New York City is one of the hottest multifamily markets in the country, but the New York State Legislature has put an end to that. A new law enacted last week halts an owner’s ability to convert rent-regulated apartments to market-rate units. The new law will cause the value of rent stabilized apartment buildings to drop up to 40% according to some estimates. The wrinkle is that most of these units are located in neighborhoods where “free-market” rents are not meaningfully higher than stabilized units, so the net effect will be deterioration of affected buildings because landlords will not be able to invest capital enabled by the incremental increase in rents. History has proven time and again that government controls in the multifamily sector leads to the decline of neighborhoods. This is a real setback for New York, and other jurisdictions that are likely to follow suit.