By Sabina Mollot
In news that is certain to surprise absolutely no one, New York City fared the worst when compared to four other major cities in a study looking to determine which cities have the fewest neighborhoods with affordable two-bedroom apartments.
Additionally, in New York City, the neighborhoods with the highest low income to high rent ratio were the Lower East Side, Williamsburg and Long Island City.
Upper East Side-Carnegie Hill was actually the most affordable to the neighborhood’s own residents with an average household income of $155,213 and average two-bedroom rent of $3,555. The median income for all of NYC is $55,752 with a 2.4 person household.
The study was conducted by RentHop, an online apartment listings directory.
Based on RentHop’s findings only nine neighborhoods out of 139 there was data available for could be considered affordable (6.5 percent of neighborhoods). A general rule is that in order to be considered affordable, an apartment’s rent can’t exceed 30 percent of the household income. However, for the purpose of the study, this was increased to 35 percent to account for income growth since the last census was released.
Creating an interactive map, the study lists each neighborhood’s average asking rents for two-bedroom apartments as well as the income that would be required to afford the rent, based on a typical building rule that a tenant’s yearly earnings must be 40 times whatever a month’s rent is.
However, it’s worth noting the map doesn’t factor in what people in occupied units are currently paying and how many of those are market raters vs. stabilized renters vs. any other kind of reduced rent situation. Instead, the stats are just based on listings for units that are on the market.
The data surrounding what people end up paying after signing leases isn’t generally accessible, explained Shane Leese, a RentHop “data scientist” who worked on the study, “the way sales data is when someone sells a house.” But, he added, “We do know what things on the market are.”
Based on that information, the study showed a clear picture of gentrification in action.
“A lot of things out there being developed are not targeting people currently in the neighborhoods, but targeting what developers are trying to create in neighborhoods,” said Leese. “The apartments are not for people that live there.”
For the three neighborhoods considered the least affordable, here are some stats:
Long Island City/Queensbridge/Ravenswood: the two-bedroom median rent is $3,300 with a median household income of $28,378. This means tenants pay 139.54 percent of their incomes on rent. Meanwhile, with the 40 times rule in place, this would make a required income $132,000.
In Williamsburg, a two-bedroom unit goes for $2,499 with a median household income of just $21,502. The required income with the 40 times rule is $99,960. Instead, tenants must pay 139.47 of their incomes on rent.
Coming in at third is the Lower East Side, there’s a two-bedroom rent median of $3,495 and median income of $31,237. The required income to actually afford it would be $139,800. Here, tenants spend 134.1 percent of their income on rent.
“LES is known for its night life and rough-and-tumble past, but the wealth gap and expensive apartments are the true story here,” RentHop concluded.
The East Village, Stuyvesant Town-Peter Cooper Village, Gramercy, Kips Bay, Murray Hill Flatiron, Union Square, Chelsea aren’t affordable either, but they didn’t make the top ten unaffordable neighborhoods list.
The rent to income gap shrinks in the East Village, although renters still pay 61.9 percent of their money on rent, according to the study. A median two-bedroom rent is $3,750 with a median income of $72,665. The income required to afford the rent is $150,000.
Farther north, in Stuyvesant Town/Peter Cooper Village, the median two-bedroom asking rent is $4,527. The average income is $95,022 with a required income of $170,260. This means residents are still rent burdened, paying 53.8 percent of their household earnings on rent.
Gramercy is slightly more affordable to its residents. Two-bedrooms come at an average price of $3,995 with a neighborhood median income of $100,900. The required income is $159,800. Residents on average pay 47.5 percent of their income on rent.
In the Kips Bay/Murray Hill area, two-bedrooms are on average $3,498. Household income is $97,458 with a required income of $139,920. Residents pay 43.1 percent of their income on rent.
Flatiron, Union Square, Chelsea and Hudson Yards are grouped together in the study with two-bedrooms going for $4,304. Incomes are $101,369 on average though the required income is $172,160. Tenants on average spend 51 percent of their household income on rent.
Leese noted the study highlights “a housing crisis, or an affordable housing crisis. There’s plenty of housing.”
On the worst of the worst, he said, “Long Island City, the Lower East Side, these neighborhoods are now known for big buildings going up and they’re topping the list of unaffordable neighborhoods. It shows developers are really targeting changing these places and it’s creating a wealth gap.”
In terms of how New York fared compared to four other big cities (Los Angeles, Boston, Chicago and Miami), Leese said, “It’s worse than other cities. Chicago and Boston, I thought they’d be bad. They weren’t good but they weren’t as bad as New York City.”
It’s Miami, he said, where housing isn’t being priced to accommodate its current residents with only 9.3 percent of its neighborhoods considered affordable by the study’s standards. “Miami was the only one similar to us,” Leese said. “Expensive homes, apartments are being built there, but there’s not a strong economy. The money that comes into Miami comes from other places. It’s mostly the hospitality industry.”