With the rent-to-income ratio in New York City set to reach an all-time high in November, and no shortage of tenants looking for a cheaper option, I set out to determine what it would take to stay in a two-bedroom apartment.
Here’s what I found out:1.
Rent and other costsThe average rent for a studio apartment in New Jersey is $1,085 a month.
If you were to take that average rent, you’d have to earn $13,865 per year to be able to afford the rent.
That’s $7,100 a month less than what the average rent in New Haven, Connecticut is for a two bedroom.2.
Rent to income ratioThe average monthly rent for someone with a bachelor’s degree is $2,000.
If that person had to earn at least $18,500 a year to afford a two room, it would be nearly $4,000 less than the average for a one bedroom in the city.3.
Annual rentThis is a basic way to figure out what rent a two person family needs to make ends meet.
Let’s say a two year-old, $500,000 income, living in a $1.2 million apartment in Manhattan, and a two month-old child, $600,000 a year.
That child will have to work 35 hours a week and eat out an average of 18 meals a day.
This means they’d have a $2.2 billion annual rent for two people, and the average income in New Hampshire is $30,000, which is roughly $12,000 per year.4.
Annual costsThere are a few things to consider here: a) How much of a difference does one person’s income make?
The typical family income in NYC is about $42,000 and New York state is $39,000; so the two-person family would need to make $30 million to cover the difference.
That means that a single parent would need a $7.5 million annual income to afford $3,000 in rent a month, while a single worker would need $8 million to afford that same rent.
b) How many people in the household need to live in a single room?
For example, a family of four in a city with a median household income of $53,000 needs to rent a room in a studio.
However, in a one-bedroom in the Bronx, the two rooms need to be rented together for $1 a month each.
This would make the rent $11,500 per month, and in a five-bedroom, $13-a-month apartment in a Brooklyn neighborhood, the rent would be $17,500.
That is, in the one-room in the Brooklyn neighborhood for the two adults, the average monthly rental is $5,500, which works out to a $15,000 annual rent.
Cuts to rent and other expenses to offset those two numbers are included in the final cost breakdown below.
In the New York metro area, the annual rent to income ratios are lower, so if a two and a half-person household were renting in Manhattan and earning $50,000 each, that would require an annual rent of $2:1, meaning they would need about $4.5k to live comfortably.
The second item above is important because it shows how much of an impact an income-to incomes ratio has on the cost of living.
A one-person, one-child household in New England would have a rent-cost per capita of $1 in a mid-size metro area.
If the one person in that household earned $50k, the cost per person would be around $12k.
If they earned $150k, that cost per household would be about $20k.
So the total rent cost would be slightly lower for that household.
That, in turn, makes a difference in how much a single person in New Orleans would have to pay in rent to afford what the typical two- or three-person rental would be in the New Orleans metro area (in the city with the lowest median income).
The same would hold true for the cost for renting out a single-bedroom unit.
For an apartment in the same metro area that is two- and three-bedroom with a four- or five-person income, the rental cost would range from $10,000 to $25,000 (with the lower-income households paying more than $15k per month).
For more information, see my previous blog post here.
I hope this helps you determine how much you can afford and how you can get by without rent and expenses.
If it does not, please let me know and I’ll update this post.
Thanks for reading.
If you’re looking for more affordable apartment rental options, check