Deregulating the Up & Coming

Financialized Gentrification & the NYC Rent‑Regulated Housing Market

Introduction

This project examines whether gentrification—understood as a financialized process driven by expectations of future rent growth—is associated with greater loss of rent‑stabilized housing in New York City.

The Problem: Housing Affordability in NYC

Around 43% of NYC’s rental housing is regulated, primarily through rent stabilization. While rent regulation remains one of the most accessible affordability tools for New Yorkers, it also creates incentives for deregulation when gaps between regulated and market rents widen.

Incentives to Deregulate

Persistent rent gaps between market‑rate and regulated units increase landlord incentives to pursue deregulation or rent increases, particularly during hot market periods.

Legal Pathways to Deregulation

Prior to 2019, landlords could deregulate units through vacancy bonuses, high‑rent deregulation, and high‑income deregulation. Post‑2019 reforms closed many—but not all—pathways.

Research Question & Design

Research question: Does gentrification lead to greater deregulation of rent‑stabilized units?

Gentrification is operationalized following bunten et al. (2023) using relative changes in income and housing values at the ZIP‑code level, estimated within a time‑heterogeneous DiD framework (Sun & Abraham 2020).

Financialized Gentrification Context

The analysis focuses on the 2012–2019 period, often described as NYC’s “fifth wave” of gentrification, characterized by intensified financialization and speculative investment.

Data Sources

Key sources include HCR rent‑stabilized building lists, NYC DOF tax data, IRS income data, Zillow home values, and Census ACS estimates.

Results: Descriptive Patterns

Gentrification during this period clustered primarily in north‑central Brooklyn and Queens, with all eligible Manhattan ZIP codes gentrifying.

Changes in Stabilized Units Over Time

Rent‑stabilized units declined more sharply in gentrifying ZIP codes, with the gap widening substantially after 2012.

Spatial Variation in Unit Loss

The magnitude of stabilized unit loss varies widely across NYC, even among gentrifying areas.

Inferential Results

Gentrification is associated with a statistically significant increase in year‑to‑year loss of rent‑stabilized units. The estimated interaction‑weighted ATT implies roughly a 1.18% higher annual loss rate.

Interpreting the Effect Over Time

Compounded over time, these differences imply substantial divergence in stabilized unit counts between gentrifying and non‑gentrifying areas.

Event‑Study Dynamics

The negative effect on stabilized unit counts intensifies as gentrification progresses.

Conclusion & Future Directions

Gentrification between 2012–2019 is associated with meaningful losses of rent‑stabilized housing at the building level. Future work should explore smaller geographies, post‑2019 reforms, and informal or illegal pathways of de‑stabilization.

References

Methodological Appendix

View the repo for this project on my GitHub

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