A widely cited study by Zillow reports that US renters paid $441 billion in rent in 2014, up from $420 billion in 2013, and that renters in the NY/NJ market collectively accounted for about $50 billion of that total. The explanation is simply that demand has outpaced supply so rents have increased faster than wages. The analysis also predicts that as new rental buildings come online, there may be some relief for renters coming in 2016 or 2017.
What I find interesting which is not emphasized in the article is that while rent revenues in NY/NJ increased by 3.6% YoY, many other metropolitan areas showed larger increases. Zillow lists the 25 largest metro areas, and NYC was third from the bottom in % increase! San Fran jumped 13.5%, Denver 10.8%, and Pittsburgh 10.6%. In all of these other markets, this could be a reflection of new rental units being added to the market, and net gains in population, but some of this must be from rent increases. And its not like NYC isn’t adding rental units (although last I checked the population gains have been modest).
I also see a lot of the new NYC rental units targeted to higher income renters, so my prediction is that low income renters will continue to feel squeezed as higher income renters may enjoy some purchasing power as new buildings come to market.