New York City rents grew seven times faster than wages last year, tightening affordability crunch

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May 07, 2024, 08:00 ET

Rents have outpaced wages in nearly 9 out of 10 major metros since 2019

Since 2019, U.S. rents have grown 30.4%, while wages have grown 20.2%. Rents have outpaced wages in 44 of the 50 largest U.S. metro areas.
Wages caught up last year nationally and in about half of major metros.
In New York City, rents grew more than seven times faster than wages last year — the largest gap in the country.

SEATTLE, May 7, 2024 /PRNewswire/ -- Rent prices have surged in recent years, and wages have not kept pace. While last year was a bright spot — wages grew faster than rents nationally and in almost half of major U.S. metro areas — the opposite was true in New York City, where the nation's largest gap emerged.

Zillow logo (PRNewsfoto/Zillow Group)

Since 2019, U.S. rents have grown 1.5 times faster than wages, according to a new analysis of rental data from Zillow® and StreetEasy®, along with wage data from the Bureau of Labor Statistics.^¹ Demand for rentals from the large millennial generation — many of whose members have remained renters longer than previous cohorts — and Gen Z adults has run headlong into the country's housing shortage, causing rents to quickly rise.

That trend cooled last year, as national rent growth (3.4%) was outpaced by wage growth (4.3%). Strong multifamily construction has helped absorb demand for apartments, keeping rent growth in check in much of the country. But rents grew more than seven times faster than wages across New York City's five boroughs last year. That gap between rent growth (8.6%) and wage growth (1.2%) in New York City was larger than in any of the 50 biggest U.S. metro areas.

"It is encouraging to see much of the country making even modest progress in the rental affordability crisis. Unfortunately, New York City is heading in the opposite direction," said StreetEasy Senior Economist Kenny Lee. "Despite a strong job market in the city, and in some ways because of it, the gap between what a typical renter can afford and the price of rentals on the market is growing. New multifamily buildings coming online has eased competitive pressure in many markets, but in New York City, construction just simply can't keep up with demand."

Moderating rent growth across the country has given wages a chance to catch up, providing a reprieve for renters in many markets. Rents dipped in three markets last year — Austin; Portland, Oregon; and San Francisco — while wages continued to grow. In 20 other metros, rents grew, but wages grew faster, giving renters some breathing room.

Florida markets occupy three of the five spots where rent growth has most dramatically outpaced wage growth over the past five years. Florida has been a migration hot spot since the pandemic, with new residents attracted by the possibility of year-round outdoor living and relatively affordable housing compared to many coastal markets.

This surge in demand has led to skyrocketing rents in the state, while wages have struggled to keep up. Even in Miami, where wage growth has been slightly above the national average, a nearly 53% increase in rents — the most dramatic jump of any U.S. market — has left a huge gap between the income residents are earning and the income they need to comfortably afford the area's typical rental.

Wages have consistently outpaced rents in recent years in only six major metros. The biggest gaps have been in San Francisco, San Jose and Houston.

Zillow and StreetEasy tools
Zillow and StreetEasy have a number of tools that help renters with affordability and access.

The upfront costs of finding a place to rent can add up, with Zillow research showing those costs tend to be higher for renters of color. In New York City, upfront costs average almost $10,500, with broker fees often the largest expense. Lowering upfront rental costs will give all New Yorkers expanded choices in the rental market, which is one of the reasons Zillow and StreetEasy are advocating for broker fee reform.

For all apartment buildings, Zillow includes a "costs & fees" breakdown to help renters gauge the full affordability picture by highlighting certain onetime costs, such as application fees and security deposits, as well as recurring costs, such as parking. While the typical renter nationally pays $60 in application fees across all the rentals they applied for, Zillow offers a universal rental application that allows renters to apply to an unlimited number of participating rentals for 30 days for a flat fee of $35.

Zillow rental listings also include rooms for rent — individual rooms in units or homes — bringing more affordable rentals online. Renters using Zillow can include "room" listings in their searches alongside traditional "entire place" options.

