The latest projections of world population growth the planet will add another 2 billion people over the next 30 years across the world, and the U.N. predicts the world will have 10 new megacities by 2030. This means that to sustain 3 billion new lives, food and energy production will need to increase dramatically. In addition, new models of housing additional population will need to be examined in order to increase efficiency and scale without exhausting resources.
In the short term, there’s the issue of price. New York isn’t alone in rent increases since the 1960’s that have outrun wage increases or inflation. While recessions might have slowed it at times, average prices have gone up from around $25 a square foot in the 60’s to well over $1,000 today.
So, how does the price of rent continue to increase in New York City despite reports of it losing population for the first time in more than a decade? Scarcity.
The New York City construction boom is entering a slowdown, which limits the inventory of what’s available to rent — that’s what’s sustaining the year-over-year growth in rent prices in New York’s most popular boroughs: Manhattan, Brooklyn and Queens.
At the start of the New Year, the New York Times reported the possibility of broker fees being eliminated for tenants. However, that was short lived. Until the sales market picks up, real estate industry blog, Brick Underground, predicts that the saturated rental market will make getting a lease with any kind of concessions harder in 2020.
To better understand how technology can provide solutions for the residents of super cities like New York, Europe’s leading roommate finding app designed a survey to quantify current sentiments, preferences and challenges.
This report aims to examine the trends in co-living, in the context of increasing urbanization and the pressures on housing and infrastructure, attitudes about gender, living arrangements, and payments and opinions on roommates, across age groups over 18, and various career stages from student to retiree.
A survey designed by the Badi US marketing team was administered online via the SurveyMonkey platform to study co-living and roommating trends in New York City.
The survey was administered from 4 February 2020 to 6 February 2020. Data on gender, household income, age group, and geographic region for each survey respondent were auto-generated via SurveyMonkey participant profiles.
The content of the survey instruments focused on identifying the housing and rental preferences of New York City natives and transplants, the experience of finding an apartment and roommates, and the tools they used to navigate the New York residential real estate market, as self-reported by respondents.
- 82.14% think co-living is a growing trend
- 58.64% of respondents would be open to an arrangement where living spaces are communal (i.e. shared bathrooms, entertainment areas, dining rooms, kitchens)
- 56.34% of respondents pay rent by check and close to 20% pay through a portal provided by their building management
- Venmo is the app of choice for NYC rent payments among 18-29 year olds
- Property managers play a key role in residential real estate tech adoption
3 Is Co-Living a Growing Trend? 83% of New Yorkers Think So
Since 1950, the world’s cities have grown almost six-fold. That is, their populations have grown as much but that’s not to say their housing inventory has grown as well. A fundamental issue of global urbanization is the crushing toll this growth has taken on the infrastructure of cities. The most notable byproduct of these phenomena are in rents around the world. Inflation-adjusted rents have increased by about 64% since 1960.
Cities are increasingly popular places to live, work, and play. This is also a reflection of the sharing economy, as a new generation of city dwellers — some of whom are migrating from the suburbs — prefer to rent rather than buy. This generation is growing, and demand has outpaced dwelling supply. Thus, respondents overall who live in cities are warming to the idea of sharing more living amenities, especially co-living arrangements.
Co-living, more specifically, entails residents sharing space and resources but also organized around a shared set of values or intentions. It’s an extension of the sharing economy, and a method of stretching resources both within the group and externally, preventing costly shortages.
But co-living isn’t a new idea. They have roots in boarding houses of the 19th century, morphing over time into efficient shared spaces dotting the landscape in areas like San Francisco today. While those boarding houses were primarily for women, today more men are open to an arrangement where living spaces are communal (i.e. shared bathrooms, entertainment areas, dining rooms, kitchens) than women.
In this survey, 84.59% think co-living is a growing trend. With 58.64% open to these communal spaces, it’s no surprise that $385M in investments have pooled into the space. In NYC, there are currently 15 co-living companies that offer renters a turn-key experience: Alta+ By Ollie, Common, Roomrs, Quarters, Outpost Club, Dwell, June Homes, Node, WeLive, Tribe, Goal House, Outsite, Venn, The Assemblage, and Aleph.
