‘Can’t keep up with demand’: NYC rents grew seven times faster than wages last year — making the Big Apple the epicenter of the rental affordability crisis
Many Americans dream of living in New York City — but ask any New Yorker, and you may realize the dream is more like a nightmare as rents skyrocket while wages fail to keep pace.
A recent analysis of rental and wage data compiled by Zillow and StreetEasy (with additional research from the Bureau of Labor Statistics) found that rent rates in the Big Apple are growing seven times faster than wages — a gap that is squeezing middle-class New Yorkers and forcing many to consider relocating to more affordable cities.
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Across New York City’s five boroughs in 2023, rent rates grew an average of 8.6 percent compared to just 1.2 percent for wages — the largest gap among the country’s 50 biggest metropolitan areas measured by Zillow’s data.
‘Can’t keep up with demand’
"Despite a strong job market in the city, and in some ways because of it, the gap between what a typical renter can afford and the price of rentals on the market is growing,” said StreetEasy senior economist Kenny Lee in the press release. “New multifamily buildings coming online has eased competitive pressure in many markets, but in New York City, construction just simply can't keep up with demand."
New York City has a long-standing problem with limited housing availability. The city's population continues to grow, but construction of new housing units hasn't kept pace — a supply and demand imbalance that puts upward pressure on rents.
At the same time, demand for rentals in the city remains high, thanks to a strong job market and a steady influx of young professionals and students. Landlords are also facing rising costs for things like property taxes and maintenance expenses — costs which, you guessed it, get passed on to renters.
New York isn’t the only hot spot where rents are growing faster than wages. Over the past five years, Florida's real estate market has experienced some of the nation's most significant rent increases relative to wage growth, according to Zillow’s data.
This trend is particularly evident in the state’s major hubs of Orlando, Jacksonville and Tampa, which ranked among the nation’s biggest gaps. Since the pandemic, Florida's inviting climate and comparatively affordable coastal housing has attracted a wave of new residents — but rents are rising.
In Miami, for example, despite wage growth slightly surpassing the national average, Zillow noted a staggering 53% increase in rents — the highest in the U.S. — has created a significant affordability gap for residents.
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Consider these affordable cities instead
There is some good news for renters, many of whom are in a better position these days to afford higher rent rates. In late 2023, the nation’s wage growth of 4.5% was outpacing the Consumer Price Index (CPI) of 3.4% — one of a growing number of signs that inflation’s grip may be slowly easing.
If you’re ready for an alternative to New York or even Florida, there are some U.S. cities with more affordable housing options if you know where to look. Zillow’s data covered the years from 2019 to 2023 and demonstrated that quite a few metropolitan areas' wages were outpacing rent rates, including in some surprise spots.
In the notoriously expensive Bay Area, for instance, living costs remain high, but there are signs the area may be becoming slightly more affordable. In San Francisco, Zillow’s data shows rents grew 3.4% — and a wage growth of 12%. Nearby San Jose told a similar story, with 6% rent growth and 12.5% wage growth.
Portland, Oregon, saw wages outpacing rent rates by 3%, while in Houston wages were outpacing rent rates by nearly 4%. Both cities, however, saw a more than 20% rent cost growth during the analysis period.
Renters can also take solace in the fact that the average rental rates are actually falling in some cities. For instance, a Realtor.com study found rent drops in Memphis, Atlanta, Austin and St. Louis.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
