When thinking of cities likely to have the least affordable rental housing, New York City is a good bet. It only makes sense that the financial capital of the United States would be an expensive place to live. So when the New York Times recently published a list of the top 20 cities where rents are highest relative to median gross income, it was a bit of a surprise to find Ithaca ranked 11th, just one spot below the Big Apple. 

The list, derived from an analysis conducted by the real estate website Zillow, found 90 cities where the median rent—not including utilities—was more than 30 percent of the median gross income. Conventional wisdom suggests an individual’s rent should be somewhere around 30 percent of his or her income. Zillow found Ithacans, on average, spend 38.6 percent. 

According to the U.S. Department of Housing & Urban Development (HUD), the average two-bedroom apartment in Ithaca—including utilities—costs $1,130 per month. To afford such an apartment without spending more than the traditional 30 percent of one’s income on rent, the household would need to earn $49,000 a year. The median household income in the City of Ithaca is $29,230 and two-thirds of the city’s households earn less than $50,000 a year, according to the 2008-2012 estimate from the American Community Survey (of the U.S. Census Bureau).

“The cost of housing is increasing at a faster rate than the increase in median household income,” said Nels Bohn, Director of Community Development, Ithaca Urban Renewal Agency (IURA). “Between 2013 and 2014 the cost of rental housing in Ithaca increased 13 percent,” he said, “yet household incomes are largely stagnant. We have a growing housing affordability problem in Ithaca.”

Why is rent so expensive in Ithaca?

Several cities found on the New York Times' least affordable rents list were to be expected. Los Angeles (topping the list at 47 percent), Miami (43.2 percent), San Diego (41.4 percent) and San Francisco (40.7 percent) are sought after destinations for employment. It’s easy to fathom why living in those cities year round would be costly. 

It is less apparent why the rental housing market in Ithaca is so competitive. Even when compared to other college towns in the Northeast, Ithaca is expensive. According to Apartmentratings.com, the average two-bedroom apartment—$1,165 in Ithaca—is cheaper in Burlington, VT ($999), Charlottesville, VA ($1,139), Amherst, MA ($1,074), and New Brunswick, NJ ($1,066). All of the aforementioned college towns have median household incomes greater than Ithaca, with Burlington ($33,070) the only one not north of $40,000.

The simplest explanation for why Ithaca’s rental housing market is skewed is supply and demand.

“The New York Times article that just came out that looked at all of these market areas had, to me, really surprising results,” said Paul Mazzarella, Executive Director of Ithaca Neighborhood Housing Services (INHS). “I knew Ithaca was expensive. I’ve also known New York City was very expensive. One of things that makes rentals expensive in Ithaca is that the supply of rental units is really limited.”

Thanks to a constant stream of renters supplied by Ithaca College and Cornell University students, landlords in Ithaca find themselves with very few vacancies. According to Bohn of IURA, the current rental market in Ithaca has a vacancy rate of less than 1 percent. A desirable vacancy rate in a real estate market is typically 5 percent. In addition to increasing rent, a housing market that prioritizes a student population leaves the rest of Ithaca’s rental market in the dark. 

“It is important to note that increasing the supply of housing aimed at only one price range or targeted to a single age niche will not result in the benefits of increased competition for the entire market,” Bohn said.

“For instance, increasing the amount of housing near campuses that are targeted for college students has minimal impact on the rents for households seeking housing elsewhere throughout the community. Likewise, increasing the supply of high-end housing is not expected to trickle down to offer more choice for lower-income households. We need an across-the-board increase in the rental housing supply as well as other types of housing, such as condominiums,” he added.

Not only is the presence of Ithaca College and Cornell University dictating the city’s housing trends, the institutions also create jobs. This brings new faces to Ithaca looking for a place to live, and more times than not, to rent. While a thriving job market is a good thing, Ithaca Mayor Svante Myrick said it factors into why affordable apartments are so hard to find.

“I think it’s because there’s a lot of jobs here, and there’s not a lot of apartments here,” Myrick said. “It’s that dynamic. We have not grown the housing market as fast as the job market. So that while we’re adding more jobs, the people coming in to take the jobs are now competing with the people that were already here.”

