More than four years into the pandemic, the verdict is in: Gen Z is loving life in New York City. And that's tough news for renters.
The pandemic has driven generations young and old away from central business districts. The promise of remote work and fewer options for accessing dining, entertainment and other commercial spaces will move 2 million Americans out of metropolitan counties in 2021-2022, according to research from the Economic Innovation Group. I evacuated.
But some Millennials and even more Gen Z are bucking the trend and returning to America's largest city, according to data released by the city on Thursday. This is the lowest since 1968. The percentage of vacant and available rental properties has plummeted to 1.4% in 2023, making Gotham the worst housing crisis in 50 years.
More than 42% of people who moved to New York City from 2021 to 2022 were Gen Z, and 39% were Millennials, according to Census Bureau data. Additionally, across metropolitan areas, including New York City, today's Homeowner report shows that all generations are experiencing population declines, with the notable exception of Gen Z.
“Younger generations certainly make up a significant portion of the population returning to the city for its social, cultural and convenience attractions,” said Co-founder of New York-based Hudson Valley Property Group. said Jason Bordainick, Managing Partner and Managing Partner. luck. “Whether you work in an office or remotely, the appeal of city life, and Manhattan in particular, remains strong.”
To put things into perspective, housing experts believe that a “healthy” or normal vacancy rate is in the 5% to 10% range. High vacancy rates tend to be more profitable for tenants than for landlords. Higher vacancy rates make it easier for people to find apartments, but it also means landlords have to attract tenants with lower rents and other incentives.
The latest vacancy rate announcements have alarmed New York City leaders, many of whom are calling for more housing, especially affordable housing.
“The data is clear: The demand to live in our city far exceeds our ability to build housing,” New York City Mayor Eric Adams said in a statement. “New Yorkers need our help, and they need it now.”
If the vacancy rate is low, the rent will also be high.
With vacancy rates as low as New York City, it's no wonder rents are soaring. According to RentCafe, the average rent for his 700 square foot apartment in New York City is more than $4,700, and only 1% of apartments cost less than $2,000 per month. By comparison, the average rent across the United States is just $1,700. A lack of housing supply will only worsen rental costs, experts agree.
“The biggest underlying factors that New York City has always struggled with when it comes to housing production are high land costs and very long development cycles,” said Daniel Asch, a New York-based real estate attorney with Adler & Stachenfeld. speaks. luck. “With a complex regulatory landscape that makes it difficult for developers to build quickly and efficiently, the only way to expedite development is to ease such restrictions, speed up the pace of approvals, and/or The job is to provide incentives to improve the financials of each project. “
Low vacancy rates, high rents, and fewer affordable housing options only exacerbate the city's homelessness problem. “We're seeing a huge influx of immigrants who desperately need housing that requires city resources,” Ash said. In total, cities need hundreds of thousands more homes to make up for the housing shortage. In September 2023, Mr. Adams announced an overhaul of New York City's housing system that could see up to 100,000 new homes built over the next 15 years.
But city-based programs aside, building entirely new housing in New York City is less attractive to developers due to high costs and strict regulations.
“Building in New York City is prohibitively expensive, so developers need financial incentives to build more housing,” said another New York-based real estate attorney at Adler & Stachenfeld. Yutin Patka says. luck. “New York City is a highly regulated market and comes with high costs for owners and developers.”
In addition to building more housing, rent control is also important for those looking for affordable options. Many apartments in New York City are rent-regulated based on income, but that's not enough to make city living accessible to everyone.
“The current situation highlights the urgent need to re-evaluate recent rent controls and regulations,” Bordainick said. “Some of these measures are unintentionally discouraging investment in housing and exacerbating the housing shortage. To fully utilize the private market to increase capital investment in housing, It is imperative that we reevaluate our policies.”
Even though rents are as high as New York City and competition to find a place is fierce, New York City is very different from living in other metropolitan areas across the country in many ways. However, it remains a promising location.
“New York has always been, and always will be, a destination for dreamers,” says Patka. “New York City will continue to see strong housing demand for the foreseeable future. [but] lack of affordable housing [could] It alienates the very talent that New York attracts, and that's what makes it such a special city. ”
