Trends & Data

The State of New York City Rent Affordability in 2016

By Alan Lightfeldt April 21, 2016

New data provides quantitative evidence of the widening gap between what New York City households can afford and what they are likely to find in the city’s increasingly expensive and competitive private rental marketplace. According to StreetEasy’s annual New York City Rent Affordability Report, the typical New York City household is expected to spend nearly two-thirds of its annual income on market-rate rent this year, a considerably greater burden than just last year[i].

Using the median rent-to-income ratio, which measures the share of income spent on rent, the typical household in New York City is expected to spend 65.2 percent of its total income on market-rate rent in 2016. That figure was 59.7 percent in 2015, an alarmingly high figure in its own right but nearly six points lower than the forecasted rent burden this year.

For a growing number of renters searching for an apartment in the private rental market (vs. units in buildings that are part of financial assistance or subsidy programs), an affordable place to live is well out of reach. The underlying factor behind New York City’s worsening affordability problem is simple: New Yorkers’ incomes aren’t growing fast enough to keep pace with the rising cost of rent. With the notable exception of Manhattan, rent growth is forecasted to far outpace income growth in each borough in 2016.

Faced with a wider gap between what is affordable and what is available in the rental market, New Yorkers are forced to make difficult decisions. Some resort to taking on more roommates to lower their rent burden, resulting in crowded housing conditions that affect immigrant communities the most. Others simply move further away from the city, lowering their housing costs, but increasing their transit time to major job centers in New York City. For the majority of renters, however, the gap means dedicating a larger share of their paycheck to the costs of housing.

This burden weighs heavily on New Yorkers. According to a recent survey conducted by WNYC radio and Public Agenda, nearly 90 percent of New Yorkers believe that the high cost of housing is a serious problem. The concern about high housing costs was second only to the high cost of living, highlighting how the struggle to afford high rent and other necessities is a clear and growing challenge for New Yorkers.[ii]

Bright Lights, Big(ger) Rent Burden

As income growth lags behind rent price growth, New Yorkers in four of the five boroughs can expect to face a higher rent burden in 2016 than in previous years. According to StreetEasy forecasts of asking rent and household incomes, Brooklyn remains the least affordable among the city’s boroughs. The typical household in Brooklyn will need to spend 65.4 percent of its total annual income on the median market-rate rent in 2016. Brooklyn is followed by the Bronx (54.1 percent), Queens (51.6 percent), Manhattan (49.1 percent) and Staten Island (27.9 percent). [iii]

As the least rent burdened borough, Staten Island is home to seven of the 10 neighborhoods in New York City with the lowest median rent-to-income ratio in 2016, including the four lowest: Greenridge (18.8 percent), Princes Bay (19.2 percent), Pleasant Plains (21.1 percent) and Woodrow (21.1 percent).

Conversely, the burden is greatest for households in East Brooklyn, Upper Manhattan and the South Bronx. In Manhattanville, for example, the median rent-to-income ratio is forecasted to reach 119.5 percent in 2016, meaning the annualized median market-rate rent in the neighborhood is far greater than the typical household’s total annual income.[iv] Manhattanville is not alone: Chinatown, Little Italy, Mott Haven and North New York all have median rent-to-income ratios greater than 100 percent, pointing to neighborhoods in the city that are most difficult for local residents to secure affordable housing in the private market.

The high burden highlights the growing necessity of housing subsidies and rent-regulated apartments for low-income households. The rental market in New York City is highly regulated to ensure, at least in theory, that the households with the greatest financial need are able to live affordably. Not every household, and in some neighborhoods perhaps the majority of households, will need to pay market-rate rent because of subsidies and rent-regulated units. However, our rent-to-income ratios highlight the highly unaffordable rental landscape that these New Yorkers would face without these programs and subsidies in place.

Rent Burden Grows Across New York

While Brooklyn continues to be the most burdened borough, the median rent-to-income ratio in Queens has seen the greatest increase. Between 2015 and 2016, the median rent-to-income ratio in Queens increased 8.4 points from 43.5 percent to 51.6 percent. Neighborhoods within Queens saw some of the greatest increases in rent burden in the city, led by Murray Hill (8.6 points), Long Island City (4.3 points) and Jamaica (3.7 points).

