NYC is Building More Housing Than in the Past 60 Years, Why Aren't Developers Optimistic?
After decades of disregard, the housing affordability crisis has finally made it to the front page. For that, at least, we are grateful. Journalists and politicians look back to find reasons: income inequality, land values, taxes, labor costs, inflation, incentive structures, NIMBYism, corruption, and bureaucracy all contribute to the mess we are in. None of these explanations are wrong, and none is complete.
Our clients have noticed. They tell us that development in New York City is harder than it has ever been. Many have sworn off trying to build here entirely, turning instead to New Jersey and further afield. The ones still in the market say it plainly: the numbers do not work. Not in a way that leaves room for a decent return, given everything stacked against a project from day one.
The data confirms that our clients are not outliers. They are a trend.
POLICY CONTEXT
From 421-a to 485-x: How We Got Here
May 2024 saw the lowest number of monthly permits for multifamily buildings in a decade. There were only 36 permits issued, with the sole exception being the lockdown months of 2020. The full year of 2023 produced just 15,500 approved units, the lowest figure since 2016. These are not abstract statistics. They represent housing that was not built, for people who are still looking for it.
To understand how we got there, you need to look first at the NY State affordable housing tax credit, a program that for many developers made a project doable. The program was called "421-a," after the section in the state law that created it. The law expired in 2022, and was later replaced by a new law section called "485-x." For decades, the program functioned as the essential mechanism for making new rental housing financially viable in New York City. Developers used it to assemble financing; without it, most projects did not pencil out. When the state let 421-a expire in June 2022 (with critics arguing, not unreasonably, that it rewarded developers for building mostly market-rate housing without sufficient community benefit) the development community responded in the only logical way. They sprinted. Permits for over 60,000 new apartments were filed in 2022 alone, nearly three times the annual average, as developers rushed to get their projects covered before the deadline passed.
60,000+ units filed in 2022 — nearly 3x the annual average — as developers raced to beat the 421-a expiration.
Then the music stopped. Lawmakers recognized the problem created by the absence of the program, and enacted 485-x in April 2024, promising it was a smarter successor: more affordable units required, stronger tenant protections, and wage floors for construction workers that scaled with project size. The intent was sound. The market's response has been cautious, partial, and in some ways, the opposite of what the program's architects intended.
THE REBOUND
Better Numbers, With a Catch
"It's critical that policymakers and other advocates do not become complacent in response to the quarter's housing production totals. The strong results come following a decade-plus of underproduction that needs to be addressed and can't be done 99 units at a time." — Zachary Steinberg, EVP of External Relations and Advocacy, REBNY
By the second quarter of 2025, something had shifted. 424 new building filings were made at the Department of Buildings, a 28 percent increase over the prior year and a 43 percent increase over Q1 2025. City & State NY News outlets attributed the uptick to 485-x beginning to take hold. By Q3, the numbers were more striking still. There were 11,746 proposed multifamily units across 207 proposed buildings; a 69 percent increase from the previous quarter and 162 percent above the historical average since 2008. Rebny
On the completions side, the story looks even better…on the surface. New York City was on pace to complete 50,000 new homes in 2025, far exceeding 2024's 34,000 units, which itself had been the highest number of new homes built in the city since 1965.6sqft For a city that spent years barely building anything, these numbers feel like progress.
But here is the catch: the surge in 2025 completions was largely driven by developers who rushed to start projects before 421-a expired in 2022, with many of those buildings only now reaching completion. 6sqft The wave cresting this year was set in motion three years ago, under a policy that no longer exists. And the pipeline meant to replace it is not yet generating comparable volume. As of the end of Q3 2025, only 3 percent of projects in the NYC development pipeline can be attributed to 485-x. Rebny
Three percent.
WHAT WE'RE HEARING
On the Ground, in the Room
The developers we work with are not sitting on the sidelines while they wait for the city to shower them with better deals. Most of them want to build. The demand is real. In New York City, every decent apartment that comes to market gets rented, and rented quickly. The problem is not appetite. It is arithmetic.
A recent RAND study put it plainly: construction costs in New York City are fourth highest internationally and second highest in the United States. The property tax system is structured in ways that penalize multifamily production relative to single-family homes and condos. In many neighborhoods, rents are simply not high enough to generate the returns that make development viable. This is not a story about greed. It is a story about math that does not add up.
What we are seeing now: the cautious re-entry, the tentative filings, the projects capped at specific unit counts - reflects a development community dipping its toe back in the water. Carefully. Conservatively. And with clear limits that the data are only beginning to reveal.
WHAT COMES NEXT
A Real Turning Point, or a Blip?
If we as a city believe that housing is a crisis in desperate need of fixing, then we have to be honest about what fixing it actually costs. The options are limited: either government builds, manages, and owns the housing; or the private sector must be given enough reason to do it. Experts caution that sustaining a pace of 50,000 completions per year is unrealistic, given how much less attractive 485-x has proven to developers compared to 421-a. 6sqft The City of Yes for Housing Opportunity zoning changes, passed in late 2024, and the 467-m commercial-to-residential conversion program offer parallel tracks, but they are not enough on their own to close a gap that has been widening for a decade.
The honest question is not whether the numbers are improving. They are; albeit modestly, unevenly, and with significant caveats. The honest question is whether the policies now in place are structured to produce the volume the city actually needs, or whether they are producing a different kind of project altogether. The answer to that question lives inside a single number: 99.
We are currently working on two projects inside this tension. One is a multifamily development on Greenpoint Avenue in Brooklyn, designed to take advantage of the new City of Yes zoning framework. The other, a nine-story building on a nearly full-block site will add over 700 units to a long-neglected area of Newark, New Jersey. Both projects are moving. Both are hard. And both reflect exactly the kind of work the city and region need more of.
The next post in this series examines why developers are targeting 99 units with such precision and what that behavior tells us about the unintended consequences of a well-intentioned policy.
Building Studio is a New York City architecture firm with deep expertise in multifamily and affordable housing development. Learn more at buildingstudio.com/multifamily-architects-nyc.
Next in the series: Part 2 — The 99-Unit Loophole — How 485-x Is Reshaping What Gets Built
About the Author
Michael Goldblum is a partner at Building Studio Architects, a New York City based architecture firm specializing in multifamily and affordable housing. With more than 30 years of experience and over 10,000 residential units designed, he has deep expertise in zoning, land use, and navigating complex regulatory environments.
