach open the floodgates for cases to challenge rent stabilization in a broader way? Maybe… Eventually the far left will overreach, and real estate will have its day in the sun.
- NFP & Banking Distress
Nonprofits enjoy three advantages:
- 1% HPD debt
- 30+ year fixed terms
- Long-term tax abatements eliminating 18–25% of gross revenue expenses
Nonprofits are sounding the alarm on rent stabilized distress, and NYCHA is a disaster. How is the private sector going to survive and what does that mean for the people that live in these buildings?
Foreclosures, note sales, discounted payoffs and workouts are on the rise. If another bank goes belly up like Signature, that would be economically disastrous but politically useful… hmm… let’s see.
- Past, Present & Future:
Values fell from 15× rent to 5× — a 10-multiple collapse in six years. Good news: we cannot lose another 10!
Market precedents matter:
- Dot-Com Bubble: S&P down 76%
- Great Recession: down 50%
- COVID: down 30% in 3 months
- Today: 6,800 and climbing
Even buying at the peak worked out if you held long enough. Same lesson here: real estate rewards time, not just timing.
2026 And Beyond:
The night is darkest just before dawn. I genuinely believe cooler heads will prevail and logic will eventually beat ideology. Distress, forced sales, cheap valuations, and widespread nonprofit alarms will finally drag the conversation away from slogans and toward root causes — namely HSTPA.
That said, the short term will remain brutally challenging. Rate resets, compliance mandates, rising operating expenses, frozen rents, housing court backlog, political hostility, and capital markets fatigue are not going anywhere. Anyone pretending the next 18–24 months are smooth is selling something.
How you spend your time, deploy capital, and think about opportunity cost matters more now than ever. Not every building deserves the same treatment; some should be saved, some sold, some worked out, and some handed back to the bank. Portfolio triage is not pessimism — it’s strategy.
There is no universal right or wrong answer. Waiting may work. Selling may work. Buying may work. What will not work is pretending the HSTPA era is sustainable or permanent. Distress has a way of forcing political clarity, and New York is nearing that breaking point. Eventually, overreach invites correction, and real estate will have its day in the sun.
We don’t need a miracle — just a return to policy grounded in math, not messaging. It won’t happen overnight, but it will happen.
Best of luck in 2026!
Seth
