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Rents in New York City are rising seven times faster than wages, making it difficult for low- and middle-income residents to find affordable housing, according to a new market analysis.
Economists at rental listing platforms Zillow and StreetEasy found that the huge gap between median rent and median wage increases in New York City exceeded that of all other metropolitan regions in the country.
While average wages in New York City rose about 1.2% last year, median rents rose 8.6%, according to the analysis from Zillow rental data and statistics from the U.S. Bureau of Labor. But nationally, average wages grew faster than rents.
Kenny Lee, an economist at StreetEasy, attributed rising rental costs to a severe housing shortage that is triggering a “vicious cycle” of price increases by landlords.
“The report really underscores the need for action,” he said. “The truly historic shortage of affordable housing supply in New York City has made it difficult for renters to find an affordable place to live in the city.”
The dramatic increase in rents comes as millionaires flock to the five boroughs and median home sales prices also continue to rise. New York City now has a higher concentration of people with seven-figure incomes than any other place in the world, according to a recent analysis by the consulting firm Henley & Partners. Average home sales prices also increased more than 18% in the metropolitan region in the first quarter of the year, according to new data from the National Association of Realtors.
New York state lawmakers last month passed legislation aimed at curbing dramatic rent increases for many tenants by allowing them to challenge increases above 8.5% in most cases. But the new “good cause” law (so called because landlords are supposed to provide reasonable justification for evicting tenants or raising rents) includes several exemptions and gray areas that have not yet been litigated.
New York City is trying to subsidize more housing for low- and middle-income renters, but the affordability metrics used to determine rents in most of those units don’t match the income levels of most residents. according to a recent study on rents and income by the Community Service Society of New York, a nonprofit organization.
StreetEasy’s Lee said local renters face another unique affordability challenge that isn’t reflected in monthly rents: onerous broker fees. “Application fees, credit check costs and a broker’s fee can add up,” he said.
Still, the report found that over the past five years, the gap between median rent and wage increases in New York City has paled in comparison to those gaps in other parts of the country, especially in Florida’s major cities.
During that period, local rents increased by about 27.5%, while wages increased by about 11%. But rents in Tampa rose 50%, more than triple the rate of wage growth, according to the analysis. Meanwhile, a 53% rent increase in Miami was more than double the rate of wage growth there, and a 37% rent increase in Jacksonville nearly quadrupled the rate of wage growth in the Northeast metropolitan area. Florida.
“Florida has truly seen the most dramatic affordability change in the country,” Lee said.