As the city’s least affordable borough, Brooklyn renters will face an even greater burden this year. Between 2015 and 2016, the median rent-to-income ratio in Brooklyn increased by 3.5 points, led by Seagate (9.4 points), Williamsburg (1.9 points), Bushwick (1.9 points) and Red Hook (1.8 points).

While Staten Island has the city’s lowest typical rent burden, it is expected to grow slightly this year. Between 2015 and 2016, the median rent-to-income ratio increased by 1.3 points from 26.6 percent to 27.9 percent. Neighborhoods within the North Shore submarket, with its proximity to the Staten Island Ferry, experienced the most growth in rent burden this year. Stapleton saw the greatest gain in the borough (2.3 points), followed by Saint George (2.2 points) and Tompkinsville (1.9 points) – all of which are located in the northern tip of the island.

In the Bronx, where both market-rate rent and household income are the lowest among the city’s five boroughs, the typical rent burden is expected to remain the same as last year. Between 2015 and 2016, median rent-to-income ratio increased by 0.9 points from 53.2 percent to 54.1 percent. Neighborhoods within the South Bronx submarket experienced the most growth in rent burden this year. Mott Haven saw the greatest gain in the borough (2.5 points) and also one of the highest rent-to-income ratios in the city at 108.0 percent, followed by North New York (2.3 points) and Longwood (2.1 points).

Low Income Growth Leads to Higher Rent Burden

Perhaps no other factor is more fundamental to the city’s growing rent burden than lagging income growth. Incomes simply cannot keep up with the growing cost of rental housing. The median household income is expected to grow by 0.8 percent to $56,244 in 2016. However, the median asking rent is expected to grow by 10.1 percent to $3,054.

The disparity between rent price growth and income growth is the most severe in Queens, where median asking rent is expected to grow by 19.2 percent to $2,503 and median household income is expected to grow by just 0.4 percent to $58,225. Queens households will consequently experience the greatest increase in rent burden from last year.

Relatively low rent price growth and high income growth in Manhattan will cause a unique phenomenon among the city’s boroughs in 2016: a lower rent burden. Manhattan is the only borough in which the forecasted income growth (1.0 percent) will exceed the forecasted growth in median rent price (0.2 percent). As a result, the median rent-to-income ratio in Manhattan is expected to decline slightly from 49.5 percent in 2015 to 49.1 percent in 2016.

A Path to Affordability

It may be tempting to believe that housing affordability is a problem only for low-income households. In fact, it is every New Yorker’s problem.

A city with an increasingly rent-burdened population risks becoming less competitive in the global economy. As rent consumes a greater share of take-home pay, some of the world’s entrepreneurial talent may choose to live in less expensive cities that afford a higher standard of living. This would be particularly harmful to the economic future of New York City as it seeks to diversify its economy away from a heavy historical reliance on the financial sector. The Big Apple has long attracted the world’s thinkers and doers. But if we shut the door on them with high rent, they may just “make it” elsewhere.

Of course, the problem of housing affordability is most acute for low-income households who often face the greatest burden as incomes fail to keep up with growing rent. Roughly one-third of the city’s labor force is employed in low paying industries such as hospitality and fast-food.[v] The growing gap between what is available to rent in the city and what can be afforded by these households poses a difficult public policy question: is it acceptable for New York to be affordable only to the well-off and highly educated?

Mayor Bill De Blasio’s 10-year affordable housing plan seeks to build or preserve 200,000 rental units in order to keep New York City affordable to households across the full income spectrum. Some of his proposals would rezone neighborhoods to accommodate greater housing density, particularly around transit hubs like East New York. Another initiative of the Mayor’s plan known as mandatory inclusionary housing (MIH) would, true to its name, mandate the provision of affordable units in certain areas of the city in which market-rate apartments are constructed.[vi]

These efforts are aimed at the supply side of the affordability equation and they are sorely needed. With a rental vacancy rate below 3.5 percent, the supply of rental housing across the city is extremely low, which places upward pressure on prices and even more competition among renters.

