The portion of rentals that were vacant and available dropped to a startling 1.4 percent in 2023, according to city data. It was the lowest vacancy rate since 1968 and shows just how drastically home construction lags behind the demand from people who want to live in the city.
Housing experts often consider a “healthy” vacancy rate to be somewhere around 5 to 8 percent. A higher vacancy rate typically means it is easier for people to find apartments when they want to move. It also means that property owners are more likely to have to compete for renters, conditions that would moderate rent increases.
The data suggests New York City’s housing crisis is only getting worse, especially during the economic rebound from the coronavirus pandemic. The 1.4 percent rate was 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 scale of the problem is putting more pressure on officials to do something about it. High housing costs continue to force families and working-class people out of the city, threatening the economy. An influx of migrants has overwhelmed the city’s homeless shelter system, and homelessness among non-migrants is also on the rise.
Housing experts estimate that the number of homes the city needs to build is in the hundreds of thousands. So far, however, the city and state have not made moves that could accelerate enough housing development to solve the crisis.
State lawmakers failed last year to pass several major housing proposals, including a push by Gov. Kathy Hochul to increase development in the suburbs. This year, less ambitious measures appear to be stuck in limbo, as the real estate industry, labor unions and tenant advocates remain at an impasse over tax incentives for new construction and tenant protections.
Rents plummeted at the height of the pandemic as people moved away and the vacancy rate increased. But as people have moved back to the city, rents have reached some of the highest levels ever over the past two years. The median rent on new Manhattan leases in December 2023, for example, was $4,050, according to the brokerage Douglas Elliman.
The vacancy rate is calculated by first totaling the number of homes “available to rent” in the city. This does not include vacant apartments that are “dilapidated” or empty because the owner uses the unit as a pied-à-terre or a short-term rental, like an Airbnb.
Then, that number — about 33,210 units in 2023 — is divided by the roughly 2.3 million total rental homes in the city that are either available or occupied by tenants.
The vacancy rate dropped to 1.4 percent even as the city added some 60,000 homes over the past two years, according to the 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 hits New York’s lowest-income people the hardest. The vacancy rate of apartments that rent below $1,650 per month — around the citywide median — was less than 1 percent. The typical New York City household, which has an income of about $70,000, spent more than half of that income on rent, the survey showed.
Somewhat surprisingly, however, the crunch is now hitting higher-rent apartments, too. Fewer than 4 percent of apartments renting for more than $2,400 were available in 2023, according to the survey, less than half of similar estimates in 2021 and 2017.
