StreetEasy has released its annual report on the state of rent affordability in New York City and the numbers aren't promising. The data shows that as rent increases in New York continue to outpace income growth, many residents should expect to devote more of their income to rent in the coming year. Last year, renters forked over 59.7 percent of their income to pay the rent. This year, they are expected to pay 65.2 percent, nearly two-thirds of their income.
Rent growth is forecasted to far outpace income growth in each borough in 2016, with the exception of Manhattan. Brooklyn promises to be the least affordable of them all. Renters there can expect to spend 65.4 percent of their income on rent. The rent-to-income ratio increased by 3.5 points from last year, led by neighborhoods like Seagate (its ratio increased 9.4 points), Williamsburg (1.9 points), Bushwick (1.9 points), and Red Hook (1.8 points).
The Bronx comes in second place, with renters paying 54.1 percent. Queens comes next, where renters are getting the greatest year-to-year increase in their rent burden. Between 2015 and 2016, the median rent-to-income ratio in Queens increased from 43.5 percent to 51.6 percent. Streeteasy notes that Staten Island is "the only borough in the city to be considered affordable for renters," with a median rent-to-income ratio of 27.9 percent this upcoming year. The borough is home to seven of the 10 neighborhoods in New York City with the lowest median rent-to-income ratio in 2016.
Manhattan renters, however, will see slight relief in their rent burden—not the first sign of the Manhattan market softening this year. Manhattan’s forecasted income growth, at 1 percent, will exceed the forecasted growth in median rent price, expected to be .2 percent. It's then the only borough where the rent-to-income ratio is expected to decline, albeit slightly, from 49.5 percent in 2015 to 49.1 percent in 2016.
The numbers also show that rent burden varies widely by neighborhood. East Brooklyn, Upper Manhattan and the South Bronx face the highest rent-to-income ratios. In Manhattanville, it's actually predicted that the median rent-to-income ratio will reach 119.5 percent, meaning the median rent will far surpass the typical household’s total annual income. Other neighborhoods with rent-to-income ratios greater than 100 percent include Chinatown, Little Italy and Mott Haven.
StreetEasy's data scientist Alan Lightfeldt chalks it all up to an extremely low rental vacancy rate that's below 3.5 percent, which is putting upward pressure on prices and increasing competition among renters. "There’s policy momentum in place here, but addressing the supply side is only half the battle," he noted. "No other factor is more fundamental to the city’s growing rent burden than lagging income growth. Until income growth catches up with rent growth, the rent affordability problem will loom large on New York households."