Even Myrick, with a yearly salary of $50,000, flirts with paying more than 30 percent of his gross income on rent. Living with a roommate in a two-bedroom apartment on Linden Avenue with a monthly rent of $750 per person, Myrick estimates spending close to $12,000 a year on rent and utilities. He said, after taxes, he clears a little more than $35,000 in income. That puts him right around spending a third of his income on rent, and that’s with a paycheck well above the city’s median income. Myrick noted that the job he had before being mayor paid him $26,000 a year, and that those days included missed meals and “a lot of Ramen.”

“I can’t complain about my paycheck at all,” he said. “I’m a single guy with no overhead, that’s pretty good. But the rent is killer.” 

Myrick said the first step to creating a more affordable housing market is keeping up with the population growth; the second step is keeping up with the local job growth. However, even if those two conditions are met, a new trend of national household size shrinking is creating a need for more households, Myrick said. 

“Fifty years ago, someone my age would be married and have three kids,” he said. “Four people would live in one house. Now, whomever it is I’m going to marry is out in an apartment on her own. And I’m in an apartment. So it’s double the number of apartments you would need before.”

You Don’t Pay for What You Get

Anyone who was surprised to find Ithaca among the least affordable places to live probably doesn’t rent in Ithaca. Whether you’re the mayor, a student, or just a longtime resident, it is a known concern.  

Cornell graduate student Amanda Costello, who lives in a four-bedroom house on South Quarry Street, pays a monthly rent of $625 per person, which only includes water. Before that, she lived on Dryden Road. 

“So far this is the cheapest place I have lived in Collegetown,” she said. “Rent increases between $25 and $50 per person every year no matter who your landlord is. Collegetown—its housing at least—is basically a glorified slum. I would never pay what I do if I didn’t need to be within walking distance of campus. The [building at the] intersection of Dryden Road and College Ave. now sits half empty because of the outrageously high rents. Who that is working out well for, I can’t say. It is horrifically overpriced. The landlords must pay off the inspectors to get these houses passed.”

Cornell graduate student Owen Rickey—who like Costello also attended Cornell as an undergraduate—echoed Costello’s frustration. He pays a monthly rent of $850 for his share of a two-bedroom apartment on Oak Ave. Angered by the year-to-year increases in his rent, he claimed that eight major landlords cornered the market in Collegetown. 

“They work together to keep prices high on their properties despite each one being a piece of crap,” he said. “Each year a house or two is closed for the removal of asbestos from the walls and ceilings. Houses sag to the point of almost collapsing. It is insane. These are $200-300 per person a month places that are going for $700-900, and all the way up to $1200 or more. All because they are close to Cornell University.”

Landlords Association of Tompkins County President Herb Dwyer said there is no such rent collaboration between the eight major landlords of Collegetown, or any landlords in Ithaca for that matter. He added that the landlords association holds roundtable meetings to make sure “those types of meetings don’t happen.”

“I’ve never heard of that,” he said. “It would only be a monopoly if there it was just one guy. If they really are meeting to discuss rents, that’s price fixing and that’s illegal. That’s straight out of a Hollywood movie. I can’t imagine that’s the case. Increases in rents are purely market driven.”

Overpaying for mediocre living arrangements is not exclusive to Collegetown. Myrick estimated that his $750 rent per person apartment looks and feels like “what $400 per person should get you,” adding, “if $750 a month gets you this, then what do you get for $400? It’s brutal.”

Ithaca Times staff photographer Justin Zoll has rented in Ithaca for seven years. He said he pays $465 (heat included) for his half of a two-bedroom apartment in Fall Creek. Even though this would qualify as cheaper than the average, Zoll said it still takes its toll.

“I’ve always paid about this much, so I can’t comment as to whether or not it’s reasonable,” Zoll said. “I can say that as someone who has worked a number of different jobs in Ithaca, it does take a considerably large portion of my income.”

Raising rents to “tread water”

With the cost of rental housing in Ithaca up 13 percent in the last year (according to the IURA), it might seem like landlords are taking advantage of a situation where there is more demand than supply. However, owning property in Ithaca is an expensive endeavor in its own right.

