More Evidence of NYC’s Housing Affordability Crisis
A major new report about housing in New York City documents the widening affordability gap, one of the driving forces behind record homelessness . Even during the economic downturn apartment rents rose significantly while renter incomes fell, and four out of five low-income renters suffer from high rent burdens.
Last week the annual “State of New York City’s Housing and Neighborhoods” was released by New York University Law School’s Furman Center for Real Estate and Urban Policy – the report can be found here. As the Huffington Post noted in its news report:
Inhabitants of the City That Never Sleeps may find themselves spending quite a few more evenings tossing and turning after reading a new report detailing the grim realities of soaring rents in a city plagued by income inequality.
Released on Monday…[the] report concludes that between 2007 and 2011 the citywide median income decreased while rent prices rose.
The Furman Center report contains some frankly stunning data about the degree to which the NYC housing affordability gap – the gap between incomes and housing costs (especially apartment rents) – widened during the “Great Recession.” In short, between 2007 and 2011 rents when up significantly (even controlling for inflation) while incomes fell, especially for low-income New Yorkers.
The new report confirms earlier findings, which we wrote about here, showing that the shrinking stock of affordable rental housing is creating more severe affordability problems for the growing population of poor and low-income New Yorkers. The worsening affordability crisis remains one of major causes of all-time record NYC homelessness, which by June had soared to nearly 51,000 homeless shelter residents per night including more than 21,000 homeless children.
Here are some highlights from the Furman Center report (emphasis added):
Between 2007 and 2011, a period when house prices citywide fell by 20 percent, the median monthly gross rent citywide increased by 8.5 percent…. During that same period, median household income decreased 6.8 percent….
New York City renters continued to face severe affordability challenges in 2012, with stagnant incomes and rising rents. From 2007 to 2011, median rent citywide increased by 8.5 percent. This same period saw real household income drop sharply. As a result, between 2007 and 2011, median rent burden increased; by 2011, 24 percent of New Yorkers were moderately rent burdened and 31 percent of New Yorkers were severely rent burdened.
Rental housing has become increasingly expensive in the city, and increasingly unaffordable to many tenants. The median contract rent (i.e., the amount agreed to in the lease, which may or may not include utilities) paid by New York City’s tenants rose steadily over the past decade and has continued to rise in recent years. Between 2007 and 2011, a period when house prices citywide fell by 20 percent, the median monthly rent citywide increased in real terms (in constant 2012 dollars) by 8.5 percent, from $999 to $1,084.
Furthermore, the rents paid by households in occupied units may mask the higher asking rents in vacant units. Even for market-rate units, landlords often raise rents more substantially when a unit turns over. …[H]ouseholds who have recently moved pay higher rents than those who have lived in their current units longer. In addition,the median gross rent paid by recent movers has increased more than the median rent paid by renters as a whole.
Between 2008 and 2011, however, median gross rent continued to rise, but real household income dropped sharply. As a result, median gross rent increased 10 percent between 2005 and 2011, while median household income actually decreased. As a result of the divergent trends in income and rent since the beginning of the recession, New Yorkers’ median rent burden increased from 29.9 percent in 2007 to 32.5 percent in 2011.
The overall rent burden masks the tremendous rent burdens faced by low-income households….In New York City, 78 percent of low-income renter households were rent burdened…..