Real Estate Weekly
Image default
Debt & Equity Featured Residential

Report: Ordinary New Yorkers priced out of their city

A hedge fund billionaire is rumored to be buying multiple apartments at 220 Central Park South for upwards of $200 million.
A hedge fund billionaire is rumored to be buying multiple apartments at 220 Central Park South for upwards of $200 million. A rough estimate on mortgage calculator puts that at $400,000 a month.

To live in New York City, it seems a hefty paycheck is now mandatory.

According to StreetEasy rent data, the city is increasingly being elevated out of reach of low wage workers, with an hourly pay of at least $38.80 now necessary to afford the city’s median asking rent of $2,690.

That amount is more than four times greater than New York State’s current minimum wage.

For workers that currently earn the state’s minimum of $8.75 per hour, there are no neighborhoods in which median asking rent could be paid affordably.

The extent to which rent growth has outpaced income growth in New York City means low-wage workers face three options: find several roommates to lower their personal rent burden, take on more than one job, or move out of New York City.

For this year, the minimum wage necessary to afford median asking rent is highest in Manhattan ($44.60), followed by Brooklyn ($35.87), Queens ($29.67), Staten Island ($26.21), and the Bronx ($21.26). Our map shows what the necessary wage would be to affordably rent in each New York City neighborhood.

Central Park South, traditionally one of New York City’s most expensive neighborhoods, requires the highest hourly wage.
Residents of Central Park South need to earn an hourly wage of at least $85.07 in order to afford the neighborhood’s sky-high rents, roughly nine times the current minimum wage. Meanwhile, a worker making minimum wage would need to work 389 hours per week in order to afford rent in Central Park South.

There are only 168 hours in a week, so a minimum wage worker could work every hour of every day and come up short on rent in Central Park South and 46 other neighborhoods, including Tribeca, DUMBO, Stuyvesant Town, Park Slope, Williamsburg and Long Island City.

Even if the minimum wage was increased to $15 per hour for the tens of thousands of fast food workers in New York City, as was recently recommended by a panel appointed by Gov. Andrew Cuomo, the rent affordability landscape would be largely unchanged.

A New Yorker earning $15 an hour could afford to live in Throgs Neck.
A New Yorker earning $15 an hour could afford to live in Throgs Neck.

A New Yorker earning $15 per hour could afford just one neighborhood – Throgs Neck in the Bronx. Workers living there need to earn an hourly wage of at least $13.64 in order to afford rent. Other neighborhoods that come close to the $15 proposed minimum wage are New Dorp ($15.76), Woodstock ($16.45), Fordham ($16.79), and Far Rockaway ($17.09).

Apart from the growing cost of rent in virtually every neighborhood, low-wage workers in New York City must contend with much higher costs of living relative to other cities.

According to a recent study by Pew Research, a $15 minimum wage in New York City would yield just $12.26 worth of purchasing power due to the region’s higher costs for items such as health care, groceries, and transportation.

A $15 minimum wage in Beckley, West Virginia, by contrast, would yield a purchasing power of $19.23. In other words, dollars do not stretch as far in New York City as they do in other, less expensive metropolitan regions, adding an extra burden for low-wage workers here.

Paying rent is a growing burden for most New York households. According to a StreetEasy study released in March 2015, annual rent will account for nearly 60 percent of a typical New York household’s annual income this year.

For the roughly one third of all New York City workers who are employed in low paying industries such as hotels and fast food establishments, the burden is far more acute.

Forced to stretch precious few dollars farther, minimum wage workers are confronted with difficult trade-offs.

They can seek lower rents in areas surrounding New York City, but higher transportation costs – in terms of both actual costs and opportunity costs – will eat into their rent savings.

They may also seek a second or third job, extending their work week well beyond the traditional 40 hours in order to muster enough to pay rent and put food on the table.

A minimum wage increase to $15, though hard fought by fast-food workers and supported by 73 percent of New Yorkers, may not be enough to stem the city’s growing rent burden.

The extent of this burden is highlighted by the fact that just one neighborhood, Throgs Neck, would be affordable to a minimum wage worker at $15 per hour. All other neighborhoods would remain out of reach.

In order to make a meaningful improvement to housing affordability, policy makers in New York City will need to target an expansion of housing supply along with income growth.

As long as the city’s rent vacancy hovers at around percent percent, as it did in 2014, New Yorkers will continue to feel the squeeze.

(Visited 1 times, 1 visits today)

Related posts

Invictus refinances uptown rental with $27M MetLife loan

REW

Arker opens first phase of East New York development

REW

Thor buys last-mile distribution center in Spain

REW