Originally posted by Nadia Balint at Rentcafe.com
Manhattan consistently tops the list for most expensive rents in the nation, wrapping up the year with an average market rate rent of $4,146/month. To be able to afford the average rent in their borough, Manhattan renters need an income of more than $150,000/year. How many renters actually have such financial power to live in New York’s most popular borough?
About 120,000, says the U.S. Census Bureau’s 2015 ACS. That’s the number of renter households earning over $150,000/year living in Manhattan as of 2015. To have a better understanding of the household make up in New York’s main island, we compared how many renters and owners live here, by income, and noticed an interesting dynamic in the upper income bracket (those earning $150K or more per year).
Keeping in mind that typically people who earn more money are more likely to be homeowners, in Manhattan the number of high-earning renters exceeds by far the number of high-income homeowners. Census data shows that in 2015 there were around 85,000 owner-occupied households in Manhattan with an annual income of $150k or more, which is about 35,000 fewer than the 120,000 renter households with similar incomes. Over the last decade, the cohort of wealthy renters increased in Manhattan by 86%, while wealthy homeowners by only 18%. Here’s how New York City and the rest of its boroughs present themselves:
Affluent renters flock to Brooklyn and Queens
Brooklyn and Queens saw a staggering rise in affluent renters in the last decade. As of 2015, Brooklyn has over 52,000 high-income renter households, more than the city of Los Angeles. If “the arrival of wealthier people in an existing urban district” is a sign of gentrification, then that “district” is Brooklyn. In the last 10 years, high-earning renters have moved to Brooklyn by the tens of thousands, causing a massive gentrification of its neighborhoods. Since 2005, the number of high-earning renters in NYC’s most populous borough increased by 324%, while the number of high-earning owners by 105%.
Likewise, neighboring Queens saw the second highest influx of rich renters in the last decade. The number of affluent renters-by-choice in Queens has soared 247%, from 8,500 in 2005 to 29,500 in 2015. By comparison, there are more than twice as many owner-occupied households in this income category in Queens, but their numbers only increased by 111% over the same 10-year period.
Bronx has relatively few high-income renter households — about 8,900 — but, even here, they grew by 166% in the last decade. Staten Island recorded the same rate of growth in high-income renters in 10 years, but the total number of renter households with incomes over $150,000 here is only 1,400.
One fifth of Manhattan’s renters earn over $150,000 per year
It may be true that a majority of people struggle with high rents in New York City. But there are also those who don’t. NYC has the most high-income renters in the country, a staggering 211,482 households, which is more than all the affluent renters in San Francisco, Los Angeles, Chicago, Houston, San Jose, and San Diego combined. The number of high-earning renters in NYC has been on a clear upward trend since the recession and has increased by 137% from 10 years prior. By comparison, owner-occupied households in NYC increased only by 64% during the same period of time.
Overall, about 10% of New York’s renters make over $150K/year. Manhattan has the largest share of affluent renters of all 5 boroughs — approximately 21%. In fact, Manhattan has a higher percentage of affluent renters than any other U.S. city, except San Francisco — where a quarter of renters are in the top income bracket. In Brooklyn, about 8% of renters earn upward of $150K annually, and in Queens 6.7%, both boroughs surpassing Los Angeles (where 6% of renters are high-income) and Chicago (where 5.6% of renters are high-income).
The graphic above shows a narrowing gap between the number of high-income homeowners and high-income renters in New York City. The 2016 median home sale price in New York City is about $600,000, according to Property Shark, 44% higher than it was in 2005. The seemingly unstoppable growth rate is causing many well-to-do people to turn away from homeownership and choose to rent instead. In Manhattan in particular, home prices increased dramatically since 2005, 59%. The median home price tag in Manhattan is currently $1,075,000, giving even people with discretionary incomes a reason to stick with high-end renting instead of buying.
Brooklyn real estate has exploded, boasting a median home sale price of $600,000, up 49% from 2005. On the other hand, multifamily development in Brooklyn is booming, and even with the average rent of $2,800/month, apartments in Brooklyn are still in high demand. By contrast, the other boroughs experienced a much slower growth rate in home prices since 2005: Staten Island (12%), Bronx (4%) and Queens (3.5%).
- Household data source: U.S. Census Bureau 2015 American Community Survey (1 and 5-year estimates)
- Home sale price source: Property Shark, a division of Yardi.
- For a monthly rent expense to be considered affordable, it should be no more than 30% of gross income