New York City builds less housing per capita than almost any other major city in the U.S. In the United States, one of the reasons why it has the highest rents in the country. Like other cities, it depends on its suburbs to ease the pressure on its housing market. The city regulates the rents of many apartments, but more than a third of the city's tenants are still burdened by rent, meaning that they spend more than 50 percent of their income on rentals, according to city data.
Landlords say that higher rents are needed to be able to cope with the growing tax burden and the increase in the cost of maintaining the property. In Manhattan, below 96th Street, 35% of rent-regulated apartments are occupied by a tenant who has lived there for more than 20 years. Less than 3% of market-rate renters have been around that long. The building in the photo is next to mine.
It was built after New York City's 1961 zoning reform, so it has above ground parking. It's one of the few post-1950 apartment buildings in my neighborhood. These rental prices are a shock to New Yorkers who moved here during the pandemic and to those who lived here long before. Many of those renters with regulated incomes would have moved if they had to pay market rent, either within the city or in Florida; when they maintain their excellent offers, they reduce the supply available to new tenants and that raises prices for everyone else.
New York has the second highest property tax rate on rental apartment buildings among the country's big cities; only those in Detroit are higher, and that's because the properties there are barely worth anything. But one thing we haven't seen in all those conversations is a discussion about why rent is so high. When a lot of people want to live in limited space, land prices rise and that is reflected in rents. The hassle of being a landlord in a tenant-friendly jurisdiction also discourages the construction of rentals on the side (once again, it drives up rents) and encourages landlords to be more demanding about tenants' credit.
It's also why landlords almost uniformly demand a full month's rent on deposit, New York's legal maximum for most apartments. In both Brooklyn and Manhattan, tenants spend more than 50% of their paychecks on rent, and in Queens they spend more than 40%. These types of statistics are usually released by people who don't like it or were forced to leave the city, but rent has skyrocketed in most major urban centers for years. You just can't get one of them, because they have controlled rents and tenants with great rent-controlled offers hold on to their apartments until they die.
Austin, a popular destination for California transplants and others seeking changes of scenery related to the pandemic, recently ranked third in the country, where rental prices are the fastest rising. However, reservations also reduce profitability for developers, reducing the number of homes being built, raising market rents for everyone else. Those who prefer to rent in the city but don't want to pay astronomical prices are focusing on Brooklyn and Queens, which is also raising rental prices there.