Despite rents rising over the past year at their slowest pace since the end of the recession, rent growth in New York City has continued to outpace wage growth, increasing the financial burden on New York City renters.
According to the latest StreetEasy rent affordability report, rent increases are outpacing income gains in New York City by 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% since 2010, an average of 3.9% per year. On the other hand, median wages have increased by 1.8% annually since 2010 – half the pace of rents.
Rents for the bottom 20% of apartment listings (least expensive) increased the most at 4.9% annually, while wages for positions in the bottom 20% of the New York City workforce (lowest earners) increased the least, and in some cases even fell since 2010. Conversely, rents for apartments in the top 20% of the market (most expensive) increased the least at 3% annually, while wages for positions in the top 20% 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% annually, 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%.
The complete StreetEasy rent affordability report with additional analysis and graphics can be viewed at http://streeteasy.com/blog/nyc-rent-affordability-2017/.
