Z Zillow Group Inc

NEW YORK, April 21, 2016 /PRNewswire/ -- 

Key facts:

• New York City renters are expected to spend 65.2 percent of their income on rent in 2016, up from 59.7 percent in 2015.
• Brooklyn remains the city's most rent-burdened borough, with residents expected to spend 65.4 percent of their income on rent in 2016.
• The rent burden for Queens households will increase the most, where the median rent-to-income ratio is expected to jump from 43.5 percent in 2015 to 51.6 percent in 2016.
• Manhattan renters will see slight relief in their rent burden; it is the only borough where the rent-to-income ratio is expected to decline, from 49.5 percent in 2015 to 49.1 percent in 2016.

As rent growth in New York City continues to outpace income growth, many residents will have to devote more of their income to rent in the coming yearⁱ.  New York City renters are expected to spend nearly two-thirds (65.2 percent) of their income on rent in 2016, up from 59.7 percent in 2015, according to StreetEasy®'s new annual report, the State of New York City Rent Affordabilityⁱⁱ.

New Yorkers in four of the five boroughs can expect to face a higher rent burden in 2016 than last yearⁱⁱⁱ. Brooklyn continues to be the least affordable borough, where renters can expect to spend 65.4 percent of their income on rent, followed by the Bronx (54.1 percent). However, Queens renters are expected to see the greatest increase in the typical rent burden among all boroughs. Between 2015 and 2016, the amount of income Queens renters are projected to spend on rent will increas from 43.5 percent to 51.6 percent. Manhattan follows shortly behind Queens with a median rent-to-income ratio of 49.1 percent in 2016. Staten Island is the only borough in the city to be considered affordable for renters, with a median rent-to-income ratios of 27.9 percent in 2016^iv.

Renters in East Brooklyn, Upper Manhattan and the South Bronx are spending more of their incomes on rent compared with renters in other neighborhoods. In Manhattanville, for example, the median rent-to-income ratio is forecasted to reach 119.5 percent in 2016, meaning the median rent is far greater than the typical household's total annual income. Chinatown, Little Italy, Mott Haven and North New York all have median rent-to-income ratios greater than 100 percent.

"With a rental vacancy rate below 3.5 percent, the supply of rental housing across the city is extremely low, which places upward pressure on prices and even more competition among renters. There's policy momentum in place here, but addressing the supply side is only half the battle. No other factor is more fundamental to the city's growing rent burden than lagging income growth," says StreetEasy data scientist Alan Lightfeldt. "Until income growth catches up with rent growth, the rent affordability problem will loom large on New York households."

Conversely, Manhattan is the only borough where renters will see a smaller rent burden this year, primarily because Manhattan's forecasted income growth (1.0 percent) exceeds the forecasted growth in median rent price (0.2 percent). As a result, the median rent-to-income ratio in Manhattan is projected to decline slightly from 49.5 percent in 2015 to 49.1 percent in 2016.

The complete StreetEasy State of New York City Rent Affordability Report with additional analysis, neighborhood data and graphics can be viewed at streeteasy.com/blog/new-york-city-rent-affordability-2016/. 

About StreetEasy:
StreetEasy is New York City's leading local real estate marketplace on mobile and the web, providing accurate and comprehensive for-sale and for-rent listings from hundreds of real estate brokerages throughout New York City and the major NYC metropolitan area. StreetEasy adds layers of proprietary data and useful search tools to help home shoppers and real estate professionals navigate the complex real estate markets within the five boroughs of New York City, as well as Northern New Jersey and the Hamptons.

Launched in 2006, StreetEasy is based in the Flatiron neighborhood of Manhattan. StreetEasy is owned and operated by Zillow Group (NASDAQ: Z and ZG).

StreetEasy is a registered trademark of Zillow, Inc.

ⁱ According to StreetEasy forecasts, the median household income is expected to grow by 0.8 percent to $56,244 in 2016. The median asking rent is expected to grow by 10.1 percent to $3,054. Median asking rent for each neighborhood in 2015 is based on all rental listings on StreetEasy throughout 2015. Using several years' worth of rent data, we forecasted median asking rent for each neighborhood in 2016 using a standard auto-regressive integrated moving average (ARIMA) model. Similarly, we forecasted median household incomes in 2015 and 2016 by using the employment cost index (ECI) to adjust 2014 ACS 1-year estimates from the U.S. Census.

ⁱⁱ StreetEasy's State of New York City Rent Affordability Report is a comprehensive annual report that forecasts the rent burden New York City residents can expect to face in the coming year. The report includes the most updated rent-to-income ratios for New York City based on historical census and rent price data. The report covers all five boroughs with data available down to the submarket and neighborhood level.

ⁱⁱⁱ Rent burden is determined by an area's rent-to-income ratio, or the amount of annual household income spent on rent. All 2016 rent-to-income ratios are based on StreetEasy forecasts of median asking rent and median household income. The rent-to-income ratio listed is for each borough and neighborhood is calculated by dividing the forecasted annual median asking rent by the forecasted median household income.

^iv According to the U.S. Census Bureau, the conventional public policy for housing affordability is that housing expenditures that exceed 30 percent of household income have historically been viewed as an indicator of a housing affordability problem. https://www.census.gov/housing/census/publications/who-can-afford.pdf

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SOURCE StreetEasy