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Rental costs in New York continue to rise, forcing many New Yorkers to spend more than 50% of their income on housing. Find out how to reduce rental costs.
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New York rents continue to break records — and not in a good way. According to a report by rental experts, Zumper, the median rent for a one-bedroom apartment in New York City has hit $3,900, while median two-bedroom rent is $4,240. Nationwide, Zumper’s June report showed that rental price increases are starting to slow, though they’re still at record highs in many places.
Why New York City rents are so high
New York City is expensive. It isn’t only rents and mortgages that keep pushing upward. According to the “NYC True Cost of Living” report released earlier this year, half the households in New York City struggle to make ends meet. “We find that 50% of working-age households do not have incomes that cover basic needs, such as housing, food, health care, and transportation,” it said.
The report also labeled half the households in New York City as “housing burdened” — meaning housing costs accounted for more than 30% of household income. And almost a third are “severely housing-cost burdened,” meaning their housing costs reflect more than 50% of the household income.
A large part of the reason for higher rents is that high demand has pushed the prices up. But that feels counterintuitive given the number of people who left New York during the pandemic and have not returned. One study by the Economic Innovation Group suggests that the increase in remote work plays a hefty role. It shows that remote workers are more likely to spend more on housing, particularly as people look for bigger homes with more amenities.
Another contributing factor? More people want to live alone. That goes for couples who split up during the pandemic, roommates deciding to go it alone, and younger people who have moved out of their parents’ homes. An article in Curbed blames the software algorithms real estate companies use to calculate rents. Whatever the reason, it leaves New Yorkers in a difficult position financially.
How to reduce your rental costs
Cutting housing costs can be a challenge. This is particularly true if you need to be within commuting distance of work. However, if rent swallows up a large chunk of every paycheck, it doesn’t leave you with much to cover the rest of your living expenses — let alone put cash in a savings account for emergencies or build a nest egg for your retirement.
Here are some ways to reduce your rental costs.
1. Share with a roommate
Sharing is the number one way to reduce your rental costs as you can cut both your rent and utility costs. Let’s say you find a two-bed apartment in New York for the median price of $4,240. Sharing would cut that to $2,120 each. If you’re able to find space for a third person, you could be paying $1,413 each.
Sure, living with another person brings its challenges. Before looking for a housemate, think about the things that matter to you when it comes to sharing space. Perhaps you’re extremely tidy, or don’t like noise after 9 p.m. Being clear on the type of person you might share with will make life easier down the line.
2. Be willing to compromise
Compromise can take many forms. From dodgy wiring to leaks, mold, and collapsing ceilings, I’m not advocating putting your health at risk to save a few dollars. A friend of mine who lived in New York City over 10 years ago still tells horror stories about her experience (the ceiling did collapse).
However, you might be able to get a better deal on, for example, a place with a slightly shabby interior. Or somewhere that has fewer windows, a small kitchen, or scuffed paint on the walls. In fact, if you’re handy with a paint brush, you might even offer to fix things up — and snag a discount.
3. Be creative with locations
Location matters when it comes to your home. Spending several hours commuting every day or living in a neighborhood where you’re scared to leave your place after dark is no fun. If you’re able to live outside New York City, there are a number of cities in New York with a lower cost of living.
If you have to be in the city, look for more affordable neighborhoods. If you’re unsure about security, visit and walk around. Talk to people who are already there to get a better sense of it.
4. Negotiate
In such a competitive rental market, the idea of negotiating might be nerve-wracking. However, if you’re able to offer more money upfront or agree to a longer lease, you might get a lower rent. It helps if you have good references from previous landlords or can compromise on other aspects. For example, if the apartment comes with a parking space you won’t use, this could help your case.
Reducing your rental costs can make a big difference to your financial well-being
Many financial advisors suggest spending no more than 30% of your gross income on housing. So if you bring home $4,000 a month, you’d have $1,200 to spend. If you can’t get your rental costs down, might you be able to raise your income? Perhaps you can take on extra hours at work or find a side hustle. There are no easy answers in this market, but every extra dollar can mean more money in the bank for other financial goals.
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