However, one of the key of issues about New York City is the high cost of living (especially housing in Manhattan). As any of New Yorkers agree, you have to earn quite bit to have "good" life style in Manhattan. I remember my invest banker friend lamented that $300K income does not provide nice life in Manhattan.
Anyway, below is the report done by Center for an Urban Future, a public policy organization dedicated to improving the overall health of New York City and serving its long-term interests by targeting problems facing low-income and working-class neighborhoods in all five boroughs.
REVIVING THE CITY OF ASPIRATION
While New York City has been successful attractive highly-educated high income earners (and providing support for low income family to some extent) over last decade, this report point out about dwindling middle class population in New York City and about what city can do to bring middle class back.
Below is a couple of issues of New York City for middle class:
- In order to maintain same quality of life as $50,000 earner in Houston Tx, you have to make $123,332 in Manhattan.
- NYC's average rent is $2,800 a month, the highest in USA, and 53% higher than that of San Francisco.
- Average housing price in Manhattan is $1.4 million (median price is around $900,000).
- The average apartment in Manhattan sells for more than $1.4 million (the median price is $900,000). In the third quarter of 2008, only 10.6 percent of housing in the New York City region was affordable to people earning the median area income.
- New Yorkers pay higher taxes than people in any other major U.S. city, roughly 50 percent more than the average in other cities and nearly triple the U.S. average.
- Young families that earn less and have little savings are also being hurt. A family of three earning $55,000 a year will have to pay nearly half of that income for early childhood care. Families making $100,000 will often pay more in day-care costs than they do in a monthly mortgage payment or rent.
- Basic expense items such telecommunication, utility and food are more expensive than other cities.
- If you live outside of Manhattan, commute is usually 30 - 60 minutes.
- As result, New York has historically done well in attracting highly educated people, but an increasing number of those with bachelor's degrees—29,370 in 2006 versus 12,955 in 2005—are fleeing the five boroughs.
Compared to other global cities, I do not think Manhattan's real estate price is too expensive (see below). So it is not possible for middle class to live in the best neighborhood in world class cities.
World's Priciest Cities To Own A Home
http://www.forbes.com/2009/02/09/cities-top-expensive-lifestyle-real-estate_0209_cities.htmlIn addition, as NYC has been hit very hard in recession (particularly in financial industry), there will be some correction in real estate price --- make it easier for middle class to live in the city again.
The biggest issue is how can New York City can stop the migration of middle class to cities in Southwest with low cost of living, abundant of middle class jobs and mild climate (thus I mainly invest in Austin Tx).
I think the challenge NYC face is also challenge expensive cities like San Francisco, Los Angeles and Boston faces. I am quite confident that city like New York City and San Francisco continuously attract highly educated, high income earners. However, without middle class and lackof diversity, the economy and culture loses edge and it would eventually decline. Sustaining middle class in the city is especially critical now when under high income jobs (in finance industry) will probably suffer much more that "regular" jobs.