4 Roommating is Part of the DNA of Super Cities
The expectation that growing up in New York City would make one more likely to have had roommates proved false, although they found it just as hard to find roommates as those who have moved to the city instead. This is interesting because while over two-thirds of all respondents say they use friends to find roommates, one would presume a network of friends who know a city would be better at locating new roommates. This is clearly an area where technology could improve those networks. However, as of now “apps” were the least likely to be used to find a roommate.
Most had shared space at some point in their life, with 68.73% saying yes to having roommates at some point in their lives. More respondents between the ages of 18-29 live with roommates than any other age group. That age range, and those over 60 said they prefer living with roommates more than any other age group and are more open to an arrangement where living spaces are communal (i.e. shared bathrooms, entertainment areas, dining rooms, kitchens). Men tended to be more open to this communal arrangement, and were less opposed to opposite sex roommates.
When looking at native New Yorkers versus those who moved there, most from NYC had never had a roommate. Yet, they found it equally as difficult to find one as transplants to the city. The search for a roommate was perceived as relatively easy, as most (45%) felt it would take one or two months to find one, and 31% felt it would take less than a month. In contrast, finding housing proved far more difficult, with 30.82% of respondents taking 3 months or more to find their apartment. A whopping 69.18% of respondents would describe the overall experience of finding an apartment to be difficult.
Finding roommates is a largely in-network experience, as 75% of participants have met roommates through mutual friends, with only 9% through work and professional colleagues. Agents were at 5%, as were social media referrals, and online listing sites. Apps dedicated to finding roommates were the least likely method, coming in at 4%.
In line with trends in the sharing economy, more respondents between the ages of 18-29 live with roommates than any other age group. One economist has said that in 1960 the average age of a first-time homeowner was 24-25. This would underscore the urbanization trend of renting, and forewarns of a shortage in living space in cities as that population ages.
Perhaps most interesting: More respondents between the ages of 18-29 and over 60 prefer living with roommates than any other age group and are more open to an arrangement where living spaces are communal (i.e. shared bathrooms, entertainment areas, dining rooms, kitchens). Why the generation gap? It could be that Baby Boomers and those after Generation X had the population numbers to experience housing shortages. Still, only a third of those 60 and over preferred having roommates, compared to 45% for 18-29 group.
5 Survey Confirms More Than Half of New Yorkers Still Pay Rent By Check
Payments continue to be firmly entrenched in the status quo, with over 55% paying by check, 13% using wire transfer, 19% using a portal provided by building management, and 7.23% using Venmo. Only 4.03% used Zelle. More NYC natives used wire transfers and Venmo than those who relocated to NYC, 22.43% of which use a portal provided by building management to pay rent and is the second most popular method following checks.
Although payments through services like Venmo aren’t the norm, they are pointing to a method that roommates can use to pay, indicating the need for a “third rail” to accommodate novel living arrangements. It could be a parent sharing rent with an adult child, or a relatively short-term guest in the space assisting with rent. Over time, these apps will likely tie into portals or existing real estate management tools, thus we expect this number to grow.
However, building managers are a sort of de facto decision maker on tech, as their choices will often provide the least friction for renters. Building management payment portals like Cozy.co, RentPayment, and Clickpay have estimated revenues in the hundreds of millions, presenting a substantial block to newcomers. As 20% of respondents use a portal already, it shows how hard it will be for other payment apps like Venmo or Zelle or Cash or Square to fully penetrate this market.
- Trust remains a major factor in choosing roommates, with 75% finding roommates through friends, and men being less choosy about gender of roommates. Men are also more open to communal living spaces.
- Roommating will be more popular as renters sit on leases without the buying power to purchase due to scarcity of housing.
- Shared living spaces with shared resources are viewed favorably, and nearly 59% were open to such an arrangement. Even though the majority don’t want roommates. Co-living appears to be a preferred middle ground.
- While megacities are growing and social media provides an illusion of connectedness, those between 18 and 29 years-old are more accepting of co-living spaces, which could be a better way of connecting both transplants to major cities and natives.
- Although more NYC natives have never lived with roommates than those who relocated to NYC, those born in the city are more amenable to co-living.
- Apps are the least likely method of finding roommates, and payment apps like Venmo, Zelle, Cash, and Square are the least likely to be used for paying rent.