Apartment Affordability Crisis: Real or Imagined?
Affordability can be a subjective term. But in a market like New York City, where median rents in Manhattan are a staggering $4,128 per month, affordability for apartment homes probably applies to only a select few. Even those with six-figure incomes are having a hard time affording apartment homes in New York and are now allowed to participate in lottery systems for below-market rates.
But affordable-housing advocates are concerned that such programs take affordable housing opportunities away from those who really need them. And some industry professionals think affordability has been overhyped. Data from MPF Research show that, on average, households pay 21 percent of their income toward housing, rather than the 30 percent threshold commonly held as unaffordable. For those making $75,000 to $150,000, that number can drop to as low as 5.5 percent, according to Harvard University’s Joint Center for Housing Studies. Real estate investment trusts (REITs) also report minimal change to income-to-rent ratios, so wage growth may be keeping track with increases more than previously expected.
Although rents may be skyrocketing, especially along the West Coast, affordability — at least for certain income brackets — may not be as out of reach as some may think. Increased supply through 2017 should help minimize negative effects as well.