On one hand: it’s nice to own a home. It presumably gives you some equity. But in a city like New York, where affordable housing is in constant crisis and high demand drives prices ever higher, homeowners—not the rich variety who bought the top of the line, but the normal variety who scrimped and saved to get something affordable way out in the boroughs—are finding that, just like renters, a shocking percentage of them cannot afford to live where they’ve been living.
- “The majority of sales in New York City in 2014 were too expensive for the vast majority of New York City households. Households earning up to $114,000 (comprising 77% of New York City households) could only afford 42% of 2014 home sales in New York City. Households earning to $83,000 annually (comprising 66% of New York City households) could only afford 22% of 2014 sales in New York City.”
- “New York City had far lower rates of homeownership among households earning up to $55,000 than the U.S. in 2014. In 2014, just over half (58%) of households earning up to $55,000 in the U.S. owned their homes. Among these households in New York City, homeownership rates were far lower; only 25 percent of households earning up to $55,000 annually in New York City owned their homes in 2014.”
Yes, New York City is expensive. But the fact that New York City’s home ownership rate is less than half of the the American average goes to show that there is a fundamental disconnect between the real estate market and the city’s real economy. Almost half of NYC homeowners spend more of their income than the 30% threshold that is considered “affordable.” The numbers don’t lie.
If you believe that owning a home is something that should be done primarily by absentee foreign millionaires looking for a stable place to park their cash in case their home government collapses, then the NYC housing market is fine. If you think that owning a home is something that regular working people should be able to aspire to without it resulting in financial ruination, we have some work to do. “People don’t need to own homes in an expensive place like NYC,” you say? Fine. If fewer people own homes, then more people rent. That means higher demand in the rental market. And we currently have an affordable housing crisis for renters. Not much of a solution.