How can bad areas in NYC be so expensive?

[MotownSpartan]

I just don't get it. To live in a "bad" neighborhood in Manhattan a small 2/br runs over $2000/month. How can any neighborhood full of people able to pay 2k/month be considered an unsafe/shady neighborhood?

In SoHo, the same small 2/br unit will cost over $7k a month. How do so many people have this kind of money to fill street after street after street of apartments?

Furthermore, everyone I talk to in Manhattan says the schools aren't good and that almost everyone tries to send their kids to private schools [[cheaper being parochial and then the more expensive ritzy ones). I understand that in the SoHos of the world money may be no object so every kid goes to private school but what about in the 2k/month neighborhoods? You would think those people would all have to be professionals to afford to live like that and the local public schools would be good.

Can someone explain how this works?

[Gannon]

If they have corporate jobs, this cost-of-living is relatively calculated into their pay...same with LA for me.

I accepted an offer back in 2000, then found the real pay to be actually $7k higher due the difference between Detroit and LA...they didn't even blink, just gave it to me.

As for those self-employed and service people...those costs get passed to their customers...and there are MANY of those tiny apartments with four or more roomies sharing space in some of the most creative ways possible.


Where there is a will...

[East Detroit]

NYC rapes the rest of the country financially, so their pay is higher and therefore their cost of living is higher.

Once people wake up and stop giving 5% of every purchase to New York, then their housing prices will go down.

[rb336]

In places like Alphabet City, the LES, Harlem, etc, you can find families living in 1 bedrooms and even studios. sometimes more than 1. You can also find 4-5 adults sharing them.

Soho is not a bad part of town at all -- lots of the people who live there are living in places owned/leased by their employers.

[ccbatson]

Easy answer...TAXES [[in an extremely liberal city and state).

[ndavies]

Easy answer...TAXES [[in an extremely liberal city and state).

Bzzzzzt... Wrong answer. Not even close to reality.

The price of housing in NY is strictly tied to Supply and Demand. Huge demand, not nearly enough supply, and no land to build new on. It is exactly the same reasons other major cities have such high housing costs.

It is exactly the same reason Detroit housing is so incredibly cheap. Detroit has exactly the opposite conditions. No demand and a huge oversupply. If your supposition were correct Detroits housing would be extremely expensive due to their exccessively high taxes.

[ccbatson]

Dream on...owners pay huge taxes, regulations limit and tax construction to the hilt. Those costs must be made up for by way of higher consumer prices. On top of that, the consumer pays huge taxes directly.

[ndavies]

Please, High taxes drive prices lower as seen in Detroit. People are only willing to pay what something is worth to them. Even with the high taxes in NY they are more than willing to pay that amount because they belive it's worth it to them. If they didn't believe they were getting value for the money they would be leaving in droves and driving down prices.

As a capitalist you should understand the forces of a free market economy. The high prices in NY are a result of that free market economy.

[ccbatson]

So, you believe owners happily sell, or rent, at a loss?

[Neilr]

Here's how it works for one group of low income tenants in NYC.

http://www.nytimes.com/2009/09/19/ny...20Melon&st=cse

[ndavies]

So, you believe owners happily sell, or rent, at a loss?

Nope owners never happily sell something for a loss. However if there is no one to sell too, they have no choice. Where do you think all the empty buildings in Detroit came from. There was no demand at the high tax rates that were being charged.

A real estate transaction require 2 parties. A buyer/landlord and a seller/tenant. They have to agree on price. If the price is too high for the tenant they'll attempt to find somewhere else. If the price is too low for the owner they 'll try to find someone else to rent/buy.

Buyers are only willing to pay what they are willing to pay. So if you push taxes too high, the owner/seller losses pricing ability. If you push the taxes far enough, the owner/ landlord can't make any money, they quit paying for building maintenance and it is then abandoned. Just as happened in Detroit.

