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You know that little social media memes like you walk outside New York City just to breeze, you spent seven hundred bucks.
Shanee Benjamin grew up in Knarsi, Brooklyn. She left the city as a teenager, but came back in twenty thirteen to start a career as a professional illustrator and art director.
I moved to Crown Heights technically like the border of Crown Heights a week ago, and I was lucky. I got a run stabilized apartment for eleven ninety five.
But several years and apartments later, her life in New York is getting harder to sustain.
I have vivid memories of being on Craigslist circut twenty thirteen and looking at a one bedroom for five hundred bucks off at Eltdop in Williamsburg. Now knowing that that's an apartment that I saw, and now sitting pretty for like maybe close a five k is just rediculous.
Shane still lives in Crown Heights, two bedroom with a backyard that she upgraded to in twenty twenty one. She pays thirty two hundred dollars a month and her landlord just told her she's raising the price to fifty five hundred dollars a month. Rather than swallow the rent increase, Shanee decided it was time to find another spot, preferably one in park Slope with some extra space.
I have key puts, so having a backyard is great, you know.
But this time around, her apartment search has been rougher than she expected.
I make decent money as an illustrator. I'm making around one fifty a year, and I am shoggling with find a two legroom with an outdoor spee that isn't like forty five hundred five thousand by.
A lot of standards. Shanee makes a competitive salary, but her story highlights a new reality in New York City in the wake of unprecedented rent hikes. The rent is too damn high, even for high earning New Yorkers.
Since the pandemic, the city has changed quite a bit, and in time we've seen rents rise as high as sixty percent in some neighborhoods.
Paulina Cacero is a real estate reporter for Bloomberg.
According to the most recent New York housing vacancy survey, they found about sixty five thousand households those earning between one hundred k and three hundred k paying a third or more of their gross income towards rent. That's tens of thousands more than just four years ago. The golden rule of thumb is that you shouldn't spend any more
than a third of your income on rent. So it's really changing the way that people think about New York City, what kind of life they can afford, and for some people, the long term sustainability of living here.
I'm Sarah Holder, and this is the big take from Bloomberg News Today. On the show, If six figure earners in New York can't make it there, who can? How a squeezed rental market is fueling the affordability crisis in America's largest city, and how some are proposing to fix it.
It's no surprise that renting in New York right now is expensive, but Bloomberg real estate reporter Paulina Cacero says there's something new about who is starting to feel the burden of high rents New York's growing upper middle class.
This is a group of people that you might expect to have some kind of financial security, but they're really being impacted by the rent squeeze.
Now, I think some people might hear that higher earners in the city, people making between one hundred thousand and three hundred thousand dollars a year, feel like they can't afford rent and kind of scoff at it a little bit. It's like, okay, but you're making a lot of money, Like it's okay, But what is the takeaway here? If it's harder for someone making six figures to find a spot without paying more than thirty percent of their income on rent, what does that mean for everyone else.
Part of what's been driving up rents in the city and what economists have been observing since the pandemic is this.
Idea of the great reshuffle.
Right, So, during the pandemic, COVID nineteen lockdown shuttered offices.
People who had.
The means, More often than not, white collar workers were able to leave the city, and that provided a rare opportunity for some people to get COVID deals. They moved into neighborhoods that weren't really affordable to them, like West Village or Tribeca. But as the city kind of returned to normal. See, these higher earners, they came back, and actually they came back in a big way, and that trickles down, right, So that's raised the prices of rents
for everyone. Not to mention, a lot of landlords were having to make concessions to get apartments leased. They saw all of this demand as people were flooding back to the city as an opportunity to recoup some of those COVID nineteen losses, and that's when you saw these immense rent hikes in twenty twenty two.
Under other circumstances, these higher earning residents might have come back to the city and looking to purchase a home, not rent one. But that's gotten harder too.
People that might have already transitioned out of the rental market are still in the rental market, and they have more means to pay higher rents as well.
There's just more people renting.
It's about like two thirds of New York City's population is renting, and that's kept pressure on the rental market as well.
Right, it's more competition, especially from these higher earners.
Yeah.
I think I read somewhere that the amount of millionaires in general in the country who are renting is higher.
