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According to the New York City data, the rental vacancy rate in 2023 fell to 1.4%. This is the lowest vacancy rate since 1968, and it shows how far housing construction is lagging behind the demand from tenants.
Real estate market experts believe that a “healthy” vacancy rate is between 5% and 8%. Higher vacancy rate typically means it is easier for people to find apartments when they want to move, and property owners are more likely to have to compete for tenants, trying to moderate rent increases. However, now the situation is exactly the opposite.
The data suggests that New York's housing crisis is only getting worse, especially during the economic recovery from the coronavirus pandemic. The 1.4 percent rate was down from 4.5 percent in 2021, the last time the survey was conducted. Local officials consider a vacancy rate of less than 5% a “housing emergency.”
High housing costs continue to force families and working-class people out of the city, threatening the economy. Housing experts estimate that the number of homes the city needs to build is in the hundreds of thousands. So far, however, neither the city nor the state have taken steps that could sufficiently speed up housing construction to solve the crisis.
State lawmakers failed to pass several major housing proposals last year, including the proposal by Gov. Kathy Hochul to speed up the development in the suburbs. This year, less ambitious measures appear to be stuck in limbo as the real estate industry, labor unions and tenant advocates can't agree on tax incentives for new construction and tenant protections.
The housing crisis has hit New York's lowest-income people the most. The vacancy rate for apartments that were rented out for less than $1,650 per month (which is in line with the city average) was less than 1%. The study found that the typical New York family, with an annual income of about $70,000, spends more than half of that amount on rental housing.
However, it is somewhat surprising that the crisis has now also affected apartments with higher rents. According to the survey, less than 4% of apartments renting for more than $2,400 were affordable in 2023, less than half of similar estimates in 2021 and 2017.
Since the housing shortage in New York is huge, and there are no certain prospects to increase the construction quickly, all available properties will definitely be in demand among tenants in the medium term. Thus, investors can earn a stable income from rent.
Source: Realty+
Photo by Jon Flobrant on Unsplash
