Richard Florida is a co-founder and editor at large of CityLab and a senior editor at The Atlantic. He is a university professor in the University of Toronto’s School of Cities and Rotman School of Management, and a distinguished fellow at New York University’s Schack Institute of Real Estate and visiting fellow at Florida International University.
We’re looking at you, New York, San Francisco, and L.A.
Forget groceries, utilities, and dining out—every American knows that the single largest drain on a budget is housing. As homeownership dips to its lowest level in decades, rent has become increasingly unaffordable in America’s superstar cities and tech hubs. In San Francisco and L.A., typical renters can expect to pay about half of their total income to housing and more than 40 percent in New York City, according to a recent Zillow analysis. Across the nation as a whole, rent eats up an average of 30 percent of income to housing, the highest figure since Zillow began tracking this data.
And these are city-wide averages: The share of household income put toward rent goes even higher in certain neighborhoods. But just how high can the rent go in America’s most expensive neighborhoods?
To get us started, take a look at the table below, which lists the 25 most expensive U.S. neighborhoods to rent in based on Zillow’s Rent Index (ZRI). This index, which covers June 2015, measures monthly median rent for all homes in a neighborhood (based on attributes such as physical facts about the home, prior sale transactions, tax assessment information and geographic location, and estimated market value).
25 U.S. Neighborhoods with the Highest Monthly Median Rent
|1||Bel Air||Los Angeles||$10,629|
|2||Pacific Palisades||Los Angeles||$7,987|
|3||Beverly Glen||Los Angeles||$7,667|
|5||Poet's Quarter||Los Angeles||$7,075|
|6||Jordan Park-Laurel Heights||San Francisco||$7,000|
|7||La Gorce||Miami-Fort Lauderdale||$6,932|
|9||Cow Hollow||San Francisco||$6,471|
|10||Pacific Heights||San Francisco||$6,380|
|12||Financial District||San Francisco||$6,373|
|15||Forest Hill||San Francisco||$5,891|
|17||Kings Point||New York||$5,763|
|19||Eureka Valley-Dolores Heights-Castro||San Francisco||$5,665|
|21||Noe Valley||San Francisco||$5,560|
|22||Hollywood Hills||Los Angeles||$5,557|
|23||Baywood Knolls||San Francisco||$5,531|
|24||Cheviot Hills||Los Angeles||$5,511|
|25||Russian Hill||San Francisco||$5,486|
The top five spots are all taken by upscale neighborhoods in Los Angeles. Topping this list is Bel Air, where the median rent is a whopping $10,269, followed by Pacific Palisades at $7,987, Beverly Glen at $7,667, Brentwood at $7,403, and Poets Quarter at $7,075. California’s two largest cities dominate the list: L.A. has 7 neighborhoods among the top 25 and San Francisco has 12, including Cow Hollow ($6,471), Pacific Heights ($6,380), Noe Valley ($5,560), and Russian Hill ($5,486). New York City and Washington, D.C., have two each, and Miami and Stamford, Connecticut each have one.
Of course, the neighborhoods at the very top of this list are known for their big homes and mansions. Bigger houses of course carry higher price tags. So, what happens when we control for the size of places being rented?
The table below is based on Zillow’s estimates for the top 25 neighborhoods with the highest median rent per square foot. We calculated the rent for a 1,000 square foot apartment.
25 U.S. Neighborhoods with the Highest Rent Per Square Foot
|Rank||Region Name||Metro||Rent for a 1,000 Square Foot Apt.|
|1||West Village||New York||$6,030|
|2||Flatiron District||New York||$5,760|
|6||Greenwich Village||New York||$5,480|
|7||Little Italy||New York||$5,430|
|8||Columbus Circle||New York||$5,390|
|10||Turtle Bay||New York||$5,340|
|11||Battery Park||New York||$5,230|
|12||Murray Hill||New York||$5,170|
|13||Sutton Place||New York||$5,140|
|14||Lower East Side||New York||$5,110|
|15||East Village||New York||$5,110|
|16||Financial District||New York||$5,080|
|18||Upper West Side||New York||$5,050|
|19||South Beach||San Francisco||$4,960|
|20||Yerba Buena||San Francisco||$4,910|
|21||Upper East Side||New York||$4,900|
|22||Tudor City||New York||$4,780|
|23||North Waterfront||San Francisco||$4,690|
|24||Van Ness-Civic Center||San Francisco||$4,690|
|25||North Beach||San Francisco||$4,560|
This list is dominated by neighborhoods in two cities: New York and San Francisco. New York City neighborhoods take the top eight spots and total 19 of the top 25. The West Village tops the list, where an average 1,000 square foot apartment is priced at $6,030 per month. That’s more than the monthly take home salary of someone earning $100,000 per year. And according to Zillow’s own rent affordability calculator, it would take an after tax monthly income of around $15,000—or roughly $250,000 before taxes—with no other major debts or expenses to afford to live there. Next in line is the Flatiron District ($5,760), followed by Chelsea ($5,700), and Midtown ($5,640). San Francisco neighborhoods like Downtown ($5,350), Yerba Buena ($4,910) and North Beach ($4,560) take the remaining 6 of the top 25. It would take an after tax monthly income of more than $11,000—around $200,000 a year before taxes—and no other expenses to afford to live in one of these neighborhoods.
A similar pattern can be seen in the table below, based on data from Zumper for July of 2015, which lists the 25 most expensive places to rent a one bedroom apartment.
25 U.S. Neighborhoods with the Highest Median One Bedroom Rent
|Rank||Region Name||City||Rent for a 1,000 Square Foot Apt.|
|2||Flatiron District||New York||$4,300|
|3||Margate City||Margate City, NJ||$4,250|
|6||Pacific Heights||San Francisco||$4,000|
|7||Gramercy Park||New York||$3,990|
|9||Battery Park City||New York*||$3,900|
|10||Vinegar Hill||New York||$3,880|
|13||West Village||New York||$3,800|
|14||Mission Bay||San Francisco||$3,780|
|16||South Beach||San Francisco||$3,760|
|18||Garment District||New York||$3,730|
|19||Russian Hill||San Francisco||$3,700|
|21||Financial District||New York||$3,650|
|22||Diamond Head-Kapahulu||Urban Honolulu, HI||$3,610|
|23||Greenwich Village||New York||$3,600|
|25||South Beach||Fort Piece, FL||$3,580|
Again, New York and San Francisco neighborhoods dominate the top spots. Now, NYC’s NoMad tops the list at number one ($4,630 per month), followed by the Flatiron District ($4,300), Margate City, NJ ($4,250), Chelsea ($4,120), and Tribeca ($4,100). Pacific Heights in San Francisco is not far behind, with a one-bedroom apartment priced at $4,000. All in all, New York City racks up 15 of the top 25 most expensive places to rent, and San Francisco takes 7.
While rents are most expensive in L.A.’s most exclusive neighborhoods, on a pound-for-pound basis, New York City and San Francisco are far and away the most expensive places to rent in America. Even people with six-figure incomes cannot afford the median rent for a one-bedroom apartment in these cities’ most expensive neighborhoods. No wonder housing affordability has become a leading, if not the leading, political issue in San Francisco and New York. What remains to be seen is whether such incredibly high rents will begin to stifle and suffocate the very diversity and creative energy that have long powered these neighborhoods and cities.
*CORRECTION: This article originally located Battery Park City in San Francisco. It is, of course, located in New York.