As the sun sets, a gloomy two-bedroom in Manhattan reveals its age, with its walls and a dead pigeon painting a picture of neglect.
Mike Danton inspects his 21-unit building, bought for $4.8 million in 2018, now under the tight grip of New York City’s stringent rent controls.
This system restricts him to charging rents significantly below the potential earnings in Washington Heights, Manhattan’s “Last Bastion of Affordability.”
Historically, landlords turned profits by updating such buildings and nudging up rents.
However, 2019’s legal overhaul slashed the allowed rent hikes post-upgrades and indefinitely locked apartments into rent stabilization.
With a $300 million, 20-year investment history, Danton finds himself cornered by mortgage delays and looming repairs, his empire and legacy at risk.
Last year, the average sale price for buildings with at least one rent-stabilized unit dropped 34% to $203,000 per unit, while non-regulated units rose 23%.
The downturn erased up to $75 billion in value from rent-stabilized properties, with the FDIC discounting $15 billion in related loans by 40%.
New York Community Bancorp’s shares also took a hit, plummeting 38% due to fears over real estate exposure.
This shift signals a critical moment for affordable housing in a notoriously expensive city.
Owners argue that tighter rent controls strip them of property rights and discourage necessary renovations.
Tenants, on the other hand, see this as a correction for years of speculative betting on exorbitant rents.
New York Real Estate Faces Historic Downturn
The debate over rent control is not unique to New York, echoing globally with varied success.
Critics say rent control skews markets and increases shortages. However, experts recommend a balanced approach to ease tenant struggles without hampering the market.
Recent New York laws shift the power from landlords to tenants, posing new challenges for property owners.
Tenant advocates view the current market as an opportunity for more community-focused ownership models.
Landlords’ quest for legal relief and tenants’ battle for stability underscore New York’s housing policy effects.
The city’s fight for affordable housing mirrors the global debate on private rights versus public housing demands.