Spotlight: New York City Housing
As New York City’s economy continues to rebound from the unprecedented turmoil of the COVID pandemic, a shortage of affordable housing is reemerging as one of the most significant challenges to a durable and inclusive recovery. Rents are surging across the city, driven by factors that include: job growth, the stemming of pandemic flight, inflows of private investment in multifamily rental properties, and a supply of housing that has not kept pace. While rent regulated, public, and subsidized housing protect many New Yorkers from rapidly rising rents, those in market rate housing face growing rent burdens. Evictions have resumed after a pandemic moratorium, with the seven highest-eviction neighborhoods in the Bronx, despite the fact that the borough has seen the slowest rate of rent increases. Lack of affordable housing also functions as a constraint on economic growth (as it is more costly for companies and individuals to relocate here) and exacerbates the crisis of homelessness facing the city.
Rents
Over the past year, asking rents in New York City have grown faster than any other large U.S. city. According to the Zillow Observed Rental Index (ZORI), a repeat rental index, August asking rents in New York City were 19% above August a year ago and up 10.7% in the last 6 months (Chart S1).
Nationally, rents are up 12% over the last year, and 6% over the last 6 months, but there is considerable variation among cities. Among large cities, rents are growing most slowly in San Francisco, Houston and Las Vegas.
Chart S.1
SOURCE: Zillow Observed Rental Index (ZORI), rental increases the 40th to 60th percentile weighted to be representative of the market in the largest 20 U.S. cities, Methodology: Zillow Observed Rent Index (ZORI) - Zillow Research
Borough level data shows rents have fully recovered from the impact of the pandemic and are now surging fastest in areas of the city that had seen a drop in asking rents at the beginning of the pandemic (Chart S.2). Manhattan leads the way, with rents up 20% over the last year, and up almost 10% over the last six months (Table S.1).
Chart S.2
SOURCE: Zillow Observed Rental Index (ZORI)
The data show pandemic era rents in Brooklyn and Queens fell less dramatically than in Manhattan, and are now also rising rapidly, though not quite as dramatically. Rents are up 19% from a year ago in Brooklyn, and almost 14% from a year ago in Queens. In contrast rents in the Bronx and Staten Island held steady through the pandemic, and are also rising, but not at the torrid pace of Manhattan. Bronx rents are up 7.6% from a year ago, and up almost 10% from pre-pandemic levels.
Table S.1: Rent Increases by Borough, and as a Percentage of Median Family Income
| |
Rent Index |
Annual Rent Increase |
Median Family
Monthly Income |
Annual Increase
% of Median Income |
| |
August '21 |
August '22 |
$ |
% |
$ |
% |
| Brooklyn |
$2,787 |
$3,320 |
$534 |
19.2% |
$4,688 |
11.4% |
| Manhattan |
$3,320 |
$3,998 |
$678 |
20.4% |
$6,354 |
10.7% |
| Bronx |
$1,951 |
$2,100 |
$148 |
7.6% |
$3,229 |
4.6% |
| Queens |
$2,324 |
$2,645 |
$321 |
13.8% |
$6,354 |
5.1% |
| Staten Is. |
$1,923 |
$2,041 |
$119 |
6.2% |
$8,333 |
1.4% |
SOURCE: Zillow Observed Rental Index (ZORI), median monthly income from 2022 Current Population Survey, March Supplement
While the pace of rent increases has been slower in the Bronx, where rents are lower, this does not necessarily imply that Bronx renters are or will be less impacted, since household incomes are lower there as well. Rising rents are taking up on average 4.6% more of a median family income in the borough than this time last year, lower than the increase in Manhattan or Brooklyn, but comparable to Queens.
Measured across 150 New York City zip codes tracked by Zillow, August rents have increased from February 2020 in every corner of the city. Rents are up by more than 10% in 138 of 150 zip codes, up by more than 20% in 83 zip codes (over half the city), up by more than 30% in 35 zip codes (more than a third of the city) and up by more than 40% in 26 zip codes (Chart S3).
Chart S.3
SOURCE: Zillow Observed Rental Index (ZORI)
Recent data from Streeteasy also shows rising rents have led to a surge in apartment searches in less expensive neighborhoods in every borough, such as: East Harlem in Manhattan, Jackson Heights in Queens, and Brownsville in Brooklyn.[1] Over time, spiking rents in Manhattan and Brooklyn will price out more renters, pushing them to other areas, driving rents higher.