Yeah, the number of millionaire renters in New York City, I think has doubled since twenty nineteen.
That kind of says it all. Yeah, the number of New York City millionaires, renter or otherwise has reached record highs in recent years. Some estimates suggest that as of twenty twenty three, one out of every twenty four New
York City residents is worth seven figures or more. But as wealthy New Yorkers become even wealthier, lower income residents are being pushed farther into the outer boroughs or beyond, especially families kids who are more than twice as likely to move out of the city than households without.
Those people that are leaving the city are primarily from the city's working class people making less than sixty thousand dollars a year, because the cost of living in New York has just become untenable for them.
So you're describing a really interesting dynamic, Like the amount of higher earners in the city is increasing, the amount of working class folks moving out of the city is increasing. Meanwhile, rent is getting less affordable for everyone across that income spectrum. Yeah, including for renters like Shane.
Before once fifty k you could have savings you can travel, you know, you could be comfortable in New York. And now I feel like we're all just penny pinsion, penny pension. And so when other folks from other different cities and states listen to us complain about who would show out one hundred and fifty K, and I'm like, yeah, live in New York brouh.
One of the fundamental issues driving rents higher is a nationwide housing shortage, a shortage that's especially potent in New York. Between twenty ten and twenty twenty three, New York City added nearly nine hundred thousand jobs, but just under three hundred thousand new homes. That means more New Yorkers are vying for a limited number of units, and Paulina says that economics play a big role in swaying what kinds of homes are being built.
The developer community in New York City points to the macro economic conditions.
Right, there is very little land in New York City.
Construction and labor costs have gone up along with inflation, and they can't get the financing or the funds together to build in the first place. If they're not building housing that's more expensive, right, it's what they say pencils out for them.
One example is Long Island City, a neighborhood in northwest Queens that's seen a lot of development attention over the last few years. From twenty twenty to twenty twenty four, nearly seventy two hundred net new apartment units were added, the majority of them in high rises with elevators.
We talked to a resident who had moved there in nineteen eighty nine. She spent about four hundred dollars for a two bedroom and a walk up and.
How times have changed.
Times have changed.
If you've been to Long Island City, now you get off at Court Square, there's a sweet green, there's these tall, luxury high rise buildings, and that's driven up the rent quite a bit.
New developments now make up nearly a third of the rental market in that part of Queen's and median rent in those buildings is six hundred and twenty five dollars higher a month than a typical apartment.
It's just an example of how these developments can continue to drive at prices and also attract a new type of resident.
Emily Eisner, the chief economist at the Fiscal Policy Institute, says the city's constrained housing supply plus its growing supply of high earners are exacerbating the housing crisis. From individual property owners to larger management companies. Landlord's take into account a variety of factors when they set rent, but Emily says some end up setting them so high in part because there are enough New Yorkers who are willing to pay.
The landlord can potentially charge you know, three thousand dollars a month, let's say for a one bedroom, and that's going to push out the like, you know, family with a young kid that makes I don't know, let's say combined two hundred thousand dollars a year and has to pay for childcare because there is demand for the unit coming from someone who has fewer overall expenses and a high enough income to.
Pay Paulina How unique is New York here though? How have other cities rental landscapes changed in the last few years. Have they seen a similar sort of bounce back of pandemic rents?
You know, these boom towns like Austin or even like in Florida where people moved during the pandemic, their rent price is soared in twenty twenty and twenty twenty one, but have.
Since started to fall.
And that's true like across the Midwest and the Sun Belt where people moved to in San Francisco, housing costs dropped and haven't recovered as much. So New York City is pretty unique in how rents have continued to rise and actually, for like most of the months this year, Manhattan run prices have continued to hit a record high in the summer four seven hundred dollars a month, which is pretty crazy.
With housing costs this high, New Yorkers are looking for solutions.
After the break.
How the issue has reshaped the race for New York City Mayor and the proposals on the table to make rent more affordable across the board. In November, New Yorkers will head to the polls to vote in the mayoral election. The race has captured national attention after the upstart Democratic Socialist State Assembly member Zoron Mondani dominated the Democratic primary in June. Meeting former New York Governor Andrew Poma.