In order to solve New York City’s affordable housing problem, however, both sides of the equation will need to be addressed. Slowing income growth is not a New York City-specific problem, but it is chiefly responsible for how unaffordable our city has become. Policies aimed at increasing wages and incomes of New Yorkers through training and education should work in concert with increased affordable housing production. Until income growth catches up with rent growth, the rent affordability problem will loom large on New York households.

How We Did It

Median asking rent for each neighborhood in 2015 is based on all rental listings on StreetEasy throughout 2015. Using several years’ worth of rent data, we forecasted median asking rent for each neighborhood in 2016 using a standard auto-regressive integrated moving average (ARIMA) model. Similarly, we forecasted median household incomes in 2015 and 2016 by using the employment cost index (ECI) to adjust 2014 ACS 1-year estimates from the U.S. Census. The rent-to-income ratio for each year is the forecasted median annualized rent divided by the forecasted median household income for each respective year.

Endnotes

[i] StreetEasy’s “State of New York City Rent Affordability” is an annual report that includes the most updated rent-to-income ratios based on historical Census and rent price data.

[ii] 2015 Public Agenda/WNYC New York Metro Area Survey. Results and full methodology can be found here: http://www.publicagenda.org/files/PublicAgenda_Whats_At_Issue_Here_2015.pdf

[iii] All 2016 rent-to-income ratios are based on StreetEasy forecasts of median asking rent and median household income.

[iv] The rent-to-income ratio listed is for each neighborhood is calculated by dividing the forecasted annual median asking rent by the forecasted median household income.

[v] https://nycfuture.org/pdf/Low-Wage_Jobs.pdf

[vi] http://www1.nyc.gov/site/planning/plans/mih/mandatory-inclusionary-housing.page

Alan Lightfeldt

Alan Lightfeldt is a data scientist at StreetEasy. Previously, he was a research assistant at the Furman Center for Real Estate and Urban Policy, a joint research center between the NYU School of Law and the Robert F. Wagner School of Public Service. His research focused on subsidized housing programs and the effects of real estate-owned (REO) properties on communities. He received a master's degree in urban planning from New York University and a bachelor's degree in international political economy from the University of California at Berkeley.

a concerned observer

Wow. So many questions. For starters, how are people paying the rent when the rent-to-income ratio exceeds 100%? How exactly does that work when it’s not a month or two but long term and getting worse?
- native new yorker
  
  I wondered about that too. Also noticed your study includes individual S.I. neighborhoods, I think for the first time.
  
  Over 100%:
  
  Boro
  Area Name
  rent – income ratio
  
  Manhattan
  Manhattanville
  119.48%
  
  Manhattan
  Chinatown
  114.58%
  
  Manhattan
  Little Italy
  108.53%
  
  Bronx
  Mott Haven
  108.00%
  
  Bronx
  North New York
  101.27%
  - Alan Durand Lightfeldt
    
    In fact, we included Staten Island neighborhoods last year as we always do when our data supports it.
    - native new yorker
      
      O.K. You were quoted in the SI Advance today.
- Alan Durand Lightfeldt
  
  When rent-to-income ratio exceeds 100% in a neighborhood, the median asking rent for non-subsidized units exceeds the median annual income in that neighborhood. This could be a sign of a neighborhood that is transforming quickly, has a significant amount of subsidized housing, or both.
a concerned observer

On second thought, these findings are somewhat misleading. They use median income of all households vs. median rent of only private rentals, excluding public and subsidized housing. The effect is to overstate the rent-to-income ratio. I’m sure it’s still a scary number, but not as scary as 65.2%. Care to take another crack at this, Streeteasy?
- anon_coward
  
  even worse. in forest hills the asking rents for a 2 bedroom fluctuate close to $1000 per month between the top and bottom ends. depending on the exact building, condition of the apartment, school zone, subway stop, etc.
  