Important Factors Driving Rent Increases
The COVID pandemic brought huge changes that impacted rents both locally and nationally: business shutdowns and record job losses with the initial wave of the pandemic, a transition to remote work, and unprecedented monetary and fiscal stimulus to prop up the economy. As the country and the economy are finding a new normal, these factors have combined to drive rents to new highs.
Jobs – On a seasonally adjusted basis U.S. payroll employment surpassed the pre-pandemic highs in August 2022, fully reversing pandemic job losses. In New York City as of August, private employment remains 129,000 below peak employment of February 2020, but the city’s economy has been adding about 20,000 jobs per month on average in 2022, and employment in high-paying sectors such as Information and Professional and Business Services has reached new highs (see Table 1). In addition to job growth, the following factors are also likely contributing to rent inflation.
Rising Interest Rates – The Federal Reserve has announced its intention to continue to raise interest rates until it feels inflation is under control. Higher interest rates have increased the cost of homeownership and are likely pushing would-be home buyers to rent instead, increasing pressure on the rental market. The expected path of higher interest rates will eventually decelerate economic growth and job creation, which may eventually push down rents, but also brings greater risk of recession and job losses, which will likely lead to increased evictions and homelessness.
Migration and “Pandemic Churn” - Rising employment and rents in New York City suggest the pandemic outflow of people from New York City has normalized, and this is confirmed by change of address data from the U.S. Postal Service. Postal data show a net outflow of approximately 50,000 households with the March 2020 initial wave of the pandemic, but this measure of migration has returned to pre-pandemic levels for the last year or so. The churn of households leaving and then returning to New York City may have contributed to rent increases, even at comparable levels of supply and demand, as renters compete in a tight market. The fact that rent increases have been highest in those areas that saw the largest initially drops (especially Manhattan) may be evidence of that dynamic.
Chart S.4
SOURCE: USPS, temporary and permanent changes of address
The postal data historically show a net outflow, even when New York City’s population is growing, because they do not reflect factors such as local births, household formation, and arrivals who don’t file change of address forms, such as many students and international migrants from abroad.
Texas and Florida have also begun bussing migrants to New York City, with 17,429 arriving since the start of April (as of October 5th). U.S. Customs and Border Protection has intercepted over 200,000 migrants at the southern border each month since March, up from fewer than 100,000 monthly last year, and as few as 17,000 in April of 2020.[2] Regardless of whether bussing from Texas and Florida continues, New York City’s reputation for openness and opportunity will ensure that many arriving migrants will end up here, and they will need housing.
Remote Work – While many pandemic era trends have been reversed, increased rates of telecommuting persist: Google mobility data continues to show people spending more time at home (Chart 3), office occupancy remains well below pre-pandemic levels (Kastle Chart 4), office space available for rent in New York City remains elevated, and office rents have fallen. The increase in remote work was accompanied by an increase in housing demand and house prices, particularly in areas with a higher share of remote work before the pandemic, possibly suggesting that remote-working households are seeking larger spaces.[3] As workplaces transitioned from fully remote to hybrid models with more days in the office, workers have had to move within commuting distance. Their return to the New York City area, and the need for more home office space has likely put upward pressure on rents.
Housing Supply – While many factors are driving demand for rental housing, the City’s supply has failed to keep pace. According to PLUTO data from New York City’s Department of City Planning, New York City added only 65,000 housing units in the 5 years from 2018 to 2022, an average of just 13,000 units annually (Chart S.5). New York City issued fewer housing permits on a per capita basis than most other large U.S. cities.[4] Construction of new luxury condo towers is also often made possible by the demolition of rental buildings, resulting in not only a loss of rental housing, but also a net decrease in total units, because new units are much larger than those they replace.[5]
Inflows of Private Capital into Existing Rental Real Estate – As The Real Deal reported last month, private equity firms including the Carlyle Group, KKR, Blackstone, and Apollo Global Management are betting big on apartments in New York City, spending billions of dollars on acquisitions and “emerging as one of the biggest forces in the city’s post-pandemic recovery as multifamily investment reaches levels not seen since … the peak of the last cycle.”[6] Rent-paying tenants in multi-family buildings from the Bronx[7] to Brooklyn[8] have reported receiving eviction notices shortly after new private equity acquisitions.