Today, eight months after launching this campaign with the vision of a city that every New Yorker could afford, we have won.
Wow, and with just a month to go, until the general poles show Mom Donnie leading by around twenty points. Bloomberg Real Estate reporter Paulina Cacerro says that one reason Mom Donnie's message is resonating is because housing affordability issues are at the top of voters' priority lists, and they're also central to Mom Donnie's campaign.
We saw that.
A lot of the folks that voted for Mom Donnie were like middle class and higher earners in the city and people that also tended to rent. So if you take a look at Greenpoint, which is this neighborhood in North Brooklyn that was once known for its industrial roots and kind of Polish immigrant community, saw a flood of white colored workers in the past couple years, and rents jumped fifty percent from twenty twenty to twenty twenty four, and roughly seventy two percent of Democratic voters in the
area voted for Mom Donnie. Other in demand neighborhoods where rents have risen quite a bit also overwhelmingly voted for Mom Donnie, including Soho, Brooklyn Heights, and Long Island City. So you can see how this rent affordability question has swayed. You know, a lot of renters and renters in affluent areas.
Mom Donnie's proposals include constructing two hundred thousand new affordable units over the next ten years and freezing rent increases on all rent stabilized apartments. Those are units that have limits on how much the rent can increase every year, which are set by the city's rent Guidelines Board. Here's Mom Donnie talking about his policy proposals on her sisters show odd Lots in May.
In tandem, I am both a candidate who believes we need to freeze the rent for rent stabilized tenants, and one who believes that we need to end the requirement to build parking lots when reconstruct housing, who believes we need to increase densitery around mass transit hubs. We need to up zone wealthier neighborhoods that have historically not contributed to affordable housing production.
Of course, not everyone is lucky enough to find a rent stabilized apartment that would be affected by a potential rent freeze that Mom Donnie is proposing. So what explains why these policies have resonated with such a broad coalition that includes higher earners.
I think most people know that the rent freeze policy would only apply to the New York citi's about one million rent stabilized units, but even then, I think it's created this kind of solidarity among renters.
Other candidates have put forth their own housing agendas, albeit ones that have gotten less traction. Quomo says he'll prioritize quote aggressive affordable housing development, while Republican candidate Kurtis Leiwa
has centered the needs of small landlords. The city's current mayor, Eric Adams, has dropped out of the race, but had been highlighting his role in passing a citywide zoning overhaul called City of Yes, a plan that's designed to allow more development in more places and supposed to unlock an estimated eighty thousand units of housing over fifteen years.
We see that as a really good start, but not enough.
That's Emily Eisner, again, the chief economist at the Fiscal Policy Institute.
The city needs something on the order of five hundred thousand more units over the next ten years, and I want to be clear that that includes both market rate housing and affordable housing.
Up Zonings and incentives that push developers to build affordable units can spur some of that growth, But Emily says there also need to be efforts to preserve the affordable housing that already exists.
Sometimes the affordable housing sort of either leaves the affordability zone and goes into market rate, or some of the buildings are sort of going to disrepair. So we need to see various efforts to sort of keep those housing units livable and also keep them affordable.
And Emily also pointed to policies designed to keep tenants in those affordable units, policies like eviction protections that she'd advocate for expand to cover more renters. As for Shaney, she's starting to feel like the grind to find housing in New York that meets her needs and fits her budget might not be worth it anymore.
She's had a lot of friends who moved to the Sunbelt region North Carolina, South Carolina. As a native New Yorker, it's not something that she thought she would ever have to entertain.
My life in a city has been amazing. I've been able to carry a single household for over a decade in New York City by myself. I think New York has actually brought me more opportunities than I would have had if I had stayed at Pittsburgh for college. The only difference is that I would have rather been more of a homeowner now at this age. But New York is kind of like stopping you from a little bit.
It's just not a sustainable place. She can't have the life that she wants to live, even though she, for all intents and purposes, like made it cheap. She did everything that she thought she was supposed to do.
The city is a good grip on you, but it has caused me to like look long term future, like what would life be like at other cities where I can afford a home.
This is the Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg dot com, subscribe today at Bloomberg dot com slash podcast offer. If you liked this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.