December 9, 2022

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.”)

A new report shows just how bank-busting it’s become to rent in New York City.
Getty Images

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.

See also  Windy City cottage that survived the Great Chicago Fire asks $2.4M

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.

There are some signs for a bit of relief.
There are some signs for a bit of relief.
Getty Images

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.