Chart S.5: Changes in Number of Housing Units, by Community Board District 2018-2022
SOURCE: NYC Comptroller’s Office from Department of City Planning PLUTO data.
New York City's stock of affordable housing also offers limited refuge from surging rents. Data from the Mayor’s Management Report for FY 2022 shows that New York City's Department of Housing Preservation and Development (HPD) began the process of constructing 47,875 units of subsidized housing between FY 2018 and FY 2022, an average of just 9,575 annually. Construction completions during this same time frame moved at an even slower pace, totaling 33,151 affordable housing units, an average of 6,630 units each year. When New York City’s housing market matches this slow pace of housing creation with rapid short-term increases in demand for rental housing from rising employment (up 164,000 since January), rising interest rates, rising migration, and hybrid work/home office demand, the disparity drives rents beyond what many can afford, leading to higher rent burdens, more evictions, and homelessness.
Chart S.6
SOURCE: HPD via Mayor’s Management Report
Impacts of the Rent Surge
Rapidly rising demand for rental housing, a supply of housing that is rising very slowly, and the ongoing precarity facing low-income households puts many New York City families at greater risk of displacement. From the 2020 onset of the pandemic through January 15, 2022, a patchwork of Federal, State and local eviction moratoria restricted the issuance of eviction warrants, prevented the commencement of new eviction cases, and paused existing cases. Despite these restrictions, some evictions filings did occur, and filings have been steadily rising with the expiration of restrictions (Chart 7).
Chart S.7
SOURCE: Princeton University Eviction Tracking System
Although new eviction cases have not yet returned to pre-pandemic levels following the lifting of the moratorium earlier this year, evictions filings have risen, and have been concentrated in low-income neighborhoods outside Manhattan, with the seven highest neighborhoods, and eight of the highest ten, located in the Bronx (Table S.2). The evictions in just these ten neighborhoods account for more than a quarter of all evictions citywide since the start of 2020.
Table S.2: NYC Neighborhoods with the Most Eviction Fillings 2020 to September 2022
| Zip Code |
Neighborhood |
Borough |
Eviction Fillings Since 2020 |
| 10453 |
Morris Heights |
Bronx |
6,120 |
| 10456 |
Melrose |
Bronx |
5,396 |
| 10467 |
Van Cortlandt Park |
Bronx |
5,323 |
| 10452 |
Highbridge |
Bronx |
5,263 |
| 10457 |
Bathgate |
Bronx |
5,223 |
| 10468 |
Jerome Park |
Bronx |
5,072 |
| 10458 |
Belmont |
Bronx |
4,990 |
| 11226 |
Flatbush |
Brooklyn |
4,654 |
| 11368 |
Corona |
Queens |
3,667 |
| 10460 |
Bronx Park South |
Bronx |
3,596 |
SOURCE: NYC Comptroller’s Office from Princeton University Eviction Tracking System data
The fact that rents have risen more slowly in these neighborhoods than elsewhere, and that many of these neighborhoods saw high levels of evictions prior to the pandemic, suggests that the precarity of poverty is a driving factor. While additional housing supply is urgently needed to address the city’s overall shortage of housing, reducing the number of evictions will require other strategies as well (e.g. tenant protections, housing vouchers, etc.)
The city’s shelter census has also risen by more than 14,000 individuals in just the last year (Table S.3). This surge has been driven in large part by a sharp and recent influx of individuals in families with children, many of whom are believed to be asylum seekers arriving in New York City. As of October 5th, the Department of Homeless Services reports 17,429 asylum seekers have arrived in New York City since April, with 13,238 in the shelter system.
Table S.3: Increase in New York City Homeless Shelter Population, 10/1/2021 - 9/30/2022
| Shelter Category |
One Year Increase |
One Year % Change |
September 30th Census |
| Adults in Families with Children in Shelter |
5,696 |
51.0% |
16,873 |
| Children in Families with Children in Shelter |
4,866 |
32.8% |
19,681 |
| Single Adult Men in Shelter |
2,640 |
21.6% |
14,839 |
| Individuals in Adult Families in Shelter |
995 |
30.1% |
4,298 |
| Single Adult Women in Shelter |
227 |
5.6% |
4,317 |
| Total Individuals in Shelter |
14,424 |
31.6% |
60,008 |
SOURCE: NYC Open Data.
