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While the rest of the United States saw a brief reprieve last year from the greatly mismatched pace of wage growth and rent growth that has defined the rental market since 2019, that was not the case in New York City.
The nation’s biggest city saw the biggest gap emerge between the rate of wage growth and that of rent growth, with rent prices growing more than seven times faster than wages throughout 2023, according to a new report from Zillow.
Rent increased by 8.6 percent percent throughout the city during 2023, according to Zillow, while wages only increased by 1.2 percent. Nationally, rent growth slowed to 3.4 percent during 2023, while wages grew by 4.3 percent.
Most other major cities in the United States followed the national trend, with Los Angeles rents climbing by 2 percent while wages grew by 2.7 percent, and Miami seeing wages grow by 3.6 percent while rents grew by 2.4 percent.
Cooler rent growth throughout 2023 has been attributed by some economists to a recent boom in multifamily housing construction that resulted in an influx of new rental units becoming available during the year — a trend that did not hit New York City, however.
“It is encouraging to see much of the country making even modest progress in the rental affordability crisis. Unfortunately, New York City is heading in the opposite direction,” said StreetEasy Senior Economist Kenny Lee. “Despite a strong job market in the city, and in some ways because of it, the gap between what a typical renter can afford and the price of rentals on the market is growing. New multifamily buildings coming online has eased competitive pressure in many markets, but in New York City, construction just simply can’t keep up with demand.”
Three markets — Austin, Texas; Portland, Oregon; and San Francisco actually saw rents decrease last year, giving wages a chance to catch up. Florida, meanwhile, is home to three of the five cities where rent growth has most outpaced wage growth, according to Zillow.
