Renters pin their hopes on housing lotteries in tight urban markets like NYC
Winning the lottery doesn't always mean striking it rich. In New York City, it could mean scoring an affordable place to live through the city's housing lottery program.
As housing costs continue to outpace wages, municipal housing lotteries in New York and other major cities are offering a potential solution for renters priced out of the traditional market.
These programs allocate below-market-rate apartments through random selection.
"There are so many more people that need housing than we have apartments, so the fairest way to give people a chance is through a lottery process," said Emily Osgood, associate commissioner of NYC Housing, in an interview with CNBC.
NYC Housing lottery sees 50 applications per unit
There’s a catch— your odds of winning a housing lottery (at least quickly) are getting slim. The average ratio for the NYC housing lottery is 50 applications per available unit, so you’re likely going to wait years until you are selected.
"It may not happen the first time, but you've got to stick with it. It's not an overnight sensation. The timeline is probably going to be long, but hang in there," said Osgood.
To participate, applicants must meet specific income requirements based on the area's median income, unit size, and household size. NYC defines affordable housing as costing no more than 30 percent of a person's or family's income.
Applicants don't need to be NYC citizens to participate in the housing lottery, but local residents are given higher priority.
If selected for a rent-stabilized apartment, there are limits to rent increases.
For 26-year-old Nahjae Olin, the housing lottery was a game-changer. She started applying to the housing lottery after seeing how expensive it would be to live alone or even with a roommate.
According to Apartment List, the average rent for a one-bedroom apartment in the Bronx is $2,230, significantly more than what Olin could afford on her preschool teacher's salary.
By May 2023, Olin signed a two-year lease on a one-bedroom apartment in the Bronx for $881 a month. Olin had to prove she made an income between $33,086 and $46,700 to qualify.
"It felt like a full circle moment. To live down the block from the apartment I grew up in is great," she said.
Are housing lotteries a band-aid solution?
While these programs provide relief for a lucky few, the root causes of the housing crisis remain. The limited number of units available through lotteries barely scratches the surface of the demand for affordable housing in major cities.
New York City isn't alone in its efforts.
Other cities, such as San Francisco, Boston, Chicago, and Washington D.C., have similar housing lottery programs. Wait times in these cities range from many months to years as well.
These programs come at a critical time.
According to a recent Harvard University report, half of all U.S. renters are now classified as "cost-burdened," meaning they spend more than 30% of their income on rent and utilities.