Another example of this is when the Feds whacked on the Luxury tax to Boats, Planes and Luxury cars a couple of decades or so ago. The buyers of these luxuries weren't willing to pay the exorbitant taxes. So they just quit buying the goods. Large numbers of Boat and Private airplane companies went bankrupt. Many legendary names went out of business. The Feds actually ended up losing tax money because the sales just completely dried up. The Car and Boat companies couldn't cut the prices far enough to recapture the sales without destroying their businesses.

The difference between NY and Detroit is NY is an Island. The commute from the outer reaches of the metropolis is excruciating. There aren't the lower cost alternatives that are available in Detroit. NY can get away with a higher tax since the cost to circumvent the tax is still higher than the tax. So yes the taxes add a little to the costs. However tenants are willing to pay the price, otherwise demand and prices would drop.

[wolverine]

New York is definitely an extreme example, SF too, but principle is still the same. People are willing to pay more for the location, and they are willing to make it work if they can.

When I did my apartment hunting in Chicago, it was incredible to watch new "recession condo" buildings go rental and see the rates slowly rise as the leasing offices got more and more callers. Some units jumped as much as $800/month more than originally listed. It has nothing to do with taxes, rather the demand was high enough to justify an increase in rent.

[Detroitej72]

Dream on...owners pay huge taxes, regulations limit and tax construction to the hilt. Those costs must be made up for by way of higher consumer prices. On top of that, the consumer pays huge taxes directly.

If that were the case, people would be leaving NYC in droves, just like they did Detroit. Instead the opposite is happening. Its called supply and demand and as a free market guy, I would have thought you of all people would recognize that. Obviously you are letting your partisan views get in the way of logic and facts.

[Detroitej72]

So, you believe owners happily sell, or rent, at a loss?

And where did you pull that from, your crystal ball, or did Glen Beck tell you that on his web sight?

[ccbatson]

Ahem...people ARE leaving New York in droves.

[ccbatson]

Sorry, I should have said Productive people...those that bear the brunt of the taxes...just like outsourcing.

[ndavies]

Ahem...people ARE leaving New York in droves.

Really, That's why the census bureau estimated the population of NY grew by 2.6% between 2000 and 2006. It must be all those people leaving.

http://quickfacts.census.gov/qfd/states/36/3651000.html

[rb336]

Sorry, I should have said Productive people...those that bear the brunt of the taxes...just like outsourcing.

so, the only people leaving are the ones who can afford to live/move there? Bats, you are so clearly speaking out of the wrong orifice, it's funny

[Detroitej72]

Really, That's why the census bureau estimated the population of NY grew by 2.6% between 2000 and 2006. It must be all those people leaving.

http://quickfacts.census.gov/qfd/states/36/3651000.html

I think Bats believes[[wrongly) that since Rushie said he was leaving NY, that means everybody.

[Danny]

I went to see Harlem N.Y.C. in 1997 and 2001, once a very bad black ghetto, now an ethnically diverse very expensive area. You see not just black traditional mom and pop businesses but white, asian and hispanic owned businesses. The rents over the area are super expensive making it very hard to lease a tiny row home, apartments and supercondos. Gentrification change Harlem into a hip cool uptown ethnic village. The new Harlem Rennaisance is there.

[ccbatson]

Productive people who have something to lose by confiscatory taxes are leaving...people getting that wealth redistributed to them are attracted like flies...except the ones that the Mayor gives one way bus or plane tickets out of the city to.

[Blarf]

They have a a higher standard of living.

[ccbatson]

Who are "they" Blarf?

[rb336]

Productive people who have something to lose by confiscatory taxes are leaving...people getting that wealth redistributed to them are attracted like flies...except the ones that the Mayor gives one way bus or plane tickets out of the city to.

Why do you continue to bleet on and on when you clearly, and obviously, know nothing? hell, i'd put money on it that you've never been to NYC [[i'd almost bet that you've been nowhere outside a 100 mile radius of where you were born).

No one is leaving in droves, not even a trickle. More people who make huge amounts of money stay in NYC -- perhaps they are intelligent enough to understand that if you want a civil, and civilized, society, it has to be paid for by someone

[ccbatson]

Check your facts...it is outsourcing on a local scale, and the precise impact is public information.