The stereotypes and sitcom jokes are true: Renting in Manhattan is insanely expensive.
The average rent in Manhattan hit a record high of $3,438 per month in May, according to a new report from Citi Habitats, a residential brokerage firm. That's largely because there are too few apartments available to meet growing demand: The Manhattan vacancy rate was just 0.89 percent in May (h/t Crain's New York).
Manhattan rents have been breaking new records for the past three months, as rents spike across all apartment categories, according to Citi Habitats. The average rent is $85 higher, or 2.5 percent higher, than it was a year ago. Landlords aren't giving out as many rent concessions anymore either.
New York isn't the only place where rents are spiking though. The U.S. is increasingly becoming a renter nation. As banks have tightened their credit standards, buying a home is less feasible than it was during the housing boom. In addition, until housing prices bottom out, even buying a home isn't so attractive. As a result, more and more people are becoming renters.
As rents in Manhattan spike, some New Yorkers are even fleeing to outer boroughs such as Queens, according to Citi Habitats spokesman Daniel Charles. A glimpse of Manhattan's unaffordability: The average three-bedroom apartment in the West Village costs $6,600 per month. Try raising a family in Manhattan, we dare you.
New York City is especially unaffordable because of the concentration of high-income workers and city regulations. About 50 percent of all rentals in New York City have rent control or rent stabilization. This incentivizes New Yorkers to cling to their rent-controlled or rent-stabilized apartments, forcing newer renters to pay higher rates for fewer available apartments. Various city regulations also prevent developers from building more high-rise residential towers, according to Forbes.
In addition, New York City has a high concentration of finance workers, who are paid substantially more than the typical employee. The average annual salary in the finance sector in New York City was $361,330, more than 5 times higher than the average salary for the rest of the private sector in the city -- $66,120 -- according to a report from the New York State Comptroller's office cited by The New York Times.