New York City has always had an expensive reputation, but people have flocked to the city for the opportunity it provides. A higher cost of living just comes with the territory.
Currently, though, the growing cost of living is outpacing income growth and New Yorkers are feeling the pinch more than ever. Renters in all five boroughs are expected to spend on average 65.2% of their annual income on rent in 2016, according to a recent report from StreetEasy. This is up just shy of 6% from 59.7% in 2015.
Leading in rental burden is Brooklyn, where renters can expect to pay 65.4% of their income to their landlord. Meanwhile, Queens renters can anticipate the highest jump in rent, from 43.5% in 2015 to 51.6% in 2016.
In the Bronx, tenants can expect to pay 54.1% of their income in rent while in Manhattan, renters are only expected to spend 49.1% of their income on rent (Manhattan is forecasted to have a 1% income growth in 2016). Staten Island remains the most affordable borough, where the average renter is only shelling out 27.9% of their income for an apartment.
With a vacancy rate of a mere 3.5%, rental housing supply is extremely low in New York City, driving rents upward as tenants compete for rental space. Pair this with sluggish income growth, and you have a recipe for an increasingly disproportional rent.
Though it may be tougher for New Yorkers, keeping your housing cost to less than 25% of your income is ideal for creating an optimal budget. Thoughtful planning allows you to get control your finances so you not only have money to pay rent, but grow your savings, enjoy disposable income and pay other bills. And thoughtful budgeting doesn’t have to be painful.
Additionally, keeping an eye on your credit report can help ensure you get the best deals. For example, if you have errors and inaccuracies on your credit report, you may unfairly miss out on your dream apartment, since landlords typically check a version of your credit report when you apply for a lease. (You can keep track of your credit standing by checking your two free credit scores, updated every month, on Credit.com.)
Not every city is as expensive as the Big Apple. If you’re thinking about relocating, you can check out a list of the most affordable places to live in the U.S. on Credit.com.
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