“It’s very expensive to own property in the city of Ithaca,” said Ithaca landlord Monica Moll. “Property taxes are 22 cents of every dollar. Utilities and water is very expensive. I have a high turnover rate, so that’s very expensive. Every year, I turn over 75 percent of my property. So that costs money. So I can see why rents are so much above the median income in Ithaca because there are so many factors in keeping up property that is very expensive. It’s really hard. I can’t raise rents fast enough at this point to cover the increase in property taxes.”

Warren Real Estate broker Mark Mecenas been in the real estate industry in Ithaca for nearly 30 years. He is also a landlord and a developer. No matter what hat he’s wearing, he said the cost of doing business in Ithaca—or anywhere in New York State—is high. He pointed to the area’s high taxes and long heating season as to why owning and renting property is more expensive in Ithaca, than say, Virginia or Georgia.

“My whole reason for investing in real estate is to be a hedge for inflation,” he said. “Because every day I’m losing buying power through inflation. I’m not trying to raise rents. For the most part, I’m treading water. I’m not getting ahead. I’m not making any real gain. I’m just saying ‘Ok, what are my expenses this year? Oh, I have to increase rent.’ It’s a vicious cycle.”

As taxes rise, so will rent. 

“On the cost side, homeowners and renters struggle with high property taxes due to the high percentage of tax-exempt property in the city, which is over 60 percent,” Bohn said.

“It is not unusual now for a homeowner to pay more in taxes than mortgage payments. One solution to alleviate this problem is to increase the tax base. A new market-rate condominium housing project downtown or student housing project in Collegetown may not lead directly to more affordable housing, but the property taxes they pay will reduce the tax rate for the rest of the community, including housing developers of moderate income rental housing,” he added. 

Can anything be done?

One solution to stabilizing the rental housing market in Ithaca would be to increase the supply. However, as Bohn noted, simply adding housing options is not guaranteed to have any impact. A new apartment complex near Collegetown isn’t likely to lower the cost of living in downtown. Options must be added across the board. Unfortunately, developing new housing is a huge challenge anywhere, let alone Ithaca.

“We run into such a firestorm of opposition at every turn any time we have affordable housing projects proposed,” Myrick said. “People wonder why it’s so hard to build affordable housing in the city. The people who like it generally don’t show up. I mean, they just don’t show up at city council meetings. You’ll never have 100 people show up (to support an affordable housing project).” He also pointed out that a lot of people who would be in favor of the project don’t actually live in the city yet, making it even less likely that they would attend a council meeting.

Landlords Association of Tompkins County President Herb Dwyer said adding new housing options in Ithaca is a challenge because there are few places left to build. 

“It all comes down to supply and demand,” he said. “It’s not like there’s giant lots of land that aren’t being touched. But we need to be careful and find an intelligent approach to building density. The notion of increased density … people want more density but they don’t want it in their backyards, so it’s tough.”

One affordable housing project that did make it through city council meetings is INHS’s Breckingridge Place, the 50-unit apartment building in the heart of downtown Ithaca that opened in January. Its rents range from about $616-$1,100 a month, plus electricity. These apartments are only available to families and individuals that meet the income criteria for the project. Income eligibility depends on the size of the family. Single person incomes up to about $48,000, two-person incomes up to about $55,000, and three-person incomes up to about $62,000 were eligible for the lottery.

Breckingridge Place filled up in less than six weeks, Mazzarella said. 

“The economic theory is if you increase the supply, that’s going to make rents go down,” Mazzarella said. “That’s not going to happen here. But I do think we need more rental units. Development of more rental units could slow down the rate of increase in rent prices. We’re always looking at different sites and the possibility of building new housing, and we’ve got a couple places in mind. But it literally takes years to develop a project and get it under construction.”

As for rents going down in Ithaca anytime soon, don’t hold your breath. 

“You look at the Ithaca City School District, and they’re about to pass a budget that will increase property tax by more than 8 percent,” Dwyer said. “So I can already tell you rents will be more expensive again next year.” •

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(14) comments

bobohut

@taxestoomuch property taxes are "38 cents of every dollar"? What dollar? I pay about 20%.

bobohut

Well first, I'm pretty sure that the 30% of income spent on housing figure refers to GROSS income, so the bit about the mayor spending close to 30% is misleading.

