Is New York Really Secretly Affordable?
The Center for Housing Policy just released a report arguing that New York is cheaper for moderate income families than many other places. I'm skeptical.
A friend who recently moved out of New York sent me this article with a stonkered "Say what?" It seems that the Center for Housing Policy, an offshoot of a group that lobbies for low-income housing supports, has produced a report showing that New York is comparatively cheap for "moderate income" families, defined as those living between 50% and 100% of the median.
This assertion seems radically counter to the experience of most people who move to New York City, and do not find it more affordable than the place they have left. It also seems radically counter to those of us who grew up in New York City and eventually moved out; not one of my friends who has done so has ever emailed me to say, "OMG, [Insert city here] is so expensive!" Presumably they were too busy wondering if they needed roller skates to traverse the vast distances between front door and back bedroom.
So how did the CHP come up with this result?
For starters,let me say that the data is picking up something real, though I think, not quite what the report implies. New York has almost no middle class in Manhattan, and it's shrinking fast in the rest of the city. But New York is actually a pretty okay place to be poor in a lot of ways. The city offers more subsidies, higher up the income scale, than almost any place else in America. There's a whole lot of subsidized housing of various sorts. There are (if you are lucky, or have lived there a long time) still rent-controlled units around. A full third of New York City's citizens are on Medicaid. And there are various other means-tested assistance programs for people whose incomes would make them middle class anywhere else.
People a little higher up the socioeconomic ladder do not ever see this social-service-assisted world, because they're not eligible for it (or wouldn't dream of applying). But there are a fair number of poor families in Manhattan living in more space than, say, a couple of book editors in Brooklyn.
This is not to say that I'd rather be poor in New York City than middle class: the school system is a disaster, crime is still too high in those areas, public housing has all sorts of disadvantages I needn't describe, and if you still aren't convinced, imagine dealing with a social service bureaucracy that was just like the DMV, except that it also controlled your housing and food budget.
No, it's not fun. But the availability of subsidies means that those living a little below the median can stay in the city, while those living somewhat above it usually cannot--they simply cannot afford to compete for market-rate housing.
And though the poor and near-poor are not luxuriating in the high-style living available in New York's subsidized housing, on the metrics that this report captures--the cost of housing and transportation as a percentage of income--being somewhat below the median is going to look comparatively affordable.
Another big reason New York comes out ahead is that they factored in transportation as well as housing cost--but only transportation to and from work, which is what the American Community Survey, the source of their data, asks about.
(Though it's not actually clear to me what assumptions they're using to allocate the cost of commuting, which the ACS does not ask about directly. People who live outside the five boroughs, and even a few who live within them, commute via commuter rail and express busses, not the MTA, which costs a lot more than a monthly metrocard--and often requires you to also have a monthly metrocard. A friend who lives in Westchester pays almost $400 a month for his various commuting passes.)
What they definitely aren't factoring in is the things that other people do with cars, which New Yorkers have to pay for: the taxis when you're in a hurry and/or going somewhere that the train doesn't'; the delivery fees or trucks for stuff that can't be transported by hand; the higher cost of good because you can't drive to Wal-Mart; the commuter trains, busses, or airplanes that must be paid for if you ever wish to leave the five boroughs of Manhattan.
Meanwhile, they've left out education. Even moderate income New Yorkers may be struggling to pay a few thousand for parochial school tuition every year, because their local school is a disaster area and their kid didn't win the lottery to one of the better public schools. That doesn't show up in the data, even though education, like transportation, is a cost that's closely tied to your place of abode.
Which hints at the biggest thing that they're leaving out: quality.
A while back, when I was still living in an $1100 a month one-bedroom in Manhattan, I decided to look to Hoboken and Jersey City for cheaper digs. I wasn't that interested in more space, but given how tight my budget was, I was willing to move somewhere less convenient if I could pay substantially less.
To my surprise, I couldn't--at least, not within walking distance of the PATH. Studios in New York basically started around $1000-$1200--and so did apartments in Jersey City.
The reason to move to Jersey City or Hoboken was not the price; the bottom of the market there was about the bottom of the market in New York, and both corresponded to something near the bottom of the local income range for college graduates. The difference was, in New York City, an $1100 studio was rare, and usually pretty weird--mine, while it did actually have two rooms, was 435 square feet, half underground, and had so little light that you needed the lights on even in the middle of a bright summer day. The hot water was kinda on-again-off-again as well. Most of the other apartments in that range were much smaller than mine, though they might have a doorman, or a tap that produced hot water every time you turned it.
In Jersey City, at that price, you got something that had been renovated within the last fifty years, was above ground, and had a management company who would occasionally make repairs if something broke. And you could pretty much find one whenever you wanted, rather than sleeping on a friend's couch for six months waiting for something to come up in your price range.
But if you didn't make that quality adjustment, it would seem like Jersey City and Manhattan were indistinguishable. They weren't. A person living in Manhattan was experiencing substantially lower housing quality than someone living in Jersey City, though of course, they were making up for it by being closer to the city's amenities.
People who are living in that "affordable" New York City housing are either living in subsidized housing, which has its own miseries, or they are living somewhere that is much smaller and less nicely appointed than their counterparts in other areas--and also, probably farther from work. They are probably sending their kids to a school where half the students drop out. Or they're stumping up for parochial school tuition, which their counterparts in Minneapolis don't have to do.
Does that matter? Well, one reason I left New York is that so many people seem to spend at least 50% of their income on housing--and while financially stupid, it's all too understandable. The housing supply is so constrained that virtually everyone is living with less space, light, and privacy than they consider to be the minimum acceptable standard for their income level. The temptation to spend more than you can really afford is constant, and nearly overwhelming.
What you're looking at in New York is a distorted market where most lower-income people are either being subsidized--in which case, their rent is low, but their building is unpleasant and they can't move--or where they're crammed into a very small space with what is, to a modern American's viewpoint, far too many other people. Is that better than having more space and a car in Riverside?
I lived in New York City for three decades. In fact, I just realized that I may well have been one of the "moderate income" households that CHP is analyzing. And while I don't regret a minute of my residence, I'm pretty sure that my life would have been financially easier almost anywhere else.