Jay Martin 🏠 🏢🏚️🌇@jaymart222
Rent Stabilization Is an almost perfect example of a Ponzi Scheme.
In 2019, Albany Broke It.
Every Ponzi scheme depends on the same mechanic: new money entering the system pays for the promises made to the people already in it. Rent stabilization worked exactly this way, and for decades it more or less held together.
Here’s how. The longer an incumbent tenant stayed in occupancy, the deeper their discount grew relative to market and costs.
That growing discount had to be paid for by someone, and that someone was the newcomer.
Vacancy increases, renovation-driven investments, and modestly higher entry rents brought fresh capital into the system every time a unit turned over. New money subsidized old promises. It was never stated this way, but that was the deal. It barely worked. But it worked.
Turnover (naturally occurring from death and self initiated vacancies NOT evictions) kept enough new rent flowing in to cover rising costs, and the future value embedded in eventual turnover gave owners something to borrow against. This last part is key and is always missed or reframed as a negative.
That leverage financed boilers, roofs, elevators, and facades.
The system’s solvency was built not just on current rents but on the promise of future ones.
Then in 2019, the legislature did what regulators do to actual Ponzi schemes: it shut off the flow of new money. No vacancy increases. No meaningful renovation recovery. No incentive for any tenant to ever leave or ask for a buyout, and no incentive for any owner to bring a vacant unit they’d lose money on back.
Could Albany have addressed harassment or subsidized distressed buildings directly instead? Sure. But by eliminating turnover and any return on investment, it guaranteed that newcomers could no longer offset costs, and it wiped out the future value that had historically financed building improvements.
That leaves exactly one entity capable of making up the difference: the Rent Guidelines Board. And the RGB is a politically controlled body, vulnerable to public pressure, that routinely ignores its own cost data. A system that once relied on market-rate newcomers now relies on the annual mercy of nine appointees. Under a freeze, it doesn’t rely on anything at all.
These are inconvenient truths for those who insist that costs aren’t up, distress isn’t real, quality isn’t falling, and that housing somehow pays for itself. But buildings run on cash, not intentions.
Without new, higher rents entering the system, the math doesn’t work. It never did and was never asked to. THAT is what’s different about rent freezes today and the current system with costs up rent collections down.
It’s broken and the only answer being given by current leaders is to break it further to move more of the cost of housing to taxpayers.
A city and state facing billions in deficit with a federal government that hasn’t even funded the federal housing units in New York it’s already responsible for?
That’s an odyssey of extreme hubris.