The surge in the City’s homeless shelter population is straining shelter capacity. While the NYC shelter system had reached a peak of over 61,000 individuals in 2019, under the de Blasio Administration, the City had ceased to use many hotels and “cluster sites” that were deemed inferior. A plan was developed to build new, “purpose-built,” nonprofit-operated shelters; however, many of these were put on hold during the pandemic and in the transition to the Adams Administration.
The increase is also putting an increasing burden on city finances. In FY 22 sheltering people experiencing homelessness cost New York City a nightly average of $136 for a single adult, $172 for an adult family and $188 for a family with children. Rising rents are likely to both increase the need for shelter, as struggling New Yorkers are unable to find affordable housing, and increase the of cost providing shelter, as the City must find more housing in a tight market.
Chart S.8
SOURCE: NYC Open Data
As the shelter population is rising, New York City is having less success placing people from shelter into homes. Over the seven-month period from January 2022 – July 2022, the pace of permanent housing placements for families with children in shelter decreased. Compared to the first seven months of 2021, permanent housing placements for families with children dropped by 24%, with fewer placements in every program that was active in 2021, including a steep decrease in the number of public and supportive housing placements (Chart S.9). Placements into permanent supportive housing, one of the best, albeit less available, options for some homeless families, appears to have dropped to zero in June and July, perhaps due to delays in application approvals. This decline in placements is likely to increase lengths of stay, which then will further contribute to a higher shelter census.
In the twelve-month period from August 2021 – July 2022, the City placed an average of just 53 families with children in NYCHA apartments per month compared to monthly averages of 139, 170 and 143 public housing placements in the three prior years, respectively. Several factors could be behind this drop – the time to prepare apartments for re-rental rose by 48% last year[9] or a possible policy change in the prioritization of homeless families into NYCHA housing.
The chart also shows an increased utilization of the CityFHEPS (Family Homelessness and Eviction Prevention Supplement) program, a municipal rental assistance program that was developed in 2018 to streamline other rental assistance programs and align their structure with the New York State FHEPS program. Between August 2021 and July 2022, CityFHEPS has grown to account for approximately two-thirds of all permanent housing placements among families with children in shelter. The growing role of CityFHEPS comes on the heels of City Council legislation last year that expanded the value and eligibility of these vouchers. CityFHEPS vouchers that were once limited to just $1,265 per month for single adults, and $1,580 per month for families, have now been increased to reflect the higher payment standards used in the Section 8 voucher program[10] – for example, NYCHA’s current payment standard for a Section 8 voucher holder renting a two-bedroom apartment is $2,527. Despite these recent adjustments to the program, average monthly CityFHEPS placements for families with children are similar to the number made in the year prior. In the one-year period from August 2021 – July 2022, the Department of Social Services averaged 204 CityFHEPS placements of families with children per month, compared to 194 placements per month in the preceding year (based on an adjusted average that omits June 2021 CityFHEPS placements due to the conversion in that month of cluster sites to permanent housing, as also evidenced by the sudden drop in the census for families with children in chart S.8).
Chart S.9
SOURCE: NYC Comptroller’s Office from New York City Department of Social Services data. “Other Subsidized Placements” includes the following programs: 421-a tax incentive program, the Enhanced One-Shot Deal program, the Special One Time Assistance program, FHEPS A, FHEPS B, Section 8, SEPS, and other miscellaneous placements categorized as “other” by the Department of Social Services.
Conclusion
The turmoil of the COVID pandemic shifted and accelerated the impacts of a shortage of affordable New York City housing that remains today. While rents fell during the pandemic, the incomes of thousands of unemployed New Yorkers collapsed, making even falling rents unaffordable, and requiring emergency measures like eviction moratoria and emergency rental assistance to keep them in their homes. The post-COVID resurgence of New York City’s economy has brought jobs and people back to the city, and with them surging rents.
Looking ahead, ongoing interest rate increases by the Federal Reserve bring increased risk of a recession that would likely cool the rental market. But a recession that would also bring rising unemployment and falling incomes would cause new housing precarity, rent arrears, evictions, and homelessness for many struggling New Yorkers.
Durable, long-term, and inclusive growth for New York City – especially through a potential recession – will require a full panoply of housing responses: protections against evictions, the expansion of housing vouchers and income supports funded largely through federal and state aid, and significant growth in housing supply sited fairly across the city and across income levels, including new market-rate housing and substantial new permanently affordable housing targeted for the most vulnerable families and the working poor.
Spotlight Prepared by: Andrew McWilliam and Stephen Corson.
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