New York City rent prices are soaring, with the average rent reaching around $3,475 per month. A report indicates that faced with such high rents and upfront costs, 95% of apartments are beyond the affordability range of the average working class.
According to a new report by Zillow Group Inc.’s StreetEasy and tech:nyc, the average annual income of New Yorkers in 2023 was slightly below $89,000. Following the standard of not spending more than 30% of income on rent, New Yorkers can afford a maximum of $2,216 in housing costs per month.
In other words, adhering to the 30% income affordability limit, the average working class can only afford 4.4% of the apartments available in the market.
The report also found that in addition to high monthly rents, upfront costs are also on the rise. The average upfront cost in 2023 was $14,540, which includes one month’s rent, security deposit, and broker fees.
Similar to New York and other major areas in the United States, wages are not keeping up with the increasing cost of housing. The report states that in 2023, the median rent in New York City rose by 8.6% to $3,475, while the average wage in New York only increased by 1.2%.
Moreover, the housing shortage situation is further deteriorating. New York City’s housing shortfall has reached 380,000 units, surpassing the combined total of the housing shortages in the metropolitan areas of San Francisco, Chicago, and Boston.
The housing affordability crisis in New York City is hitting blue-collar workers the hardest. The report mentions that individuals in healthcare support, food supply, and transportation services earned less than $70,000 in 2023, which means they cannot afford 99% of the apartments in the market.
Even tech workers with an annual income of $135,089 can only afford 35% of the apartments available in the market.
The report states, “the increase in rent expenses will lead to larger budget gaps for renters and make it difficult to save for long-term goals such as a down payment for a house. But many New Yorkers have no choice.”