Personal Finance

Pricey New York City is causing millennials to live above their means

Anthony Noto
A customer looks at listings on display outside a Brown Harris Stevens offices in New York.
Brendan McDermid | Reuters

Ask around and you'll discover that a sizeable chunk of New York City's millennial population flocked here from other states, hoping to take advantage of the career opportunities that the sprawling metro area has to offer.

They're also willing to spend more than they should to stay.

According to a new report from StreetEast, millennials are more likely than any other generation to exceed their budget when it comes to N.Y.C. housing.

The market is "expensive, fast-moving and highly competitive," explains StreetEasy senior economist Grant Long. "But despite facing rising housing costs and budgeting constraints, aspirations of owning a home remain high in the city, particularly among millennials."

StreetEasy surveyed 1,000 renters and homeowners living across all five boroughs — Manhattan, Bronx, Brooklyn, Queens and Staten Island. The results illustrate how New Yorkers are struggling to find affordable homes due to the rapid rise in prices and rents over the last decade.

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The findings also show how different generations approach the situation.

For example, of the millennial respondents, 45 percent say they chose a more expensive home than they'd planned, compared to 30 percent of "Generation Xers" — those born from the early 1960s to late 1970s — and 19 percent of baby boomers.

Despite the lofty prices, more than one third (34 percent) of the millennial respondents are aiming to buy a home in the next year.

The report also found that locals, in general, are willing to overspend so long as long as the neighborhood meets specific requirements. Renters and homeowners alike rank safety (90 percent) and access to public transportation (87 percent) above all other factors when it comes to choosing a home.

Here's a further breakdown of what the survey found:

  • New Yorkers pay 1.3 times more for housing than average Americans
  • 46 percent say N.Y.C. is unaffordable
  • Nearly one third (31 percent) exceeded their initial budget on their current home
  • 37 percent of homeowners went over their initial home budget; 27 percent of renters went above initial budget
  • More than 1 in 3 New Yorkers plan to move in the next year
  • More than one third (39 percent) cite the high cost of living as a top reason to leave
  • The desire for a bigger home and to buy a home also rank high — 32 percent and 29 percent, respectively
  • Luxury amenities (i.e. doormen and gyms) rank the lowest among all requirements in choosing a home
  • New Yorkers also tend to want to stay in their borough (71 percent); but fewer plan to stay in their neighborhood (36 percent)

Not surprisingly, renters are significantly more likely to rate the cost of the city negatively. More than half of the renters who responded, 52 percent, consider New York City unaffordable, compared to 39 percent of homeowners who can buy and sell more freely.

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