The Affordability Crisis in New York: A Policy Failure, Not a Market One

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The cost of living in New York City has become a pressing concern for residents and policymakers alike. Bill Ackman, the CEO of Pershing Square, has taken a strong stance on the issue, arguing that the city's affordability crisis is a policy failure, not a market one.

In a wide-ranging interview with Fortune Editor-in-Chief Alyson Shontell, Ackman emphasized that the city's left-wing mayors have made it difficult for developers to build new housing, leading to a severe shortage. Mayor Zohran Mamdani's rent-freeze agenda is, in Ackman's view, exacerbating the problem. “Let's use New York City as a microcosm, starting with the cost of housing,” Ackman told Fortune. “It's so high because left-wing mayors have made it very difficult for developers to build here, and Mamdani, by freezing rents, is just going to make the problem worse.”

Ackman's core argument is that the rent-stabilization system has split the housing market in two, with landlords raising rents on market-rate tenants to compensate for frozen income on rent-stabilized units. This, he argues, is a bad policy that contributes to the affordability problem. “In many New York City buildings, roughly half the tenants are in rent-stabilized apartments with frozen rent, and the other half are at market rate,” Ackman said. “So landlords raise rents on the free-market half to generate enough cash flow to cover their interest expense.”

He also pointed to the removal of housing stock from the market due to rent regulation rules that make it difficult for landlords to recover renovation costs. “About 60,000 units are off the market because renovation costs can't be recovered under rent regulations,” he said. This, he argues, is a direct consequence of the city's policy failures.

Ackman's housing critique is inseparable from his broader argument about the importance of capitalism in solving affordability and inequality. He argued that the wealthy, who tend to be a small share of the population, pay a large share of taxes, and that discouraging them from investing in the city would be counterproductive. “You want the top earners - who are a small share of the population - paying a large share of taxes,” he said. “That's not particularly unfair. But you don't want to discourage people like Elon Musk from locating their businesses here.”

Ackman took a clear lesson from the examples of Florida and Austin, which have implemented policies that encourage development and affordability. In Florida, he argued, the elimination of real estate taxes has created a favorable environment for developers, while in Austin, the ease of building has led to a significant reduction in rents. “If you make it hard to build where people want to live, and you don't let landlords recover renovation costs, they'll pull units off the market,” Ackman said.

Ackman's public posture toward Mamdani dates back to the mayoral primary, when he pledged to fund a centrist alternative and called Mamdani's platform “disastrous for NYC.” He warned that if Mamdani implements his plans, it could have dire consequences for the city.

The housing critique is part of a larger argument Ackman made throughout the interview: that capitalism, not government redistribution or philanthropy, is the most efficient tool for solving affordability and inequality. Ackman has long argued that a person's significance in life is ultimately measured by how positively they affect the largest number of people.

He also connected the debate to a broader worry about the “wealth effect” of equities investment: nearly half of Americans aren't participating in stock-market gains, and Ackman traces this dynamic back to support for candidates like Mamdani. Rather than argue America is too reliant on stock-market wealth, Ackman took the opposite view: “Wages can't compound as quickly as stocks, so everyone needs to participate in the stock market in order to believe in capitalism,” Ackman said.