Today's twenty-somethings take an idealistic, impractical approach to finding housing in the Big Apple
For the city that never sleeps, it is pretty expensive to find a place to sleep.
This is especially true for nearly all recent college graduates relocating to the Big Apple. New York may be the greatest city in the world (depending on which Uber driver you ask) but it is handcuffed to the nation’s highest cost of living.
Millennials don’t want to be in affordable housing; they want luxury housing at an affordable price and have been prioritizing it in that order. This discrepancy explains the lack of realistic options in Manhattan for the newest members of America’s workforce. Young adults, myself included, clearly place too much of a premium on chic apartments and hip locations. After sacrificing four years of sleep for partying and studying, we are looking for apartments to reflect our newfound professional and urban lifestyle while grossly overpaying to do so.
It is no secret that New York City housing is expensive, thanks in part to high salaries, cheap transportation and ample careers opportunities. Rents have skyrocketed in recent years, which is great news for developers and property owners, but terrible for everyone else. As of July, the average monthly rent for a one-bedroom apartment in the city was $2,852 while a two-bedroom set you back $3,653. These steep prices are even higher when you take the less favorable areas out of the equation.
Recent college grads in New York City are actually making less than they were five years ago after accounting for inflation, yet apartment prices continue to rise. Rent outgrowing income is unsustainable; the average Manhattan resident now puts roughly half of his post-tax income toward housing. One sliver of hope is that recent census data showed income slightly outpaced rent (2.4% to 2%) last year.
For those seeking manageable alternatives, the options are limited. The city recently experimented with micro-unit apartments in a development called Carmel Place in Kips Bay. To do so the city waived a clause in the housing code that requires new units be at least 400 square feet.
When Carmel Place opened earlier this year it was greeted with much enthusiasm and optimism. Initially thought to exemplify the future of Manhattan real estate, at least for young people, Carmel Place has received mixed reviews from several major publications. The largest knock is that with a starting asking price of $2,562 for active listings, the micro-units don’t exactly have a micro-price tag.
While the concept of micro-units provides promise, the potential for larger profit margins will always keep costs as high as demand allows. The only way to prevent supply and demand setting a market price for micro-units would be for the government to establish a rent maximum.
Clearly, demand in the city is driving these exorbitant rents and there is no realistic immediate solution. My advice to fellow Millennials: lower your expectations and look at finding roommates, subletting, or moving to more affordable areas (Queens, the Bronx, parts of Brooklyn, northern Manhattan). There is no shame in saving some money by “roughing it” for a year or two.
Richard Agran is a recent graduate of Loyola University Maryland's Sellinger School of Business. He aspires to become a real estate developer in New York City.
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