By StreetEasy, Special for USDR
- Rent growth far outpaced incomes in New York City. City-wide asking rents increased by 33 percent from 2010 to 2017, or 3.9 percent annually, while median wages grew at less than half that pace: 13 percent since 2010, or 1.8 percent annually.
- The lowest-priced rents increased the most. Homes with the lowest rents in NYC grew 4.9 percent annually, while the highest-price rentals grew just 3 percent per year.
- The lowest earners faced the smallest wage growth. Wages for NYC workers in the bottom fifth of earners saw the smallest annual increases since 2010, while wages for top-earning professions grew the most.
Despite rents rising over the past year at their slowest pace since the end of the recession, rent growth in New York Cityhas continued to outpace wage growth, increasing the financial burden on New YorkCity renters.
According to the latest StreetEasy rent affordability reporti, rent increases are outpacing income gains in New York Cityby a factor of two to one. This growing rent-to-wage disparity has the most severe effect on the city’s lowest earners, who face greater affordability challenges than any other segment of the working population. In New York City, rents have increased by 33 percent since 2010, an average of 3.9 percent per yearii. On the other hand, median wages have increased by 1.8 percent annually since 2010 – half the pace of rentsiii.
Rents for the bottom 20 percent of apartment listings (least expensive) increased the most at 4.9 percent annually, while wages for positions in the bottom 20 percent of the New York City workforce (lowest earners) increased the least, and in some cases even fell since 2010iv. Conversely, rents for apartments in the top 20 percent of the market (most expensive) increased the least at 3 percent annually, while wages for positions in the top 20 percent of the New York City workforce (highest earners) increased the most.
“New York City residents who are earning the least amount of money are experiencing the greatest competition for housing and the steepest rent increases,” said StreetEasy Senior Economist Grant Long. “As New Yorkers – particularly the lowest earners – are forced to dedicate more of their monthly income toward rent, it becomes extremely difficult to save for necessities like healthcare and education, or a down payment on a home. The city needs to focus on policies that can contain the pace of rent growth and develop much-needed skills in the local workforce to ensure every New Yorker can equally benefit from our growing economy.”
The growth in asking rents also far outpaced the growth in costs of other goods. Nationally, inflation rose 1.5 percent annuallyv, less than half the annual growth of New York City rents. Locally, New York metro’s consumer price index (excluding the cost of housing) grew at an annual pace of just 1.2 percent.
The complete StreetEasy rent affordability report with additional analysis and graphics can be viewed at http://streeteasy.com/blog/nyc-rent-affordability-2017/.
StreetEasy is New York City’s leading local real estate marketplace on mobile and the web, providing accurate and comprehensive for-sale and for-rent listings from hundreds of real estate brokerages throughout New York City and the major NYC metropolitan area. StreetEasy adds layers of proprietary data and useful search tools to help home shoppers and real estate professionals navigate the complex real estate markets within the five boroughs of New York City, as well as Northern New Jersey and the Hamptons.
Launched in 2006, StreetEasy is based in the Flatiron neighborhood of Manhattan. StreetEasy is owned and operated by Zillow Group (NASDAQ: Z and ZG).
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i StreetEasy’s rent affordability report is an annual report that examines the current state of rent affordability in New York City. The 2017 report compared the StreetEasy Rent Index to wages as reported by the NYC Department of Labor between 2010 and 2017, and analyzed how growth in different price tiers changed over time. NYC data includes all five boroughs.
ii At StreetEasy, we track the evolution of rents through our StreetEasy Rent Index, which we report across boroughs, and across submarkets and price tiers within boroughs. For the purposes of this analysis, we calculated a single rent index covering all of New York City. For a discussion of the methodology underlying StreetEasy’s index calculations, see here.
iii Wage data sourced from NYC Department of Labor.
iv For the purpose of this report, StreetEasy segmented city-wide wages and apartment rents into five price tiers.
v As measured by the consumer price index (CPI). Source: U.S. Bureau of Labor Statistics.