The average rent in New York City just climbed to $3,017, and New Yorkers are (rightfully) freaking out.
So why is rent in the big apple as high as the Empire State Building? Keep reading to learn why living in New York is so expensive.
There’s Only So Much Space For Living In New York
There is only so many square miles of land in Manhattan, and lost of people want to live in such a limited space. Because of this, the rent prices can skyrocket.
If there were more land and more open places to live in Manhattan, then the prices wouldn’t be that high. It’s basic supply and demand. To understand this more, check out this piece on BiggerEquity.
Which explains why more and more New Yorkers are moving to Brooklyn or New Jersey and commuting into the city for work.
The Zoning Rules Are Inhibiting The Supply
There could be more apartments if there were taller buildings closer together. While New York is dense compared to other cities, it could still be much denser.
Just look at the zoning of the popular neighborhood the East Village. Most of this neighborhood has R74 and R8B zones, which allow for a Floor-Area Ratio or FAR of 4 to 0. Which means four square feet of the building is allowed for every square foot of lot area.
So most of the housing stock in the area is a closely-packed building of only four or five stories, due to zoning. If zoning allowed higher buildings, then there would be more places to live in this popular neighborhood.
Rent control actually raises the rent if your apartment isn’t rent-controlled. The average rent for available apartments in New York City is over $3,000. But in 2011, New York City renters were paying a median rent of $1,125.
This is because there are a lot of cheap apartments in Manhattan. The only problem is New Yorkers can’t get into them because they are rent-controlled. Tenants that have great rent-controlled deals will literally cling to their apartments until they die.
High Property Taxes
Another reason rent is so high in Manhattan is because property taxes in New York are so high. Manhattan has the second-highest property tax amoung the largest cities in the country.
Detriot has the highest property tax, and this is because their property isn’t worth anything. This high property tax is why tenants have such high rents.
High Construction Costs
In 2003 it was found that residential construction is nineteen percent more expensive in Manhattan than Chicago. Higher construction costs mean that the rent of the newly constructed property will be higher.
There’s a lot of reasons why construction costs are so high in New York, One reason is wages for New Yorker construction workers is high. A lot of New York construction sites do not have a lot of spacious lots to store materials, which also adds to this cost.
Now that you understand why the rent in Manhattan is so high and living in New York is so expensive, find the place within your budget to rent or own today.
For more resources on properties to rent, or help finding your next home, contact us today!