Thursday, April 17, 2014

Yes, rent is very high in New York. But it's a lot higher in Los Angeles,* and that's not counting the car.



More years ago than I care to admit, when I was a very young advertising copywriter in Los Angeles, I needed to borrow money to buy a used Volkswagen.
 
I had been taking the bus to work from the north end of Van Nuys, where rent was cheap, to Wilshire Boulevard, where the ad agency was cheap.                                                                                                             
It was sometimes said that this was a great agency if your parents could afford to send you there.  At the time it was considered the best in the world.  I wasn't about to seek a better salary elsewhere.

But after a year of spending three hours a day commuting, including half an hour walking to and from the bus stop on Victory Boulevard and twenty minutes waiting for a connecting bus at Hollywood and Highland, I was finally earning enough to buy a small, inexpensive car.  

The bank reluctantly gave me the loan.  They were reluctant because my rent was too high--23.5% of my salary.  

The rule then was that your rent should be no more than 20% of your salary.  They wanted me to live someplace even cheaper.

Today in Los Angeles, median rent is now a horror-inducing 47% of median income, or exactly double what the bank thought was too high for me years ago, according to a recent article in The New York Times (In Many Cities, Rent is Rising Out of Reach of Middle Class). 

And in Los Angeles, you also have to pay for a used Hyundai, a new Maserati, or something in between.  Then, after you pay for the car, you have to pay to park it, to insure it, to put gas in it, to change its oil, rotate its tires, and on and on.  Cars are expensive.

The magic proportion for a landlord is now 30% or less (re less: fat chance for most).  That’s what a landlord wants to see when you fill out an application to rent an apartment.

The Times, citing an analysis done for the paper by a real estate website, says there are 90--90!--U.S. cities where the median rent, not including utilities, is more than 30% of median income.  Los Angeles is at the top of the list.

Presumably, people moved in when their rent was no more than 30% of their incomes, thus satisfying the landlord, but then their rent went up and their incomes didn’t.

New York ranks tenth on the list, with median rent at 39.5% of median income.  

But our position is artificially high to my way of thinking, as New York is the ONLY city on the list where you don’t have to have the added expense of a car.  (Try living in LA without one, as I did for a year. Or in San Diego, or Flagstaff, or Hattiesburg, Mississippi.)

California is over-represented in the top twenty, with nine cities.  New York state has only two, us and Ithaca.

So yes, if you’re renting in New York, you definitely have a right to complain.  But you’d have a right to complain a lot louder if you lived in LA, or any of the other eight cities where rent takes more of your income than it does here.  Not to mention the car.

E-mail or call me any time if you have any questions about real estate, or just want to discuss. cstimpson@stribling.com, 917-991-9549 

*Several people have pointed out to me that this headline is not strictly accurate.  They're right. In absolute dollars, rent is probably higher in New York.  It's as a percentage of income that the rent is higher in LA.

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