  i bet the same is true for every other neighborhood
- Alan Durand Lightfeldt
  
  The rent-to-income ratios stated in our report are based on rental listings on StreetEasy and reflect the share of income needed to afford rent in the private, non-subsidized market. While New York City has a highly regulated rental market (and for very good reason), the majority of residents are looking in this market. In other words, if you aren’t lucky enough to score a regulated unit or do not qualify for a subsidy, this is the reality you would face.
  - a concerned observer
    
    Not to be a pain about this but removing those households with public/subsidized housing from the income pool will mean a higher median income for those who remain. Most though not all in public or subsidized housing have lower than median household incomes. Or am I missing something?
    - Alan Durand Lightfeldt
      
      You are absolutely correct that households in subsidized units must meet certain income requirements. By design their incomes will be lower. Census income data is not separated between subsidized or non-subsidized households, however, so we report the overall median household income.
      - a concerned observer
        
        Fair enough, and thanks for your reply.
- We need more housing
  
  “somewhat misleading” come on – this study is designed to mislead.
  
  No landlord is renting to people who spend 50% of their income on housing. This study’s conclusions are misleading and untrue.
Steve Smith

Are these rations based on salaries before or after taxes?
rothsteg

It’s hard to imagine a more flawed study. Firstly, as others have pointed out, median income encompasses the entire population of an area, while the ask price only encompasses the private sector. To use a glaring example, the Upper East median income includes those who live in NYCHA’s Isaacs Housing Project which lower the area’s median income, but doesn’t include a soul who is affected by the asking price. Secondly, asking prices are not necessarily transaction prices. Newspapers have recently been full of stories about asking prices not being met and concessions being offered. Finally, and most significant, asking prices (or new transaction prices) only affect those who are signing or, presumably, renewing leases. For those on leases which have time to run, their costs are not affected by today’s ask. In time they may be, but that doesn’t make the assertions regarding the per cent of income currently going to rent any more accurate.
- Alan Durand Lightfeldt
  
  Great points, and thank you for reading our study. I’ve addressed your first point in other responses so I will address your remaining points. Our study uses overall median income in a neighborhood with median asking rent in order to determine what share of a typical resident’s income will go towards rent this year. This is valuable to know, especially as the city discusses affordable housing policy and subsidies. In other words, this study highlights what New Yorkers are up against if they aren’t able to secure a regulated unit. With regards to concessions, you make a great point. However there is simply no way for us to track specific concessions for every unit, so we omit them from this analysis.
  - We need more housing
    
    garbage – complete garbage. you don’t understand how math works.
    
    Step back for one minute and just think this through.
    
    No landlord in NYC is going to rent to anyone who doesn’t make at least 35x the rents – and most landlords require 40x. How can you possibly believe that market rate renters are paying more than 50% of their gross income on rent? It’s nonsense.
    
    The median rent in NYC is a bit over $1,500 month. That’s the fact. That’s how much NYC residents really pay. And the median income for a family of 4 is $83k.
    
    We need more housing, but we don’t need to lie to people in order to get it built.
    - Elizabeth A. Wall
      
      I disagree. My rent is 2050 in East Harlem. I work for CUNY and make <50k with two Master's degrees. My net pay covers the rent and leaves me $450.00. My daughter gets $700 in disability and husband gets $1400 in social security. My daughter had many medical expenses that are not covered by insurance so we scrape by. CUNY employees have not seen a raise in six years as we remain one of the last groups with unsettled contracts. We fall in the category of families who don't make enough for some of the housing lotteries and too much for others. If you seriously know where I can find an apartment for a family of three at 1500 per month (for real…. Not a preferred deal where the rent can double at the next lease)..then let me know.
    - Patricia McKeon
      
      I am a NYC Real Estate Broker for the past 22 years plus…I don’t know where you are living and how long you have been living in your current apartment….I work in Washington Heights , Hudson Heights area of Manhattan (upper upper west) and even here you would be hard pressed to find a 1 bedroom for $1500. When they do come available they usually are a basement apartment and small…
      Sometimes Yes, you will luck out and find a 1 BR with great light for $1500 in a 4th floor walk up building…BUT that is NOT THE NORM!! The rents up here Even in Washington Heights have steadily been Going UP….the Median 2 Bedroom for Rent is now $2500 and most likely that will be in a walk up building!! Also in about 10 days any cheap apt meaning a 3 BR for $3000 per month, will be swooped up by incoming Columbia Students and New Hires…whose guarantors must show 80 Times the Rent Amount!! Its absolutely insane and as a Broker, I do not like seeing these increases…Last summer I was renting 1 BR in Hudson Heights for $2100 (Large, PreWar, Elevator Buildings) this summer they are priced at $2300 per month!!
      - native new yorker
        
