If record-breaking rents alone weren’t enough of a headache for New York City locals this past year, there’s now something else adding salt to the wound when it comes to affordability.
A newly released report from local listings portal StreetEasy shows city rent growth outpaced wage growth by 23% — the widest gap since the 2008 recession — after adjusting for inflation.
In August, real wages were down by 9.1% year-over-year, while rents climbed 13.4% during the same stretch of time, according to StreetEasy metrics.
The report notes that less than half, specifically 48.2%, of the city’s 4-million-person workforce earned enough per year to afford just 10% of the rental apartments that listed over the summer — unless they shelled out more than half their earnings on rent. (Generally, the report adds, it’s recommended that renters keep their living expenses below 30% of their income to avoid becoming “rent burdened.”)
If there’s any good news, StreetEasy adds that asking rents are still continuing their rise, but at a slower rate. Over the last year-plus, rents have plummeted to record lows and gradually rose to record — and bank-busting — highs. The impacts of those changes have included tenants getting sweet COVID deals who later faced massive rent hikes upon renewal — and house hunters finding themselves in bidding wars to lock in a deal.
Among the city professionals hit hardest during this time: healthcare support workers, such as nurses’ aides and home health aides. Typical annual incomes in this field are just shy of $39,000, which StreetEasy says is hardly enough to afford a mere 2% of this summer’s inventory without having half of the earnings solely go toward the rent.
Finding roommates, as has long been the case, can lessen the burn. the median asking rent for studios and one-bedrooms in the third quarter was $3,000, according to StreetEasy, while that for two- and three-bedrooms was $3,800. Splitting up the rent, in these cases, would save $13,200 per person per year.
Now, rising rents have hit a plateau — and perhaps there’s a bit of relief in sight. Per StreetEasy’s tallies, September saw a median asking rent of $3,500 — a $25 month-over-month slip from August. Still, that’s 27% higher than last September.
But the report adds a greater share of rental listings now offer concessions, such as a month of free rent on a 12-month lease. That figure hit 8.6% in September, up from a seven-year low of 6.6% in July, which can help lower net-effective rents for tenants. The share of rental listings with price cuts also rose to 17.7% in September.
Any rebalance of the rental market will be gradual, per the report. What complicates matters for now: A number of would-be homebuyers will remain renters for the time being at a time of rising interest rates to combat decades-high inflation.