The Pricing Out of a Generation
How New York and New Jersey are a case study of the assault on the American Dream.
Growing up in Staten Island and Brooklyn, my dream was to always make it big and live in Manhattan. If not Manhattan, maybe Downtown Brooklyn. Today, the idea of living in either sounds like a pipe dream. Hell, even renting a basement apartment in Staten Island has become a luxury these days. This lack of affordability is not limited to New York City and its boroughs, but also the surrounding counties in New Jersey and suburban New York. Whether it be where my dad grew up in Long Island or my family from Central Jersey, living has become unsustainable for the very people that were born here. Even cracking six figures isn’t enough to survive anymore. And if you’re below six figures, this whole part of the country actively works against your existence. Many young people cannot afford home ownership in the New York Metropolitan Area, so they usually rent in urban hubs such as Hoboken, Astoria, or Bushwick. These places are also quite expensive, so the only way to make it is by renting with a couple of roommates.
According to one 2023 report, roughly half of households across the five boroughs lack the income to meet basic needs without some form of support from family or the government. In Staten Island alone, 66% of young people aged 18 to 24 live below the true cost of living. A more staggering statistic can be found in the Bronx, where 91% of this same age group live below the cost of living, the highest of any borough.1 In Bensonhurst, Brooklyn (where my mom’s family settled many years ago), 60% of households live below the true cost of living. Neighborhoods that were once welcoming to native New Yorkers have become exclusive to the very wealthy. When I say very wealthy, I do not mean people that have had family here for decades and worked for it. I mean people who moved here and come from money to begin with, the ultra wealthy who make more than the average middle-class family would realistically see in their lifetime. People here are doing everything they were told to do. They got degrees, they started businesses, they saved and invested, and yet still it is impossible to afford anything.
So, why is this the case? Well, we can start with the simple rule of economics: supply and demand. There is way too much demand and not nearly enough supply when it comes to housing. In fact, the amount of rentals vacant and on the market dropped to a mere 1.4% in 2023, compared to the 5-8% range considered healthy.2 This number leaves renters competing with each other for the very little supply of housing, driving up rent prices and having landlords asking for increasingly higher monthly rates.
The average New York City household generates an annual income of roughly $70,000, with more than half of this income going towards paying rent.3 This system is becoming unsustainable, as working-class individuals are being pushed out of the very neighborhoods they were raised in. Of course, there are people who benefit from this. When you are assessing the causes of this, you have to understand who has the true power. The answer can be found in private equity firms.
Meet your new landlords…
Owning property has always been a sound way to invest and build wealth for families. This is not the problem, but rather large private equity firms that buy up properties en masse for the sole purpose of squeezing out profits. Some would argue this is the free market at work, but the business practices that go along with these “investments” are absolutely predatory. First of all, rents are being increased at rates that do not reflect an increase in the quality and maintenance of these properties. In Bushwick, a limited liability company associated with Carlyle Group (one of the largest private equity firms in the world) purchased a three-story, three-unit building. In 2023, a one-bedroom apartment at this Carlyle Group associated property went for about $3,500 a month. Given such an expensive monthly rate, you would expect quality service and care for the building. Instead, fire alarms were left blaring for days despite citations from the FDNY, gas and heat outages were left unresolved, and the owners of the property were completely unresponsive.4 That is because it is not about proper management or responsible ownership, but instead about being lazy and generating as much income as possible without delivering quality service to tenants. Let’s be clear, most people who grew up in the city probably can’t afford $3,500 a month for a single bedroom. I know I can’t! This, again, reinforces the city as a home for only the very wealthy instead of the people that I grew up with. Mechanics, small business owners, transit workers, sanitation workers, and many more of the people I knew growing up are being squeezed out.
Following the 2008 financial crisis, private equity investors targeted rent-stabilized units across the city and pressured families to move out so that they could generate an easy profit. Carlyle Group itself has purchased more than 150 properties, mostly concentrated in Bushwick and Bedford-Stuyvesant.5 This is pure exploitation of a housing crisis and is actively ruining lives. People are dying because of this. For those who still have the money to pay this, they are simply getting less for more as the quality of these properties decreases. Private equity firms will laugh at this and ignore what I have to say, but their business model is purely unsustainable. There will come a time when the bubble bursts and absolutely no one will be able to afford anything. There will be no one left to rent to. Good luck generating a profit when no one can afford your $8,000 studio rent in Bay Ridge (when that time comes, I’m sure it will if these guys keep at it).
This is not limited to urban apartments, but also homes across the New York Metropolitan Area. Rutgers University Assistant Professor Eric Seymour’s report on the housing situation in New Jersey can shed light on these drastic increases, finding a similar takeover of housing by private equity in the Garden State. Professor Seymour focused on seven municipalities across Jersey: Asbury Park, Millville, Montclair, New Brunswick, Passaic, Phillipsburg, and West New York. The increase of corporate ownership of housing in these towns can be found in the chart below, provided from the original report cited.6

Corporate ownership of 1-to-4 unit housing properties increased across all seven townships included, with New Brunswick registering the highest share at 19.1%, closely trailed by Asbury Park’s 18.4%. Professor Seymour’s findings also share something in common with New York’s housing crunch, in that “high rates of high-cost lending and foreclosure before the financial crisis are associated with higher rates of corporate ownership.”7
It is pretty clear that these big firms saw financial hardship following the Great Recession as nothing more than a ruthless business opportunity. As a result, we are all being ripped off and communities are being devastated. A house that would cost $100,000 or $200,000 decades ago now easily goes for over a million. It is no wonder that people who make even above six figures have a good chunk of their income consumed by housing costs, thus making it a necessity to be a millionaire for a comfortable standard of living in New York and New Jersey. Make no mistake, organizations such as Carlyle Group are out to destroy the American Dream, even if in their own heads it is simply “the free market at work.” Inevitably, they will bite off more than they can chew as wages are unable to keep up with ever increasing rent.
This cycle forces middle-class individuals to avoid home ownership and instead seek out rentals in communities where private equity has completely priced out working-class families. As a result, young middle-class individuals are paying more for less and usually have to find roommates to even meet the cost of rent. Families who lived in towns such as Newark or Bushwick are completely left on the streets as they cannot afford the thousands of dollars in egregious rent prices demanded by private equity. This cycle will only reinforce itself, until we are all eventually without any affordable housing. It is up to state and federal government to address this issue, with one clear solution being to invest in more housing. There has been a clear consensus to do so among politicians, though the results have been pretty mediocre given prices are still too high. It is urgent that we protect vulnerable families from predatory private equity firms looking to hollow out our communities. Not just in the Northeast, but across the United States.
https://unitedwaynyc.org/true-cost-of-living/
https://www.nytimes.com/2024/02/08/nyregion/apartment-vacancy-rate-housing-crisis.html
Ibid.
https://www.nytimes.com/2023/08/15/nyregion/private-equity-apartments-nyc.html
https://www.nytimes.com/2023/08/15/nyregion/private-equity-apartments-nyc.html
https://schalkenbach.org/corprate-ownership-of-small-residential-properties/
Ibid.