(Bloomberg) -- The vacancy rate for New York City’s most-expensive rentals plunged to 3.4% last year, the lowest in almost three decades.
Availability of rental units costing more than $2,400 per month fell from about 13% in 2021, according to the latest New York City Housing and Vacancy Survey released Thursday, reflecting a broader housing shortage in the Big Apple not seen since the 1960’s.
The plunge in housing availability has been exacerbated by policies discouraging new construction and soaring interest rates that have pushed potential home-buyers into renting. The overall vacancy rate across the city’s five boroughs fell to 1.4% last year, the lowest since 1968, with the cheapest housing — apartments that rent below $1,100 — the hardest to come by at a vacancy rate of just 0.4%. New York considers a vacancy rate below 5% to be a housing emergency.
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Construction of new rental apartments plummeted since the New York legislature let a tax incentive for constructing affordable housing, known as 421-a, expire in 2022 and have not replaced it. In January, Governor Kathy Hochul presented a new proposal to incentivize construction of thousands of new affordable units, but it will need collaboration among tenant groups, real estate developers and organized labor.
“The data is clear: the demand to live in our city is far outpacing our ability to build housing,” New York City Mayor Eric Adams wrote in a statement about the survey. “New Yorkers need our help, and they need it now.”
The four rent categories used by the city survey roughly reflect the city’s quartiles of occupied rental units.
The biggest drop in vacancies last year was among the city’s priciest rentals, according to the survey, though the availability of those units was greater than the cheaper ones. More than a quarter of the city’s renter-occupied units cost more than $2,400 a month, and almost half of the units in Manhattan rent in that category.
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In January, the average apartment in Manhattan rented for $5,044 while the median rent was $4,150, according to a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. A two-bedroom apartment, for example, rented there for an average $6,051.
The availability of the city’s most-expensive units — which have an asking rent above a threshold that’s grown from $1,250 in 1993 to $2,400 in 2023 — hit a previous low in 1996, according to a review of the city’s previous surveys.
To be sure, the inventory for Manhattan’s luxury listings has grown each of the last five years, according to the Miller Samuel report. The median rent for those apartments came down 10% over the past year to $9,900 in January. That compares to $6,135 for luxury rentals in Northwest Queens.
The mayor has proposed lifting zoning restrictions to allow 100,000 new homes over 15 years, although some housing advocates have raised concern that it won’t be enough to lower housing costs and could further gentrification. Part of his plan would convert vacant offices into housing, but state approval will be necessary to create a substantial amount of new homes through office-to-residential conversions.
“This housing ‘emergency’ has been going on for nearly 60 years with no relief,” Jay Martin, the executive director for the Community Housing Improvement Program, said in a statement. “The real emergency is that lawmakers have failed time and time again to increase the housing supply, which would help renters and end this manufactured scarcity.”
--With assistance from Laura Nahmias.
©2024 Bloomberg L.P.