News headlines suggest that New York City has experienced a sudden population loss since the start of the COVID-19 pandemic. According to U.S. Postal Service data, in 2019 New York City ranked second in the nation for the number of persons leaving the city and the city garnered the top spot for 2020. Postal Service data also shows that more than 110,000 people left Manhattan between February and July. But is it true that recent population losses are attributed solely to the pandemic?

A closer look at the data shows that population in New York City has declined for the past three years. The city’s population growth, from a high in 2011 of growing by approximately 100,000, decelerated each year until 2017 when the population change became a net loss. For three years, 2017-2019, population declined. However, the increase in the rate of loss also declined over the past three years. Population declined 0.6 percent (53,000 people) in 2019. The change estimated by the Postal Service of a drop of 110,000 persons would be the largest change for New York City in the past 10 years, rivaled only by the 2011 increase of 1.2 percent or 98,000 persons.

In July 2019, the population division of New York City Planning issued a population analysis that suggested that the change in population was the result of two phenomena: international inflows had slowed sharply over the past several years at the same time the population aged, resulting in more deaths and fewer births. The Postal Service data implies a third factor as the decrease accelerated significantly in 2020. Clearly, early evidence suggests these factors remain unchanged and may be exacerbated by the pandemic. Assuming that a decrease in 2020 without the pandemic would have been approximately 50,000 persons (the average loss from 2019 and 2018), then there is an excess emigration of 60,000.

A separate New York City study discussed in a May New York Times article, “The Richest Neighborhoods Emptied Out Most as Coronavirus Hit New York City,” cited smartphone location data aggregated by Descartes Labs. Descartes Labs estimates that 420,000 people left New York City, which was the epicenter of the coronavirus outbreak, between March (when stay home orders were first implemented) and May. The smartphone data captures both temporary and permanent relocations. Analysis of this data shows that migration was greatest in the most affluent neighborhoods, with decreases of 40 percent or more in population in the Upper East Side, West Village, Soho and Brooklyn Heights neighborhoods of New York City.

These neighborhoods are defined by upper-income, college-educated households that tend to use public transit to commute. Whether the move was temporary or long term, exiting households had the financial means to do so and/or jobs that permitted working remotely. The neighborhoods where households remained were often comprised of households earning incomes less than $35,000, with a high school education or less. Remaining households were likely to have workers employed as janitors, mail carriers, transit workers, truck drivers, low-wage health care workers and food service workers, often what we now classify as essential workers. With the financial sector as the dominant industry in New York, many white-collar workers have the flexibility and capability to do their work from home.

According to the August national report released by the online real estate platform Zumper, New York City–the second most expensive United States rental market after San Francisco–experienced a rent decrease of 7 percent from August 2019 through August 2020, resulting in one-bedroom rents of $2,840 in New York City. If we apply classic microeconomics and consider the demand curve, we can foresee lower rents in the upper rental strata as an enticement to upper-income households to reconsider the city. Possibly, there are households for whom $3,000 per month in rent is too much, while $2,800 per month works.

According to Costar data, the historical average vacancy for New York City is 3.0 percent, which compares to the slightly higher current 4.2 percent average vacancy. Of note, most of the vacancy is in four- and five-star apartments, which currently operate at a vacancy of 7.2 percent. It is also interesting to note that from 2017 through 2019, when the city’s population began to decrease, overall rental vacancy decreased by 50 to 100 basis points.

To income qualify for an average one-bedroom unit with a rent of $2,840, households would need to earn roughly $97,000 per year. While the decrease in rent certainly is bad news for housing investors and owners, the increasing affordability is good news for renter households. However, it should be noted that rents at these levels are still well out of reach for low-income households. In New York City, the maximum allowable gross rent for a one-bedroom unit targeted at the 60 percent of area median income (considered low-income by U.S. Department of Housing and Urban Development standards) is $1,279. That results in a differential of $1,500, which is far cry from the average rent presented above. The current imbalance will not penetrate deeply enough to relieve the rent burden on moderate- and low-income households.

Perhaps making matters worse, surveys show that most employers intend to downsize urban office space and that most workers with the option to do so would prefer to work from home with more frequency. Industry experts predict such shifts could result in a 20 percent decrease in future demand for office space. Anecdotally, office rents have decreased. How lower office rents will affect balancing the supply demand curve is unknown. It is difficult to determine at this point how long this shift will last. Further, is the exodus overplayed? The Postal Service data suggests 1 percent of the city’s population has moved. Does that shorten lines at the subway after residents return to offices after the pandemic? New York City is resilient and has maintained its preeminence despite the crime wave of the 1970s, the Sept. 11, 2001 attacks and Hurricane Sandy. The future will determine if there is an “exodus.”

These price trends have an unknown impact on the magnitude of demand in the short term. We do not know what the depth of latent demand is for units in places like New York City. How many individuals will be induced into the city by a 10 percent decrease along the price curve? The truth is that people are willing to pay those high rents because of a perceived benefit. Clearly, population ebbs and flows over the short run. Pricing acts as a deterrent for new residents until demand imbalance creates greater affordability for some.

While recent news of a promising vaccine on the horizon gives hope that an end to the pandemic may be in sight, it is clear that an end to New York City’s affordable housing shortage is not in sight.