Apartments in collegetown ARE trashy. It's the reality. I looked at some apartments there once, and I asked some landlords how they could justify renting places in such poor condition. The answer was always the same - the college students will rent them.

Finally, Ithaca is a really desirable place to live... what are the factors that limit population growth here? Maybe high rent is an important control? If housing were cheaper, would there be an influx of people? Do we want our city to grow, grow, grow? Or can we seek some kind of equilibrium?

taxestoomuch

“Property taxes are 22 cents of every dollar."How did he get that number? I looked my record again. It is 38 cents of every dollar, include School, City & County taxes. Ge does not pay School tax for his age?

TBruce

The article mentions, but does not emphasize, an unhealthily low vacancy rate. That would indicate that there is simply too little housing supply available for the demand. I may be missing the point made by those who claim that increasing the supply for any particular group of renters would not lower the price, although after so many years of successful efforts to keep development outside the city limits that might well be true. Still, isn't a large part of the problem the fact that there is just not enough to go around?

laurarontwo

Just another cheap shot at landlords. They wonder why developers don't build more housing in Ithaca are you kidding me have you ever tried to do something in Ithaca it is close to impossible to do anything.

MattButler Staff
Matt Butler

You can draw concentric bands around the Cornell campus and rents will become gradually lower as you move further and further away in Tompkins County and then out of the county.

Collegetown's housing is all over the place in quality. Anyone who walks around in the neighborhood can see that. The strange thing is that quality has little correspondence to prince. Everything is expensive if it is close to Cornell. (We shouldn't ignore Ithaca College altogether; the situation on South Hill is a smaller scale version of the same phenomenon.)

Ithaca has only had one Socialist mayor. Myrick and Peterson are Democrats and Cohen is an independent.

I have it from first-hand accounts of people now in their late 40s and 50s that Ithaca was a less expensive place to live in the 1980s. It was then possible to live on a service economy income. That is a tougher row to hoe now, even accounting for inflation (regardless of how you figure inflation).

The census data may be artificially decreasing the median income by including students, but the rents are being artificially made "affordable" because the parents' of these same students have higher incomes in many cases because they live in coastal cities and suburbs where the cost of living is higher.

So although the income number might be artefactually low, the rent numbers are correspondingly artefactually high. That is, the finding of "not affordable" remains an accurate claim.

TellMeWhy

@Staff -- looks like I need to seek out that past article. Many readers may have also missed it, so some reference to it would have been helpful.

Someone should look into the details of the NYT/Zillow study -- what geography did they use for Ithaca (Tompkins County? the City?). More importantly, what did they use for income? If they are using household income (without any correction/acknowledgement for the students), that will be watered down a lot by students who are making very little/no income and exacerbate the statistics to make Ithaca look worse than it really is.

@TTerpening – I am not sure why you need to resort to name calling; it does nothing to promote your points (many of which are legitimate). This obviously is a sensitive subject for you; a more respectful approach will further your cause a lot more than name calling.

Timothy Terpening

While your article asks why housing is so expensive in Tompkins County, it goes right to Collegetown and attacks landlords. It suggests Collegetown housing is trashy and over priced and it goes on to suggest ways to get the prices to come down. It also suggests that this high cost in Tompkins County is a new thing, suddenly coming onto us and now we have to take some actions to correct the trend. Sorry, but I think the article was just another cheap shot at landlords and was probably researched by its author while sitting in a bar with the Mayor.

The last couple of times this sort of thing has come up, it was another socialist Mayor trying to establish a rental housing room tax on the backs of the landlords (and renters) by fabricating lies over security deposit abuse. Before that, it was an attempt to impose rent control. This smells of the same kind of political inventiveness as has been used before to foment discord and justify some new revenue generating legislation or provide fodder for political endearment.

As for past times, you are right about Ithaca having factories, but you are wrong to suggest these very good paying jobs made Ithaca any more affordable. Tompkins County has always been at the top of the price range for housing compared to incomes. My father supported his family at NCR but he couldn’t afford to live in Tompkins County. We grew up in Cortland.


