Reasonably priced apartments are not easy to find in New York City, a factor contributing to the city's ranking as 2nd in terms of the cost of living. Since 1991, New York City has added 488,478 units of housing and 1.1 million jobs. New units for ownership have grown much more rapidly than rental units. Within the existing rental housing inventory, units that are rent controlled or rent stabilized have continued to diminish. The median rent amount in 2016 was $1,351, compared to $981 nationally. Higher-end apartment units are plentiful throughout the city; however, these are designed for those able to pay at least $2,500.
The Rise in Owned Housing
Between 1991 and 2017 there was an 8% increase in rental units and 21% in owned units. Bloomberg's report contained a category of units deemed “vacant, not available for rent or sale,” which saw a massive 162% increase. Many of these units are believed to be undergoing renovation and will be available in the future. Another category to negatively impact supply is that “held for occasional, seasonal or recreational use.” This category consists of many empty condos in high-rise buildings owned by wealthy foreign people. Despite laws prohibiting short-term rentals in the city, many units are believed to be Airbnb occupied. A report by McGill University in Montreal suggested that up to 13,500 rental units are unavailable to long-term renters due to Airbnb.
Income Related Concerns
The city added more higher-paying jobs over the last 25 years; however, the median household income is $57,500, consistent with the national average. In 2017, 32% of households in New York City spent more than half their income on rent. Despite the overall increase in housing, the drop in regulated or subsidized apartments has largely negated benefits to those with modest levels of income. Some of the causes include land scarcity, high labor costs, and high property taxes.
High Construction-Related Housing Costs
New York City has a shortage of available qualified construction workers, which drives up wages. A recent Turner & Townsend international report on construction indicates the city is the most expensive for building, with a cost of $354 per square foot. Along with Seattle, the city faces a difficult combination of high price increases and shortages of qualified labor. Costs associated with construction have recently been rising about 3.5% annually, while spending on construction reached a peak of $43 billion in 2016.
How people perceive affordability or what they determine to be reasonably affordable varies.
- Among millennials, 34% say the city is unaffordable.
- Among baby boomers, 61% felt the city was unaffordable.
- Groups who spend in excess of their budget for housing are millennials (45%), GenXers (30%), and baby boomers (19%).
- Those in New York are more willing to make sacrifices to afford to live in the city.
- Roughly 72% of city residents share the cost of their housing, compared to the 66% national average; and many live in uncommonly small-sized units.
If you are looking to move to New York, you have to be prepared for the costs. Affordable housing is difficult to find. Determine what your values are and if you want to sacrifice one for the other in order to live in New York City.