NY renters face persistent high costs despite construction boom

Despite a surge in apartment construction aimed at alleviating the rental housing shortage, New Yorkers shouldn’t expect significant drops in rent prices in 2024. The aftermath of the pandemic, coupled with high interest rates on mortgages and a longstanding deficiency in rental housing, had previously driven rental prices to unprecedented heights. As a result, rent prices across the state are nearly 30% higher than pre-pandemic levels, posing a challenge to affordability for many residents.

Efforts to address the shortage have led to an increase in rental property construction, with building permits hitting a peak not seen since 2006. However, delays due to supply chain issues and labor shortages have prolonged project completions, extending the period of tight housing supply. While the completion of these projects may slow price growth, it is unlikely to lead to significant price reductions, especially in the single-family rental market, which hasn’t seen as much expansion.

The shortage of affordable housing remains a critical issue, with the Joint Center for Housing Studies of Harvard University highlighting that half of all renters spend 30% or more of their income on rent, defining them as “moderately cost-burdened.” The need for more rental housing is clear, as the gap between housing availability and the formation of new households continues to widen, exacerbating the affordability crisis for renters across New York.