MattButler Staff
Matt Butler

TellMeWhy wishes that we had mentioned the effect of the presence of the university and the college in this article. We didn't because that was a primary focus of our April 2 cover story about the recent hike in the assessed value of Collegetown rental properties.

The other point, that the size of the student population versus the non-student population is large, is a very important one. It not approximated in very many other college towns.

TTerpening asks a good question in his first email: What should we be doing to improve the economic conditions of our city/region so that more people can better afford to live here.

The recent growth of the tech industry (with GiveGab—subject of our Feb. 19 cover story—being a prominent example) and the creation of the Downtown Incubator are perhaps early signs of a revival of the commercial sector in this area. You don't have to be that old to remember when Ithaca was a factory town and thousands of people worked at Emerson Power Transmission, National Cash Register, and (a bit further back) Ithaca Gun, along with a number of smaller manufacturers, all of which are now gone. If manufacturing comes back around here, it will surely take a different form that it had in the past, but as long as people could live in town and walk to work it would mark a return to former conditions.

Timothy Terpening

TellMeWhy, you write in the language of the progressive panderer. You probably don’t even recognize it as pandering because it’s so completely in sync with your society. Well, I’ve never learned that language because to do so one needs to be in agreement with the ideology of the progressives, socialists, and statists — pretty much the whole Left-leaning political establishment. I’m not in agreement with them and I can’t speak that language. It’s all hogwash and gobblygook. Sorry.

Your few words drip with your agreement, however, because this “language” is all about framing the argument to suit your agenda. You say “sustainable for landlords.” Is there anyone else for whom sustainable rents are sustainable? Sure there are — people who can afford to pay the higher price. Yet, you imply that everyone should be able to afford the higher prices of Collegetown. Sorry, but I don’t agree to that.

You say productivity has gone up while wages have been flat. I think you believe that lie because your agenda requires agreement on it. Really? Productivity UP over the last 30 years? I bet you also believe that the unemployment rate is only 6.7%. I suggest you take another closer look at the GDP. What is the GDP and how is it figured? You’ll soon see that the king has no clothes. He’s fanning the wind, my friend.

I can’t address the issue of rents going up faster than salaries. I do know, however, that so many businesses have up and moved out of New York State that the governor is offering no taxes to start-ups and inviting in the casinos. Well, there you are! I completely forgot about the casinos! Maybe with the casinos our productivity really will go up. There’s hope for the king after all!

Franklins Ghost

Using gauges like cost against "median income" is a skewed method of measuring affordability. A lot of Ithaca incomes are in the service industry because the transplanted liberals and NYs tax laws have driven good-paying manufacturing jobs out of the area. I went to a town meeting recently that focused largely on the fracking issue. One of the main anti-fracking speakers said Tompkins County can survive on tourism agriculture and education. Well, no, it can't, because everything we use on a daily basis has to be made somewhere, and those career fields tend to be lower paid jobs. So...one reason the median income is so low is because we've driven the good jobs away. Secondly, we've imported a lot of lower income people into the area. We are building all of these low income complexes like West Village, West Hill Overlook, Linderman Creek, Poets Landing etc. Going all the way back to the building of West Village, there weren't enough local low income people to fill the place, so the owners were forced to advertise for low income renters as far away as NYC. Third, we have a city government that's historically been hostile to job growth, hostile to development, hostile to landlords of existing properties. You mix all of that in and you have a higher cost of operating a business, and the fees charged ( rent ) will reflect that reality.

TellMeWhy

TTerpening, there are some very nice places in Collegetown, but more than not a lot of crappy looking places (and I can only guess that they are charging the market level rent).

You bring up an interesting perspective that the problem may be less the high rents (and it is sustainable for landlords) and more an issue with people's compensation.

Salaries are not going up because businesses are not directing the money toward salaries. Productivity over the past 30 years has increased while median wages have been flat. Companies are more profitable, squeezing more work from fewer people but they have not been sharing that profitability with their employees.

There is a problem when rents are going up faster than salaries -- that is not sustainable and something will eventually have to give. All bubbles will burst.

