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NYC Rents Rising Twice As Fast As Wages, Except for Wealthiest, Study Finds

By Amy Zimmer | August 16, 2017 7:00am
 Manhattan skyline view from the roof deck of a Park Slope building.
Manhattan skyline view from the roof deck of a Park Slope building.
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Corcoran Group

MANHATTAN— Yes, New York City is way less affordable now than seven years ago.

Case in point: An apartment going for $2,000 a month for rent in 2010 would now get $2,657 a month, a report published Wednesday from real estate search engine StreetEasy reveals.

Compounding the city’s affordability crisis: rents in the city rose twice as fast as wages, according to the analysis, which compared the StreetEasy Rent Index with wage data from the city’s Department of Labor.

While median rents increased 3.9 percent a year since 2010, wages increased by 1.8 percent over the same period.

Those working in the city’s lowest wage jobs were hit hardest.

Low-wage earners — those in the bottom 20 percent of the workforce, which represent a little more than 800,000 of the roughly 4.1 million employed New Yorkers — saw the least amount of income growth overall. Those jobs such as home health aides and dental assistants or other healthcare support services actually saw their incomes fall 1.1 percent over the past seven years.

At the same time, rents in the lowest bracket of the market — those in the 20 percent least expensive tier — increased the most since 2010 at 4.9 percent a year, with a 3 percent increase this year alone.

Upper Manhattan, which includes areas like East Harlem, Inwood and Washington Heights have seen among the biggest price increases, according to StreetEasy data.

“New York City residents who are earning the least amount of money are experiencing the greatest competition for housing and the steepest rent increases,” StreetEasy senior economist Grant Long said in a statement.

“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,” he continued.

Nearly 60 percent of New Yorkers don’t have enough savings to cover at least three months' worth of household expenses like food, housing and rent, a report last year from the Association for Neighborhood & Housing Development found. That means they are at risk of eviction, foreclosure and damaged credit.

The city’s highest priced rentals, on the other hand, saw prices increase the least, at about 3 percent a year, while wages for the top 20 percent of earners also grew the most. 

Workers in the fields of software development, information security analysis and other computer and mathematical occupations saw their median wages increase by about 2.8 percent between 2010 and 2017, which was roughly on pace with the rent hikes.  

“The slowdown in rent appreciation in many areas over the past year has also primarily benefited those who can afford to pay more than $3,775 per month for an apartment,” the StreetEasy report stated. “For a household to be able to afford an apartment at this level without paying more than 30 percent of their income on housing, they would need to earn $151,000 a year — 58 percent more than the city’s median income for a family of four.”

The Federal Reserve Bank of New York also found that lower-income families tend to face higher overall inflation when it comes to rent than middle- and upper-income households, according to a 2015 report looking at American Housing Survey data.

The StreetEasy report said that housing policy solutions were needed along with programs to help New Yorkers get better paying jobs, like the state’s recent legislation to make public universities tuition-free for some students in low- and middle-income families and the de Blasio administration’s goal to create 100,000 “good-paying” jobs over the next decade.

To meet this goal, the city is investing in training and apprenticeships to create a "stronger and fairer" city, mayoral spokeswoman Melissa Grace said. 

The city, however, does not have what's known as "home rule," which means that Albany lawmakers decide matters of rent regulations for apartments. But the mayor is trying to build more homes affordable for New Yorkers.

"For years, rents have risen faster than wages in New York City and that has caused far too many New Yorkers to fall behind," Grace said. "In an effort to break the cycle and in just three years, the administration has financed a record 78,000 affordable homes -- the majority of them for lower income New Yorkers."

Mayor Bill de Blasio has often discussed the rent versus wage gap when addressing issues such as the city’s record homelessness and the various programs trying to provide financial or legal assistance to families.

Nearly 59,000 New Yorkers spent the night in a shelter on Sunday, according to the most recent data available from the city. The numbers for families with children in shelters shot up nearly 49 percent from fiscal year 2010 to fiscal year 2017, city data show, from an average of roughly 8,600 families a month to more than 12,800 families a month.

The unemployment rate, perhaps paradoxically, has declined during that period.

As of May, the city's unemployment rate was 4.4 percent, down from 10.1 percent at the end of 2009, StreetEasy pointed out.

The increase on rents in the top fifth of the market in New York was smaller than in cities such as San Francisco, Seattle and Los Angeles, which have a lot of tech jobs — and that’s a positive for New York, StreetEasy’s report noted since New York City competes with these cities to lure tech companies and workers. And taxes paid by high-income earners and their employers help city programs, the report added.