NYC rent growth outpaced wage growth by over 20%

For nearly six months, the New York City rental market has been breaking one record after the other. The average rent in Manhattan reached a new all-time-high this summer after climbing to over $5,000 a month. This rapid rent growth has made New York City unaffordable for many tenants.

StreetEasy published a new report, where the listing portal stated that the gap between NYC rent growth and wage growth reached 23 percent after adjusting for inflation – the widest gap since 2008. In August, real wages in the five boroughs fell 9.1 percent from last year, while rents rose 13.4 percent year-over-year, according to the StreetEasy findings.  

A growing number of New Yorkers had to spend a more significant percentage of their earnings on rent, find a roommate or look for apartments in more affordable neighborhoods. The data from the 2021 Housing and Vacancy Survey suggests that nearly one million households in New York City spend more than a third of their income on rent, and just under 600,000 households have to allocate more than half of their earnings toward housing. 

The rising rents made it more difficult for essential workers to find an apartment in the city. High rents affected healthcare support workers and food preparation workers the most. People who belong to these two occupation groups were able to afford less than 2 percent of this summer’s rental inventory without spending more than half of their earnings on rent. 

The good news is that the NYC housing market is rebalancing. The citywide median asking rent fell from $3,575 in August to $3,500 in September, according to StreetEasy. In addition, more landlords are now offering concessions. The share of listings with at least one month of free rent went up to 8.6 percent. 

“A silver lining for renters is that the NYC rental market is rebalancing, although still highly competitive,” StreetEasy’s economist, Kenny Lee, wrote in the report. “Asking rents are still rising, but at a rate that appears to be slowing. Moreover, rental concessions have started to pick up, and the share of listings offering price cuts is rising.”

Resources:

“Gap Between NYC Wage Growth and Rent Growth Widens,” by Kenny Lee (StreetEasy, 2022)

“2021 New York City Housing and Vacancy Survey Selected Initial Findings,” (NYC Department of Housing Preservation & Development, 2022)

“New York City’s Rent and Wage-Growth Gap Has Hit a Record High,” by Clio Chang (Curbed, 2022)

“Gap between NYC wage growth and rent growth is widest since 2008: report,” by Leonard Greene (NY Daily News, 2022)

“Gap between NYC rents and wage growth at its widest in years: report,” by Zachary Kussin (New York Post, 2022)