Mayor Mamdani: Stop Trying to Build Housing. Start Incentivizing It.

Every housing conversation in New York City seems to begin with the same flawed premise: “How does the government find enough money to create housing?” 

Recent budget negotiations are shining a light on this issue. That question alone explains why we continue to underperform. Government should not be trying to build housing. Government should be creating the conditions that allow the private sector to build housing. 

There is a massive difference between those two things. For decades, New York has approached housing through a bureaucratic lens, layering subsidy programs, approvals, reviews, commissions, funding battles and political negotiations on top of one another until projects become so slow, uncertain and expensive that many never happen at all. The result is predictable: Not enough housing, rising rents, rising construction costs, shrinking affordability and an ever-deepening supply crisis. 

Everyone knows the definition of insanity, so why do we keep doing the same misguided things over and over and over again and expecting different results?

Meanwhile, the private sector sits ready to solve much of the problem if City Hall would simply allow it to. There are currently 1,814 developers actively building in New York City today. These are sophisticated organizations with balance sheets, lenders, architects, engineers, contractors, operational infrastructure and decades of development experience already in place. They know how to build housing because they do it every single day. The problem is not a lack of developers. The problem is a lack of economic incentive and governmental certainty. 

If New York truly wants to solve its housing shortage, the blueprint is not complicated: Create the right incentives, streamline approvals, reduce uncertainty, allow developers to earn reasonable risk-adjusted returns, and then let them go to work. ELURP is a good start, but much more is needed.

Projects like Chelsea Houses demonstrate exactly what should be happening across the city. Instead of endlessly preserving obsolete, deteriorating buildings through public subsidy, the city should be encouraging partnerships where developers can replace outdated housing stock with dramatically improved buildings, better infrastructure, modern amenities and significantly more units. There should not be five or 10 projects like this underway. There should be 150 of them happening simultaneously. 

The New York City Housing Authority owns the land, and the expertise, capital and appetite exists. New York possesses one of the deepest development talent pools in the world. The notion that we cannot identify 150 capable development firms to execute these projects is absurd. We could probably identify them in a week. What is missing is not capability. What is missing is economics.

The old 421a incentive program, while imperfect, at least acknowledged one fundamental truth: If you want the private sector to produce housing, the numbers must work. Once that program disappeared, development economics across large portions of the city collapsed. Construction costs kept rising. Interest rates rose. Insurance costs exploded. Labor costs increased. Materials costs climbed. Taxes remained punitive. 

Suddenly, countless projects that once penciled simply no longer did. Then, politicians acted surprised when housing production slowed. That is not ideology. That is math. 

Housing developers are not charities, nor should they be expected to be. They assume enormous risk, commit vast amounts of capital, navigate years of uncertainty, and frequently endure political hostility throughout the process. If projects cannot produce acceptable returns relative to the risk, they simply will not get built.

The solution is not for government to attempt to replace the market. The idea that government bureaucracies can outbuild thousands of experienced entrepreneurs competing aggressively in the marketplace is simply unrealistic. The solution is to unleash those entrepreneurs. Bring back a tax abatement program that actually works, not a politically diluted version designed to satisfy ideological talking points. A real incentive program. 

If the economics work, capital will flood into housing production. If approvals become faster and more predictable, production could accelerate dramatically. The current conversation about building 200,000 units over 10 years reflects a scarcity mindset. It assumes housing production must move slowly because government processes move slowly. But housing production does not move slowly when incentives align.

With the right tax policies, streamlined approvals and a genuinely pro-development environment, New York could build 200,000 apartments in four years, not 10. That is not fantasy. It is entirely achievable. 

The city already has the development companies, labor force, lenders, architects, engineers, construction ecosystem, demand and capital waiting for opportunity. What it lacks is political alignment around one simple reality: Government does not need to become the builder. Government needs to become the catalyst. That is how New York built itself into the greatest city in the world. 

And it is the only way New York will build enough housing to remain one of the greatest cities in the world.

Robert Knakal is founder, chairman and CEO of BK Real Estate Advisors.