The Law of Unintended Consequences
By: J. David Chapman, PhD/April 17, 2026
I love real estate, and I like creating and analyzing policy. If you want to understand policy, do not just read the legislation, watch what developers actually build. Right now, in New York City, developers are building a lot of 99-unit apartment projects. Not 98. Not 101. Exactly 99. That is not a coincidence.
A recent project in Brooklyn’s Bedford–Stuyvesant neighborhood highlights the trend. The Rabsky Group is moving forward with a development that intentionally stays just under 100 units. The reason has nothing to do with land, demand, or design. It has everything to do with policy.
New York recently replaced its long-standing 421-a tax abatement program with a new incentive known as 485-x. The goal was straightforward: encourage affordable housing while also requiring higher wages for construction workers. On the surface, that sounds like a win for everyone.
But the details matter. Under the new rules, projects with 100 or more units must meet significantly higher labor standards, including construction wages that can exceed $40 per hour. Projects with 99 units or fewer are not subject to those same requirements.
That one number, 100, has become one of the most important design constraints in New York real estate. So developers adapted. Instead of building larger projects that maximize density and efficiency, many are deliberately scaling back. Some are shrinking projects to 99 units. Others are splitting larger sites into multiple smaller buildings. The result is a wave of developments that are optimized not for housing need, but for regulatory thresholds.
This is the law of unintended consequences in action. The policy was designed to increase affordability and improve wages. Instead, it is reshaping the physical form of development. Projects that might have delivered more housing units are now delivering fewer. Economies of scale are lost. Costs per unit can actually increase. Timelines stretch as projects are broken into phases.
And perhaps most importantly, the total supply of housing is reduced. This is not unique to New York. We see versions of this dynamic across the country, including here in Oklahoma. Whether it is zoning thresholds, parking requirements, impact fees, or density limits, the market responds to whatever line policymakers draw in the sand.
If you create a hard cutoff, the market will cluster right below it. In the context of affordable housing, this matters more than ever. We continue to talk about the need for more housing, particularly workforce and attainable housing. Yet many of the policies intended to help can unintentionally make projects more difficult to finance, more expensive to build, or less efficient to deliver.
Developers do not ignore these rules. They design around them. That is an important distinction.
If a policy makes a project financially unworkable at 100 units but viable at 99, the market will not push through the barrier. It will step back just enough to survive. The result is not better housing. It is simply less housing.
There is a lesson here for policymakers. Incentives and regulations work best when they are gradual, not abrupt. Sliding scales tend to produce better outcomes than hard cliffs. When benefits phase in and requirements scale proportionally, developers can make decisions based on market demand rather than arbitrary thresholds.
In other words, policy should guide the market, not corner it. Because when you corner the market, it does what it always does. It finds the number just below the line.
Dr. J. David Chapman is the Chair of Finance & Real Estate Professor at The University of Central Oklahoma (jchapman7@uco.edu)