        As a homeowner I’m a spectator in all this but am surprised to see rents in my S.I. neighborhood, with our long commute, in the $1800-$2300/month range for a 3 bedroom. A 3BR in the flood zone is asking $2200/month. I know a couple in Queens who both have well paying union jobs, and they are being priced out of Astoria. I wish I knew what the answer was to to this problem. NYC is just such an expensive place to build and maintain anything that maybe the days of reasonable rents are behind us.
      - We need more housing
        
        you misunderstand what the report says. You’re talking about vacant apartments – the report is talking about what New Yorkers actually pay. The report has mislead you (which is its intention).
      - rach
        
        I don’t think its misleading. Most of the info it’s mentioning is pretty darn close to me and my some of my friends. My situation, for example, in queens is going from paying 45% to 48.3% of my income for another year (not to mention they want a security deposit that we didn’t pay initially, so its actually 52.4%). It’s growing fast and our income isn’t matching it. Plus where’s you’re research. You keep making comments, but you have no research published or websites or anything to back it up.
      - We need more housing
        
        again – you don’t understand what they are saying. they are only counting vacant (and renovated apartments) and saying that the median asking price of those units is the median price that all NYers pay. It’s just not true. The median price all NYers pay is a bit over $1,500/month.
        
        Sure, if you’re young and looking for a new apartment you’re going to get screwed. But our housing system is set up to screw you. It protects those of us with stabilized rents and forces others to pay more. The system accomplishes its goals perfectly.
        
        We have a housing shortage – rather than everyone paying a decent amount we’ve chosen a housing system where millions pay very little and the rest are forced to pay more.
        
        I’ve posted the Furman report several times – it’s over 200 pages long – there is no more exhaustive study available – here is a link again – they are the leaders in the industry on this stuff. You want page 37. Figure 4.3.
        
        The facts are clear – NYers pay about $1,500/month for housing. If you don’t it’s because you haven’t lived here long enough to have a good rent stabilized rent or because you aren’t receiving a subsidy from the government.
        
        http://furmancenter.org/files/sotc/NYUFurmanCenter_SOC2014_HighRes.pdf
      - rach
        
        Ya. The thing is that the price of rent is just too much for people to live here comfortably without having some burden (being cramped or living in sub-par places). Thank you for the info. That median seems pretty high btw.
- Matt Maison
  
  Agreed. Median income is a significantly larger group than just renters.
Kat

My question is are you using gross income or net income because using the gross is deceptive. I suspect there are a lot more people rent burdened since the city and the Federal government insist on using gross income when calculating who can afford what.
- Alan Durand Lightfeldt
  
  Hi Kat, thank you for your question. We use gross income which is the standard metric for this type of study.
jay

Does this assume a single person would rent a three-bedroom (because that is not reasonable) or is the “median rent” controlled on a per bedroom basis?
- Alan Durand Lightfeldt
  
  Hi Jay, thank you for your question. In this study we make the assumption that a renter is a household, which can mean any number of people. There is a high number of scenarios that can be studied, and ours assumes a household making the median annual income and looking for the median (or “typical”) rental apartment.
  - We need more housing
    
    wrong – your study does not assume the renter is “looking for the median rental apartment”
    Your study assumes the renter is looking for a vacant, renovated, free market apartment. It has nothing to do with the median price for a rental apartment in NYC.
We need more housing

I just can’t get over this nonsense. This report is just terrible. We NYers do an awesome job of taking care of each other. The median rent in NY is just over $1,500/month. It’s remarkable. We have great programs and subsidies that keep rents affordable for millions and millions of us.

The median rent is $1,500
The median income for a family of four is $83K.

