New York City has long been a tough town for renters, but the city just hit two milestones that show just how difficult it is to find and pay for an apartment these days.
The cost of renting in New York has hit a new high, just as the number of available rental units has dropped to a 50-year low.
The average up-front cost to move into an apartment in 2023 was $10,454, according to rental-listing data from real-estate site StreetEasy. That’s the highest since the company began tracking move-in costs in 2010.
In StreetEasy’s analysis, up-front costs include the first month’s rent in advance, a security deposit and a broker fee, which goes to the real-estate broker who shows the apartment to the tenant. StreetEasy assumed a broker fee of 12% of the apartment’s annual rent in its calculations, but broker fees can range from one month’s rent, or about 8%, to up to 15% of the annual rent in some areas.
Up-front costs were up by 29% from 2019, “before the pandemic disrupted the market,” StreetEasy noted. For a New Yorker making a median wage of about $75,000, the up-front cost of renting a new place can eat up 14% of their annual income, StreetEasy said.
“It was really shocking to me,” Kenny Lee, an economist at StreetEasy, told MarketWatch.
The median asking rent in January 2024 across the city was $3,490, up from $2,695 in January 2019, based on StreetEasy’s data.
Available rentals at a historic low
To make matters even more challenging for renters, the vacancy rate in New York City has dropped to the lowest level in the 56 years that the city has been tracking the data.
“The data is clear: The demand to live in our city is far outpacing our ability to build housing. New Yorkers need our help, and they need it now,” New York City Mayor Eric Adams said in a statement.
Only 1.4% of the city’s rental units were available in 2023, due to a serious shortage of apartments as companies call employees back to work in person. Office-badge swipes, as tracked by Kastle Systems, show that New York City offices were about 51% occupied as of early February.
“When the pandemic disrupted the market, we saw a big disruption caused by people returning to the office driving up the demand for rentals in New York City, but the supply of homes on the market is really lagging behind,” Lee explained.
“The core of the issue here is the fact that the city did not create enough homes compared to the overall population growth,” he added. “We have been undersupplied for so long.”
Aside from the fact that rents are surging because of low vacancy rates and increased competition among renters, “what really pushes renters deeper into crisis is actually soaring up-front costs,” Lee said.
Having to cough up at least $10,000 to move into a new apartment is “inhibiting or limiting renters’ options when it comes to moving within their own city,” he said.
Though New York City has long been a high-cost market, the recent surge in rental costs underscores an acute need for affordable housing.
About a third of renters in the city spent more than 50% of their income on rent in 2021, according to one estimate from the city.
Broker fees take a bite
Although New York City imposed a ban on broker fees on rentals in 2020, it was struck down a few days later, and by 2021, brokers were able to start charging renters once again.
About half of rental listings in New York didn’t charge broker fees in 2023, StreetEasy noted, and not having that fee made a significant difference for renters: The average up-front cost for listings that didn’t charge a broker fee was $8,576. But they may have lower up-front costs, these no-fee apartments can be more expensive in the long run because they are often in new buildings or in properties marketed as luxury real estate, StreetEasy noted.
For apartments that did require a broker fee of 12% of the listing’s annual rent, the average up-front cost was $12,367.
For a New Yorker looking to move to a new place, the high cost can be prohibitive. The typical renter in the U.S. only holds about $2,000 in cash, according to data from the Federal Reserve.
The average up-front cost to rent a new apartment within the five boroughs of New York City was the highest in Manhattan, at $12,171, and the lowest in the Bronx, at $7,005.
Staying put, or finding roommates
Many New Yorkers cope with the high cost of housing by having roommates. Living with another person potentially saves renters in the city $40,200 on an annual basis, a separate report from StreetEasy found.
But the high cost of moving is also inadvertently creating a “lock-in” effect for current renters, Lee said.
“A healthier market is where there is mobility,” he said. “Renters who wish to move should be able to move, whether it be trying to be closer to their workplace or their families, or moving to a bigger apartment to accommodate new children.”