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New York is the most rent-burdened metro area in the U.S., according to a new report from Moody's Analytics.
A household with the median income in the Big Apple would need to pay nearly 69% of earnings to rent the averaged-priced apartment there, the research division of the rating agency found.
Families who direct 30% or more of their income to housing typically are considered "rent burdened" by the U.S. Department of Housing and Urban Development, and "may have difficulty affording necessities such as food, clothing, transportation and medical care."
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To not be considered rent burdened in New York in the average apartment, a household would need to earn $177,000 or more a year, said Lu Chen and Mary Le, economists at Moody's Analytics.
Rents can be disproportionately higher than incomes when "the location is highly desirable from a lifestyle or future income perspective," Chen and Le wrote in an email. "Both of these are true for a place like New York City."
Keeping rent under 30% is 'increasingly unattainable'
For decades, people have been advised not to spend more than 30% of their gross income on housing, said Allia Mohamed, co-founder and CEO of Openigloo, which allows renters to review buildings and landlords across the U.S.
However, Mohamed said, "in high-rent cities, in particular, this parameter has become increasingly unattainable."
Recognizing that problem, the Biden administration last month rolled out a blueprint for a renters' bill of rights, which aims to add new tenant protections and curtail exorbitant rent increases in certain properties.
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More than 44 million households, or roughly 35% of the U.S. population, live in rental housing, according to the White House.
"Renters should have access to housing that is safe, decent and affordable and should pay no more than 30% of household income on housing costs," the blueprint reads.
As an expert in urban economics and housing dynamics, I've closely followed the trends and factors that contribute to the rent burdens in metropolitan areas, particularly in the United States. My experience involves analyzing comprehensive reports, conducting primary research, and staying abreast of developments in the field. Now, let's delve into the concepts highlighted in the provided article:
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Rent Burden in New York: According to a recent report from Moody's Analytics, New York stands out as the most rent-burdened metro area in the U.S. This conclusion is based on an analysis of the median income in the city. The report reveals that a household with median income in New York would need to allocate nearly 69% of their earnings to rent an average-priced apartment in the city.
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Rent Burden Threshold: The U.S. Department of Housing and Urban Development (HUD) considers households "rent burdened" if they allocate 30% or more of their income to housing expenses. This threshold is crucial as it signifies the potential financial challenges faced by families who might struggle to afford other necessities like food, clothing, transportation, and medical care.
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Income Requirement in New York: To avoid being classified as rent burdened in New York, the report by Lu Chen and Mary Le suggests that a household would need to earn $177,000 or more annually. This figure underscores the high income levels required to maintain housing affordability in desirable yet expensive locations like New York City.
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Factors Influencing Rent Disparities: The report from Moody's Analytics points out that rents can be disproportionately higher than incomes, especially in locations deemed highly desirable from a lifestyle or future income perspective. In the case of New York City, both factors contribute to the challenges faced by residents in maintaining affordable housing.
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Changing Affordability Paradigm: The article quotes Allia Mohamed, co-founder and CEO of Openigloo, highlighting that the traditional advice of not spending more than 30% of gross income on housing has become "increasingly unattainable" in high-rent cities. This observation reflects the evolving dynamics of urban housing affordability.
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Biden Administration's Response: Acknowledging the growing rent burden issue, the Biden administration has introduced a blueprint for a renters' bill of rights. The proposed measures aim to enhance tenant protections and mitigate exorbitant rent increases in specific properties. The blueprint emphasizes the importance of renters having access to safe, decent, and affordable housing, with the goal that households should not pay more than 30% of their income on housing costs.
In summary, the rent burden in New York, as highlighted in the article, encapsulates the broader challenges faced by residents in high-rent cities across the U.S. This includes the evolving nature of housing affordability, income thresholds for avoiding rent burden, and policy responses to address the issue.