Why don’t you focus on this? If you make the median income and have a median rent then you’re paying less than 25% of your income towards rent.

This “study” is so misleading. It really is intellectually dishonest.
- voxrepublica
  
  “Misleading” also applies to comparing median income for a family of four to some nebulous median rent figure—one that presumably includes studio and one-bedroom apartments that would not be sufficient for such a family of four. A less misleading figure would be median household income, which is somewhere over $50,000 (source: http://project.wnyc.org/median-income-nabes – recent accurate stats are hard to pin down). For your reference: the typical 40x rule for the median rent you pulled from wherever? $60,000 a year.
  - Elizabeth A. Wall
    
    If we operationally define median income and median rent then we will all be in the same page. My understanding is that median rent includes all NYC rentals including subsidized units which would yield the woefully misleading figure in the Furman report. To be specific the figure $1500 is misleading to anyone in NYC who is looking to rent a vacant apartment. I understand that median income is calculated before taxes (gross) income which is an easier number to obtain albeit less reflective of what we actually have to spend. If I am doing a community assessment then The Street Easy report could be useful so long as I clarify my terms…though I have always used Furman but I would be remiss in my reporting if I neglected to account for the true hardship so many New Yorkers experience when trying to find a roof. The reality is that if New York City is going to be anything more than a playground for the rich (which it can’t be because someone would have to do the needed work to support the playground) then we need the City to impose a moratorium on the construction of luxury units (which waste valuable real estate) until there are enough units for other segments of the NYC population. There are vacant lots and abandoned buildings all over the City that could be put to work. I live in East Harlem where the old Pathmark building creates a blight on a full block between Lexington and Third. The fate of the building is uncertain but rumor suggests that luxury condos are on the table yet again. NYC leadership needs to review zoning and land use policy as a way to address the housing crisis.
- Elizabeth A. Wall
  
  No it’s not. Where are these apartments? I need one. You are lucky if you can find a safe place for 1800 in a poor neighborhood. The numbers get skewed by the people how have stabilized apartments or rent controlled apartments…or who by some miracle got in on a lottery. Unless you have been living here for 20 years…you are SOL …If you know of a place ….prove me wrong….please prove me wrong because I’m looking.
  - We need more housing
    
    You misunderstand what the report says. You’re talking about vacant apartments – the report is talking about what New Yorkers actually pay. The report has mislead you (which is its intention).
rach

It’s looking like a lot of people have a problem with this study, but it seems spot on for me. I’m professional who moved out of Manhattan to queens 5 years ago. The rent for the same apartments have sky rocketed and our incomes haven’t met those rates, so just as the study suggested we’re moving farther away. It’s a real shame if you ask me. Forcing the creatives out like this. We don’t want to have to live in a crappy place either, but these days it’s looking like those places are the only ones who stay in the 40% of our income bracket. It sucks so bad, but people are greedy apparently.
Elizabeth A. Wall

I’ve also read the Furnan report and I would not advise any body who is considering a possible relocation to NYC to use the $1500 median as a viable financial planning guideline. No one is going to find a place for that amount and expect less than a 2 hour one way commute to work. It’s true that many people in NYC live in subsidized housing when they can afford to pay more but there rare even more people who really need the help because wages are stagnant or because so many of the manufacturing-jobs are gone. I don’t begrudge my neighbors who pay 1/4 of the rent I pay. They struggle too and we all end up on the same line at the food pantry. What would it be like if everyone just paid 30% of their income to housing? Who would object….aside from those who are paying considerably less?
L
aris_nyc

Many of the comments highlight the reports misleading choice of words, but I think it’s spot on for new renters like those moving to NYC for the first time or young people looking to move out of their parents home. It’s geared towards the people who need this info the most. Renters in public housing or who have held on to rent stabilized apartments for many years probably don’t have much interetst in reports like this and probably don’t use StreetEasy. Plus, people in rent stabilized apartment are not going to live forever and landlords will do everything they can to convert them to market rate when even the smallest opportunity presents itself. This report is important because it’s the reality that renters face now. The fact that the actual median rent is $1500 is good to know because it shows just how bad things have become when you look at market rate unites and what younger people must face.