Occupancy Rate In New York's Luxury Rental Sector At A 30-Year High

It's no secret that New York City is facing a two-headed monster of a housing crisis, where a lack of availability and a lack of affordability are combining to make life miserable for renters. However, recent results from the 2023 New York City Housing and Vacancy Survey reveal that the city's apartment availability crisis is so pronounced that even the most expensive luxury units are 97% occupied. That's the highest occupancy rate for nearly 30 years.

The survey results, published by Bloomberg News, indicate a housing market that is struggling with a lack of availability in all sectors, which is bad news for anyone seeking to rent an apartment in New York. Only 1.4% of New York City's apartments were available in 2023, the lowest occupancy rate since 1968. To put the severity of the shortage in perspective, New York considers availability below 5% a "housing emergency."

An Availability Crisis In Every Sector

Judging from New York's 5% threshold, every apartment sector in the city is experiencing a housing emergency. The city classifies rentals over $2,400 per month as "expensive," and this sector has typically had a higher vacancy rate than more affordable rentals because of the simple fact that most people don't earn enough money to afford them. Despite that, the survey shows this sector had a 13% drop in availability from the previous year.

The housing shortage is perhaps most severe in the most "affordable" sector, which New York classifies as apartments costing less than $1,100 per month. According to the survey, this sector is 99.6% occupied, meaning only 0.04% of the most affordable apartments in New York City are available. Long story short, no matter what sector of the apartment market you're looking in, it's a landlord's market.

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A Lack Of Availability Translates To Higher Prices

Supply and demand are the controlling factors driving the price of any consumer product, and apartments are no different. When there is a lack of availability, the price of what inventory there is on the market invariably goes up. One irony here is that New York City has rent control, which keeps rents down in older apartment buildings.

However, rent control has limited power to regulate the rental market. That's especially true when new construction isn't keeping pace with demand, which is at the root of the housing crisis in New York City and many other markets that are suffering from the same malady. 

What Needs To Be Done Is Clear, But The Question Of How To Do It Remains Unanswered

In a statement about the housing survey results, New York Mayor Eric Adams said, "The data is clear. The demand to live in our city is far outpacing our ability to build housing. New Yorkers need our help, and they need it now." 

While most people would agree with the mayor's assessment, the devil is always in the details, and building new apartments is expensive in the best of times, when interest rates are low.

But interest rates are not low, and acquiring the large tracts of land necessary to make major dents in the city's housing crisis is expensive. Building on that land is even more expensive. By the time the acquisition, construction and financing costs are added up, renting the units for less than $1,100 or even $2,000 is not a money-maker for developers.

That's probably the last thing renters in New York City want to hear. The fact that even New York City's "expensive" apartment inventory is not sufficient to meet demand, points to a housing availability crisis that's trending in the wrong direction.

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