Timothy Terpening

The framing of your arguments for this article is designed to incite anger and resentment toward landlords who happen to be renting apartments in a healthy market. It rings of the class war mindset that seems so prevalent in the talk of pandering politicians. That is unfortunate because it doesn’t help your cause.

The proper and constructive framing of this issue is this: what needs to happen to improve the economic conditions of our community (country) to make our housing economy sustainable and put Mr. Mazzarella out of a job?

That's a rhetorical statement and no offense was intended, but it’s true that INHS was created to address something nobody likes — neighborhood and housing blight. So why is everyone bellyaching about so-called high rents? They’re not high rents. They’re SUSTAINABLE rents. And what Mr. Mazzarella and Mayor Myrick seem to want is to spread downtown’s unsustainably low rent problem to the rest of the community. Really? You want to spread the blight to Collegetown, too?

I can’t speak for other landlords and don’t intend to. I know that not everyone reinvests in their properties at the level I do. But maybe that’s because they have mortgages. When I had mortgages apartment house improvements were not so affordable for me, either. But driving around Collegetown I am seeing some pretty well kept up properties. And it’s not always noticeable on the outside. I just renovated a two-bedroom apartment on Eddy St. and it cost me over $100,000. I did a lot of the work myself and I didn’t even have asbestos! If this house was one of those “Affordable” places Mr. Myrick seems to want more of, it would still be the piece-of-cap-apartment Mr. Rickey complains about.

I wish you people would make up your minds.

What I really wish is for politicians to start talking truth to this issue instead of joining in a chorus of political panderers. But then, if the political regime in Washington and at home in Ithaca started doing that, it would put them out of jobs. And of course, they don’t want that!

For starters, you should be asking why everything you are hearing today (from the government) about the state of our economy is a lie. There isn’t anyone in government today speaking truth to anything. How can we know the truth here when something as basic as the annual rate of inflation is being represented dishonestly? The true rate of inflation is not the 1.53% that Mr. Myrick’s regime wants you to think it is. It’s really about 10-11%. So a 13% increase in rent is not out of the question! A $20 to $50 jump in rent per person in Ithaca is about a 5% increase give or take. So the landlord is falling behind. I don’t have space to list all the government lies going around about our economy! But I’d expect the Mayor of Ithaca to be honest about it and talk about it. Well, actually I don’t expect it. Why doesn’t someone ask, if the rate of inflation is 10%, why are landlords raising the rent by only 5% and why is the school district raising taxes by only 8%? Oh, and the big one: why are salaries only going up 1-2%?

TellMeWhy

Interesting this article should come out just a few days after this story which shows Tompkins County as the 96th most expensive county (out of 3,144 counties) for housing (the wage needed for renting a one-bedroom apartment).

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/22/what-youd-need-to-make-in-every-county-in-america-to-afford-a-decent-one-bedroom/ (be sure to check out the interactive map and the original National Low Income Housing Coalition report).

By the way, “Ithaca” in the New York Times article reference may really be Tompkins County (I tried to find out whether that was the case, but was unable). The latter is the official geography of the Ithaca metropolitan area and frequently the basis for many stats on “Ithaca”.

According to the NLIHC report, Tompkins County is the most expensive of ANY upstate NY county. The next closest NY counties with higher rankings are downstate (Dutchess and Orange). Tompkins County is even higher than the counties in the booming oil fields of North Dakota. In Tompkins County, it takes a wage of more than $18 an hour (about $36,000 a year) to afford a one-bedroom apartment.

One thing not addressed in the Ithaca Times article is the college town nature of the Ithaca market. Tompkins County is home to two expensive private colleges. The parents of attending students are (for the most part) affluent and can afford to pay all the associated costs, including housing. Housing costs for them are inelastic – that is, they are not very price sensitive. That pushes up, and strengthens, housing costs all around.

Part of what makes Tompkins County stick out, is the fact that the student population is so much more dominant (ie, many other colleges like Harvard, Yale, etc, are part of a larger metro area). The interactive map shows some of the counties around Burlington Vermont (home of Champlain College and U of VT) as being higher than Tompkins County. However, Tompkins County is higher than Centre County, PA (home of Penn State).

No wonder there is so much commuting into Tompkins County.