Photo: Robert Clark
As depleted rental inventory causes prices to escalate faster than wages are rising, New York City’s rental affordability crisis is hitting some renters harder than others.
In fact, according to the listing site Zillow, low-income New Yorkers would need to pay substantially more than 30 percent of their income on even the most inexpensive housing — the commonly suggested income amount that should be devoted to housing.
The median income for the bottom-third of earners in NYC is $20,740, while the median rent is a little over $1,900 per month. In other words, these renters would need to pay over 110 percent of their income on housing.
Typical rents in large metros like NYC often cost renters more than the recommended 30 percent of income. But for low-income earners even the cheapest apartment on the market would cost significantly more than the recommended 30 percent, according to Zillow.
Nationally, rent growth at the lower end of the market outpaced wage growth in almost every major metro area, says Zillow.
Those renters who are forced to spend a “significant” portion of their income on housing costs are forced to make other financial sacrifices.
“Putting aside money for an emergency is a luxury many renters don’t have – 68.8 percent don’t have enough savings to cover three months of living expenses,” says Zillow.
These renters primary financial concern becomes affording simply the basics: food, utilities, gas and rent.
Rents grew at a faster pace than wages from 2011 to 2016, according to Zillow. And even in markets where lower incomes recorded significant gains, rents still grew at a faster pace. During those years in the ultra-hot San Francisco market, monthly wages grew by less than $500 while rents rose $1,145.
“Income inequality is growing in the United States, and this shows how high housing costs contribute to preventing people from moving up the ladder,” says Zillow Chief Economist Dr. Svenja Gudell in a digital release.
And while there are several factors at play when it comes to income equality in the US, without a long-term solution to affordable housing, the gap will continue to widen.
“Regional migration is also playing a role: booming cities are attracting workers from other parts of the country, particularly recent college grads,” Zillow Senior Economist Aaron Terrazas tells BuzzBuzzNews.
For lower-income renters who cannot move to a more affordable metro area, the options may be limited.
“They may move farther away from job centers which often means a longer commute, or share housing with family or friends,” Terrazas tells BuzzBuzzNews.
And as the hot summer housing season comes to an end with Labor Day rapidly approaching, little is likely to change in the coming fall months ahead.
“Over the fall, we expect rents to be flat at a relatively high level. Renters might find more concessions, like free parking or one month’s free rent in some markets,” Terrazas tells BuzzBuzzNews.
Click here to read the entire report.