	2019–2023			2023 Only
Metro Area*	Rent Increase	Wage Increase	Difference (Percentage Points)	Rent Increase	Wage Increase	Difference (Percentage Points)
United States	30.4 %	20.2 %	10.2	3.4 %	4.3 %	-0.9
New York City**	27.5 %	11.2 %	16.3	8.6 %	1.2 %	7.4
Los Angeles, CA	22.2 %	17.2 %	5.0	2.0 %	2.7 %	-0.7
Chicago, IL	22.3 %	8.5 %	13.8	5.4 %	-0.1 %	5.5
Dallas, TX	29.0 %	19.5 %	9.5	1.1 %	2.0 %	-0.9
Houston, TX	20.6 %	24.4 %	-3.8	2.7 %	8.0 %	-5.3
Washington, DC	18.0 %	12.8 %	5.2	4.6 %	3.5 %	1.1
Philadelphia, PA	24.2 %	14.8 %	9.4	4.0 %	2.0 %	2.0
Miami, FL	52.6 %	20.4 %	32.2	2.4 %	3.6 %	-1.2
Atlanta, GA	35.6 %	12.2 %	23.4	0.3 %	0.2 %	0.1
Boston, MA	22.4 %	13.4 %	9.0	5.8 %	-1.0 %	6.8
Phoenix, AZ	39.1 %	16.6 %	22.5	0.9 %	3.4 %	-2.5
San Francisco, CA	3.4 %	12.0 %	-8.6	-0.1 %	2.6 %	-2.7
Riverside, CA	41.4 %	23.3 %	18.1	3.1 %	5.9 %	-2.8
Detroit, MI	31.4 %	22.0 %	9.4	3.6 %	4.2 %	-0.6
Seattle, WA	19.7 %	7.7 %	12.0	2.5 %	2.6 %	-0.1
Minneapolis, MN	13.5 %	17.1 %	-3.6	2.7 %	5.6 %	-2.9
San Diego, CA	36.6 %	18.8 %	17.8	3.1 %	1.4 %	1.7
Tampa, FL	50.0 %	15.3 %	34.7	2.7 %	0.4 %	2.3
Denver, CO	23.1 %	20.3 %	2.8	3.0 %	5.1 %	-2.1
Baltimore, MD	22.8 %	8.0 %	14.8	3.5 %	2.6 %	0.9
St. Louis, MO	31.2 %	22.6 %	8.6	5.4 %	5.6 %	-0.2
Orlando, FL	36.3 %	17.4 %	18.9	1.0 %	-0.3 %	1.3
Charlotte, NC	33.9 %	13.4 %	20.5	1.7 %	4.5 %	-2.8
San Antonio, TX	22.3 %	15.2 %	7.1	0.3 %	3.6 %	-3.3
Portland, OR	21.0 %	24.0 %	-3.0	-0.2 %	2.9 %	-3.1
Sacramento, CA	28.6 %	16.2 %	12.4	3.0 %	1.6 %	1.4
Pittsburgh, PA	22.7 %	12.5 %	10.2	4.7 %	3.0 %	1.7
Cincinnati, OH	36.5 %	15.2 %	21.3	7.3 %	0.9 %	6.4
Austin, TX	23.1 %	13.6 %	9.5	-2.3 %	2.4 %	-4.7
Las Vegas, NV	34.3 %	14.4 %	19.9	2.2 %	0.2 %	2.0
Kansas City, MO	33.3 %	10.1 %	23.2	6.1 %	4.9 %	1.2
Columbus, OH	30.6 %	21.9 %	8.7	6.0 %	4.3 %	1.7
Indianapolis, IN	37.2 %	6.6 %	30.6	4.5 %	2.7 %	1.8
Cleveland, OH	32.1 %	16.4 %	15.7	5.1 %	0.8 %	4.3
San Jose, CA	6.0 %	12.5 %	-6.5	0.8 %	6.6 %	-5.8
Nashville, TN	29.1 %	17.7 %	11.4	0.6 %	2.6 %	-2.0
Virginia Beach, VA	35.5 %	25.3 %	10.2	4.9 %	5.2 %	-0.3
Providence, RI	44.2 %	22.4 %	21.8	7.3 %	3.4 %	3.9
Jacksonville, FL	36.7 %	9.7 %	27.0	0.1 %	0.0 %	0.1
Milwaukee, WI	25.8 %	26.3 %	-0.5	5.9 %	5.5 %	0.4
Oklahoma City, OK	28.9 %	19.7 %	9.2	4.2 %	2.5 %	1.7
Raleigh, NC	30.7 %	15.2 %	15.5	1.1 %	4.9 %	-3.8
Memphis, TN	36.0 %	13.1 %	22.9	1.4 %	-1.1 %	2.5
Richmond, VA	33.3 %	32.1 %	1.2	3.1 %	5.7 %	-2.6
Louisville, KY	31.7 %	23.0 %	8.7	6.1 %	4.4 %	1.7
New Orleans, LA	24.1 %	18.1 %	6.0	2.8 %	4.7 %	-1.9
Salt Lake City, UT	33.4 %	28.6 %	4.8	0.8 %	5.5 %	-4.7
Hartford, CT	35.5 %	7.6 %	27.9	7.1 %	3.9 %	3.2
Buffalo, NY	35.5 %	12.8 %	22.7	6.2 %	0.7 %	5.5

*Table ordered by market size

**Includes only New York City's five boroughs

About Zillow Group
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All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.

^¹ Annual rent growth nationally and for the 50 largest U.S. metropolitan areas (excluding the New York City metro area) is captured using the Zillow Observed Rent Index (ZORI) from 2019 to 2023 and 2022 to 2023. Annual rent growth for New York City is captured using StreetEasy's citywide median asking rent over the same time periods. Wage growth figures analyze the change in average hourly earnings from 2019 to 2023 and 2022 to 2023 using data from the Bureau of Labor Statistics for the U.S., the 50 largest U.S. metropolitan areas and New York City proper.

SOURCE Zillow