New York City's housing crisis is the worst in more than fifty years

New York City's housing crisis is the worst in more than fifty years.

The share of rental properties that were vacant and available fell to a surprising 1.4 percent in 2023, according to city data released Thursday. It was the lowest vacancy rate since 1968 and shows how drastically housing construction is lagging behind the demand of people who want to live in the city.

Housing experts often assume a “healthy” vacancy rate of somewhere around 5 to 8 percent. A higher vacancy rate usually means it's easier for people to find an apartment when they want to move. It also means that property owners will have to compete for tenants more often, conditions that would moderate rent increases.

The data shows that New York City's housing crisis is only getting worse. The rate of 1.4 percent is down from 4.5 percent in 2021, the last time the survey was conducted. New York officials consider a vacancy rate of less than 5 percent a “housing emergency.”

“The data is clear: the demand to live in our city far exceeds our ability to build housing,” Mayor Eric Adams said Thursday in a statement announcing the numbers. “New Yorkers need our help, and they need it now.”

The scale of the problem puts more pressure on officials to do something about it. High housing costs continue to push families and workers out of the city, threatening the economy. An influx of migrants has overwhelmed the city's homeless shelter system, and homelessness among nonmigrants is also on the rise.

Housing experts estimate that the number of homes the city needs to build is in the hundreds of thousands. But New York City spent fewer building permits per inhabitant then Boston, San Francisco and Austin, Texas, for most of the past decade, according to the Citizens Budget Commission, a nonprofit watchdog organization.

So far, however, the city and state have not taken steps that could accelerate housing construction enough to resolve the crisis.

State lawmakers failed to pass several major housing proposals last year, including an effort by Gov. Kathy Hochul to increase development in the suburbs. Less ambitious measures appear to be in limbo this year, as the real estate industry, unions and tenant advocates remain at an impasse over tax incentives for new construction and tenant protections.

Mr. Adams has proposed local solutions, such as revising the city's zoning code. He estimates that the changes could make room for as many as 100,000 additional homes in the coming years. They would need to be approved by the City Council, and a vote could take place as early as the fall.

But city officials acknowledge that these changes would be modest and would not have much effect without state action.

The data released Thursday was collected in the first half of 2023 as part of a survey conducted every three years by the U.S. Census Bureau. The first survey took place in 1965.

In many ways, the results confirm the experience of many New Yorkers.

Rents plummeted at the height of the coronavirus pandemic as people moved and vacancy rates rose. But as people have moved back to the city, rents have reached one of their highest levels ever in the past two years. For example, the average rent for new leases in Manhattan in December 2023 was $4,050, according to real estate agent Douglas Elliman.

The vacancy rate is calculated by first adding the number of homes “available for rent” in the city. Vacant apartments that are “dilapidated” or vacant because the owner uses the unit as a pied-à-terre or short-term rental, such as an Airbnb, are not included.

Then that number is divided by the approximately 2.3 million total rental units in the city that are available or occupied by renters.

The vacancy rate fell to 1.4 percent, while the city has added about 60,000 homes in the past two years, according to city data. In the last survey before the pandemic, in 2017, the vacancy rate was 3.63 percent.

As in previous years, the data also shows how the housing crisis is hitting New York's lowest-income people the hardest. The vacancy rate for apartments renting less than $1,650 per month – around the citywide median – was less than 1 percent.

Somewhat surprisingly, the crisis is now also affecting apartments with higher rents. According to the study, fewer than 4 percent of apartments with rents above $2,400 were available in 2023, less than half of comparable estimates in 2021 and 2017.