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New York Still Unaffordable in 2018

Originally posted on July 10, 2018 8:15 am
Updated on August 01, 2018 10:47 am

East Harlem, LES, and Bed-Stuy Among Top NYC List of Unaffordable Neighborhoods

In 2018, finding an apartment in NYC continues to be the easiest part of the process– affording one, however, remains the hardest part. With median asking rents that vary from expensive ($1,975 for a 2-bedroom in Flatbush) to downright insane ($5,914 in Lincoln Square) it’s no wonder that New Yorkers are known for being so pleasant. To get a better understanding of the NYC affordable housing crisis, RentHop took a look at the data on 2-bedroom apartments and compared it to the most recent median income data available at the zip code level (Interactive map and full list below).

Some of our key findings this year include:

  • Of the zip codes we looked into, 52% had median 2-bedroom rents exceeding half of the median household income.
  • NYC median 2-bedroom rent as of June is around $3,650 which would require household income of $146,000 to secure and comfortably afford per the 40x rent rule, which is almost 2.5x the median household income in New York City!
  • Tribeca (specifically zip code 10007) manages to simultaneously be one of the most expensive places to live from a median-rent perspective ($5,498), but with the incredibly high household income, still manages to masquerade as “affordable” with a median household income of $236,560. With such a high median household income, the high rents “only” cost 28.1% of said income.
  • Asking rents in areas like East Harlem (zip code 10035) and the Lower East Side (zip code 10002) highlight the stark disparity between what people can afford and the real estate that’s currently available for rent. With a median household income of $26,893 in East Harlem and $35,594 in the Lower East Side, the 40x rule would only allow for those households to afford apartments costing $672.33 in East Harlem and $889.95 in the Lower East Side – prices far lower than the median 2-bedroom asking rents.

The 40x Rule – 30% of Income

You may have heard you shouldn’t spend more than 30% of your income on rent. The way the math works out, your household’s yearly income should be 40 times the monthly rent to afford an apartment and many landlords won’t accept anyone who doesn’t.

For example: for NYC as a whole, the median 2-bedroom rent as of June is around $3,650 which would require a household income of $146,000 to secure and comfortably afford. The median income for New York City stands at $58,856 according to the most recent census data, putting the median 2-bedroom far out of reach, since spending over 70% of your pre-tax income on rent is unsustainable if not impossible.

There are exceptions to the rule: If you have vast savings or a guarantor whom makes 80 times the rent, a landlord is likely to let you slide without meeting the income requirements. It’s also not unheard of for a landlord to request last month’s rent in addition to the first month and security deposit for those with below average credit / income. Our “how much can I afford” guide can give you a little more info on these rules and some ways to overcome them.

So how much DO you need to live in New York City?

The Map Below Shows Income Required for a 2-Bedroom Apartment in NYC

The map above shows the cost of a 2-bedroom apartment in neighborhoods across zip codes that we had data for. We used data for the trailing 3 months as of June 1, 2018 to calculate the median asking rent and multiplied that by 40 to calculate the customary income requirement to rent an apartment. Median household income by zip code is according to the Census American Community Survey 2016, table S1903.

The map might lead you to believe that no one can afford to live in New York City, but we are mapping only the asking rents. Most of the population already has somewhere to live; many own their homes and many others have rented their homes for so long that they’re locked in to a much lower rent.

Furthermore, high incomes in certain zip codes further skew affordability. For example, in Tribeca (zip code 10007) has a median 2-bedroom rent of around $5,500, but with a median household incomes of $234,958, from an income affordability standpoint, it can be considered more affordable than somewhere like the Lower East Side (e.g. zip code 10002) with a median household income of $35,594 and a median 2-bedroom rent of $3,300.

What Are the Least Affordable Places to Live in New York City?

It should come as no surprise that the most expensive neighborhoods are in Manhattan. On a gross rent level, the most expensive median 2-bedroom rents are in Lincoln Square (zip codes 10069, 10023), Tribeca (zip codes 10007, 10013), and the Financial District (zip code 10005), with 2-bedroom median asking rents all above $4,600, requiring an income of at least $184,000 to pass the 40x rent rule.

From an income unaffordability standpoint, however, 2-bedroom rents in neighborhoods such as East Harlem ($2,550 to $2,695, depending on zip code), the Lower East Side ($3,300), and Bed-Stuy ($2,525) top the charts. With median incomes of $26,893 for East Harlem (zip code 10035), $35,594 for the Lower East Side (zip code 10002), and $31,549 for Bed-Stuy (zip code 11206), median 2-bedroom rents are astronomically high, requiring over 95% of the annual household income for each of the aforementioned neighborhoods.

The Table Below Displays all 2-Bedroom Median Asking Rents

It also shows the income required to live in each neighborhood with sufficient data. You can sort by “Zip Code”, “Income Required to Rent (40x rule),” “Median 2BR Price,” or “% of Income Required for Median 2BR Rent,” or type in a neighborhood name or zip code to search for yours.

Is There Anywhere in NYC That’s Actually Affordable?

If you click “% Income Required for Median 2BR Rent” to re-sort the table above it’ll show that stat in ascending order. This shows us Tribeca (zip code 10007), Hunter’s Point (zip code 11109) and Middle Village (zip code 11379) at the top of the list of affordable neighborhoods relative to median household income. Again, because this is calculated based on the median household income, however, Tribeca’s affordability score is largely a function of the high household income in the zip code.

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