By Jack Stone, managing director, Greysteel
In the last week of June, two things happened in the American multifamily market that belong side by side: New York froze rents, and the Dallas Fed confirmed that Texas is drowning in apartments. One of those scenarios involves a market correcting itself. The other is a market being told to stop.
In New York, the Rent Guidelines Board voted seven to one to freeze rents on roughly 1 million rent-stabilized apartments, including zero percent on one- and two-year leases, the first two-year freeze in the board’s history. That action impacts about a quarter of all housing inventory in the city and roughly 40 percent of its rental units.
In Texas, markets have kept doing what they’ve been doing for two years: bleeding.
Both states are wrestling with the same underlying problem. Rents got too high for many people to afford. The difference is what each one decided to do about it, and that difference is the whole story.
Texas is in pain, and the pain is honest. The Dallas Fed put numbers to it this spring. A pandemic-era construction boom, cheap money and aggressive bank lending dumped a historic wave of units onto the market. Statewide, Texas delivered close to 120,000 units in 2024 alone, according to the Dallas Fed. Vacancy peaked in the middle of that year, and rents have been falling across most major metros ever since.
Austin rents have now dropped for 10 straight quarters, per the Dallas Fed. Dallas Fort Worth’s (DFW) vacancy rate has been sitting around 11 to 12 percent. Owners are handing out six to eight weeks of free rent, and in some cases up to three months, just to hold occupancy. Investors that bought in 2022-2023 in the wrong submarket are living this reality right now. Valuations are under pressure. Refinances are ugly. Some of these deals are not going to make it. That is real distress.
But with all that distress, the market is already self-correcting. Developers saw rents fall and stopped building. Statewide deliveries dropped by roughly half in 2025, and the Texas Real Estate Research Center projects fewer than 35,000 new units will be delivered in 2026, the lowest in over a decade. Construction starts nationally are down more than 70 percent from their 2022 peak. Austin is predicted to bottom out and turn back up in late 2026.
Nobody ordered that. No board voted on it. High vacancy and falling rents sent a signal; capital sources read the signal, and supply growth pulled back.
Was that painful for owners caught at the top? Yes. But the mechanism is working exactly as designed. Too much product drove prices down; low prices choked off new product, and the shortage starts to cure itself. Eighteen months from now, operators who survive will be pushing rents again, and they will have earned it. That is what a free market correction looks like. It hurts like it’s supposed to, and then it heals.
Now look at New York’s answer to high rent. The state did not build its way out. That is largely not a option, because the same regulatory framework that produced rent stabilization also makes building slow and expensive. So instead, the city simply declared that rents will not go up.
To understand how strange that is, it’s crucial to understand the thing that is actually being frozen. Rent stabilization is not affordable housing. It has no income test. None. No AMI (area median income) floor, no means test, no cap. The benefit attaches to the apartment, not the person living in it. So a finance executive who could pay double without blinking can sit on a frozen rent for life, while the family that actually needs the break lives next door paying full market rate on the same floor plan. Need has nothing to do with who is protected. Last year, a sitting state assemblyman was told to give up his own rent-stabilized apartment. He kept it. He is now the mayor.
How did a system this random come about? In layers. Stabilization started in 1969 to tame spiking rents, then a 1974 law swept in most buildings with six or more units built before that year. For decades, individual units could escape to market rates when the rent crossed a ceiling, when a tenant moved out or after a renovation. Then a 2019 overhaul welded that door shut. Whatever was stabilized stayed stabilized. Whatever had already leaked out stayed market-rate. That is why a single building is a patchwork of frozen and free units, with no logic connecting who got which.
Freezing the rent on top of all that does not create a single new apartment. It does the opposite. Operating costs for these buildings rose more than 5 percent this year while the allowed increase is zero, according to the Rent Guidelines Board. Owners have already predicted what comes next: deferred maintenance, layoffs, buildings sliding toward distress.
In other words, a housing shortage cannot be solved by making it unprofitable to maintain housing.
So here we are. Two markets, same disease, two prescriptions. Texas took the free market cure, and it’s brutal right now. Owners are losing money; deals are breaking, and the headlines are grim. But the bleeding is doing something. Supply is correcting; demand is catching up, and the cycle will turn because we let prices tell the truth.
New York reached for the anesthetic. The freeze will feel like relief for the tenants who already hold the golden lease. It will do nothing for families that need rent-stabilized apartments and cannot find them, and it quietly guarantees that the next generation of stabilized buildings will be worse maintained than this one.
Texas operators are having a hard year. Be grateful it is the kind of hard that ends.