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Understanding and Confronting Housing Affordability Issues in New York

Dec 20, 2023

Update January 17, 2024

New York City is facing an affordable housing crisis as nearly half of all of the city’s working-age households can’t afford housing and essential goods. In this article, we: 

  • Define affordability
  • Describe New York State and City’s housing supply and cost burdens
  • Explain recent plans and laws to combat the housing crisis

Defining Housing Affordability

According to the U.S. Department of Housing and Urban Development (HUD), “Housing is considered ‘affordable’ when rent or mortgage, plus utilities, is no more than 30% of a household’s gross income.” Households paying more than 30% for housing needs are considered cost burdened, and households paying more than 50% for housing needs are considered severely cost burdened. Affordable housing is based on a household’s percentage of area median income (AMI), which is set by the federal government. 

However, AMI is often viewed as a distorted metric because it is based on local median income. AMI increases when lower income residents can’t afford their housing and vacate the area. As such, the amounts of “affordable” housing statistically increases. 

In reality, affordable housing is rapidly decreasing; and constructing affordable housing in New York City is problematic due to zoning restrictions, increases in interest rates and construction costs, and minimal incentives offered to developers. 

Housing Supply and Cost Burdens 

The demand for housing is far outpacing the supply, which is driving up rental prices. Over the past decade, the city has grown by almost 800,000 people, but only added 200,000 homes. At the same time, New York State has created 1.2 million jobs, but only 400,000 new homes, substantially impacting the state’s affordable housing. 

In 2021, 52% of New York State and 55% of New York City renters were cost burdened. Rental rates have continued to rise as the supply of low-cost rental continues to decrease. Since 2015, rents in New York State outside of the city have risen 40-60%. Although rental rate growth has decelerated during 2023, the national median rent is still 23% higher than it was three years ago. 

New York State has a shortage of 655,940 affordable rentals available for extremely low-income rentals, and 970,882 renter households are currently classified as having extremely low income. During the COVID-19 pandemic, a Tenant Rent Relief program was initiated throughout New York State, resulting in the lowest evictions in record history during 2020 and 2021. 

However, since those programs ended, New York City and the surrounding Metro area experienced rapid rent increases. High rents are exacerbating low-income renters’ financial insecurity, resulting in increased eviction filings and homelessness. 

The cost of living and housing market in New York varies. According to Council for Community and Economic Research, as of September 2023: 

For example, the average Manhattan 1-bedroom monthly rent (with and without a doorman) has had a significant decrease in affordability since 2020:

Renting in Manhattan in Sept 2020 vs. Sept 2023

Per MNS' Manhattan Rental Market Reports

Note: Excludes renters’ insurance and utilities.

Combating New York’s Affordable Housing Crisis

In March 2023, New York State’s Governor, Kathy Hochul, proposed the “New York Housing Compact” to address the growing demand for affordable housing in the state. The plan aims to foster the development of affordable housing through incentives for new construction, streamlined rezoning processes, property tax exemptions, and a focus on “Transit-Oriented Development.” Despite its ambition to build  800,000 new homes over the next decade, the proposal has fallen flat due to political disputes over budget constraints and controversial growth targets within New York City’s suburbs.

New York City’s housing experts have called for the construction of at least 500,000 new housing units over the next decade (50,000 annually). New York City is currently experiencing large population growth, however due to zoning laws, lengthy approval processes, and the expiration of the 421-a tax incentive program, the city is experiencing an alarmingly low number of residential permits being issued.

In response to this crisis, New York City Mayor Eric Adams launched the “Get Stuff Built” program in December 2022, aiming to build a “moonshot” goal of 500,000 homes over the next decade. This initiative emphasizes faster construction, widespread development across the five boroughs, and collaboration between the state and city council.  This program includes the Building and Land Use Approval Streamline Taskforce (BLAST), which issued 111 recommendations to expedite projects and reduce costs. The plan anticipates a 50% reduction in delays, with half of the recommendations implemented by 2023 and the rest by 2024-2025.  

The program also introduced the “City of Yes for Housing Opportunity” in August 2023. This initiative, under the Universal Affordability Preference, allows buildings to add 20% more housing if designed specifically for affordability. The goal is to create 100,000 new homes in 15 years by lifting zoning restrictions. The formal public review process is set to begin in Spring 2024.

In November 2023, the New York City Council passed the “Fair Housing Framework” setting neighborhood goals for affordable, senior, and supportive housing. This local law requires 5-year housing production targets for each community district, emphasizing the preservation of existing affordable housing, preventing displacement, and restricting new developments in neighborhoods already burdened with recent housing growth. The aim is to enhance housing equity and accessibility across the city. 

On December 18, 2023, Governor Kathy Hochul announced funding of more than $430M in bonds and subsidies to help create more than 1,500 affordable, supportive, and sustainable homes throughout New York State (within New York City, the Hudson Valley, the Southern Tier, and Western New York). As part of the Executive Action to promote housing growth, Hochul is mandating state entities reassess land within their ownership and control to determine whether it could be used for housing developments. Housing development projects will be funded by $131 million in tax-exempt housing bonds and $302 million in subsidies. 

Over half of the funding is designated specifically for projects within New York City:

  • $47 million for the reuse of the JFK Hilton Hotel to create over 300 homes in Queens
  • $128 million for construction at Utica Crescent in Brooklyn to build over 300 homes
  • $57 million for the construction of over 100 homes at Marcus Garvey Extension in Brooklyn
  • $51 million for the preservation of almost 140 homes at 753 Classon Avenue in Brooklyn

Governor Hochul’s commitment to addressing New York’s housing crisis and secured historic investments as part of the 2024 Budget includes: 

  • $391 million in rental assistance to expand New York’s Emergency Rental Assistance Program
  • $50 million for tenant legal services
  • Funding for a new Tenant Protection Unit office in upstate New York
  • $50 million for a Homeowner Stabilization Fund to finance home repairs in 10 low-income and distressed
  • communities
  • $40 million for the Homeowner Protection Program to fund nonprofit housing counseling and legal services organizations to help homeowners in default and foreclosure

Through this effort, Governor Hochul also signed legislation to build and preserve affordable housing in New York City by authorizing New York City to adopt a new affordable housing rehabilitation program to replace the former J-51 program. This will give New York City more flexibility to provide loans and grants for affordable housing and increases the New York City Housing Development Corporation’s bonding capacity.

On January 9, 2024, Governor Hochul also unveiled the next phase of her long-term housing strategy. This includes legislation to incentivize the construction of new housing; encourage office conversion projects to include affordable housing; allows the New York City to exceed the floor area ratio cap where appropriate; and legalize existing basement and cellar apartments. Governor Hochul also announced a plan to build up to 15,000 new units of housing on State-owned land, strengthen the Pro-Housing Communities program across the state, and combat discrimination against low-income New Yorkers and affordable housing providers.


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Amy Menist

Amy Menist is an Audit Senior in the firms Real Estate Services Group and the Construction Services Group with over 10 years of accounting experience serving both public and private companies.

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