"It Just Doesn't Seem Attainable."

 For as long as I've been writing this blog (yikes, I never commemorated its 20th anniversary last month!), I've tried to counter a certain negativity about "making it in New York." New York City has always been a very expensive place to live, and has always had a culture where rich people and their predilections kind of set the scene-- old money, greed-is-good Wall Streeters, all the arts and design and fashion and media people. New York is the subject of so many books and movies and TV shows that some people feel like they aren't living the dream unless it looks like an episode of Sex and the City. It can seem like an expensive lifestyle is just what's normal, so if you can't afford that lifestyle, you might feel like you haven't "made it." Or you're so busy spending money on some aspects of that lifestyle that you can't afford basic things like owning a home or saving for retirement. Some people kind of give up, just deciding that they might as well live paycheck to paycheck and get into debt since they won't be able to attain those long term goals no matter what. 

I've tried to counter that attitude-- my years in NYC were tight financially at the beginning, but I found a balance that allowed me to save money, buy homes and build wealth. I allowed myself some treats, but I also set limitations and adjusted my expectations about what was reasonable and possible. I was willing to make some sacrifices, but not some others. And things ended up working out for me-- I feel like I "made it" in the sense that I had a decent life, and could have continued to have a decent life in NYC if I'd stayed. And my attitude on this blog has always been "you can make it too," at least to some extent. I can't claim that someone making minimum wage is going to be able to buy a home and retire in comfort in NYC, or anywhere else for that matter-- that's a different issue.  My point was always more that all the college-educated middle class professionals needed to stop being crybabies about not being able to make ends meet in NYC.

But I'm not sure I can really say that anymore. 

I recently had dinner with some young women who are living in Brooklyn, not too far from where I lived in the late 1990s, when I was about their age. We talked a lot about how the area had changed and how expensive things are, and I reminisced about the neighborhood during my time there, which was the first time I became a home owner. One of the young women looked at me with a somewhat wistful expression and said "that just doesn't seem like it will ever attainable for me." I wanted to say "no, have faith, you'll start making more and if you just watch your spending, you can do it!" But when I did some math in my head, the comparisons were striking.

That first apartment I bought (with a partner) was about $135,000 in the late '90s, and that same apartment sold in 2019 for about $1,300,000. My partner's and my combined salaries to afford that apartment in the 1990s were maybe $90,000 or so, maybe even less. I think the mortgage and maintenance payments came out to maybe $1,500 a month, maybe a little more, so we were spending maybe 25% of our combined income on owning a home. (You'd think I would know all this for sure, but my record-keeping was different back then, and the spreadsheets I could find didn't mention housing costs for some reason!) The interest rates would have been lower in 2019, but the monthly cost (assuming a 10% down payment, which is what we did in the '90s) would probably have been almost $7500. So you'd need a salary of about $360,000 for that to be 25% of your income. I'm not sure what percentage of New Yorkers earned that much in 2019, but the median income today for NYC for a single person household is about $113k, and for a 2 person household, it's about $145k. 

Even if you take overall inflation into account, and adjust for how the desirability of that neighborhood has changed over the years, there's no question that it is just so much harder to afford to buy a place now. The equivalent of the $90,000-ish we were making might be around $130,000 today. 25% of that would give a budget of about $2700 a month. Depending on the maintenance, that might cover the payments on a $350,000 home. According to Zillow, there are only about 39 2-bedroom homes in that price range on the market in the NYC area right now-- and whoa, one is in Manhattan, right near Central Park! And it's actually only $189,000! But it looks like the walls might be covered with mold, and it needs a gut renovation. And the maintenance is $3500, plus an assessment of almost $1000, so it's actually not in the budget after all. The rest of the 39 possibilities are all in the furthest out neighborhoods of Brooklyn and Queens and the Bronx, and even then, they're often over budget when you see the maintenance costs. The pickings are slim for anything that might be affordable, and the commute would be a lot longer. I don't mean to sound snobby about the idea of living outside the most desirable areas of Manhattan and Brooklyn-- there are lots of great neighborhoods around the five boroughs that are safe, close to public transit, full of amazing restaurants and parks and interesting sights. But ALL the neighborhoods are expensive now, with affordability being limited to a smaller and smaller set of high-income people. 

The young women in this story are currently paying $4500 in rent for a very small 2-bedroom apartment. One is making somewhere over $100k working for a tech company, and the other is a grad student. Their neighborhood is great-- Brownstone Brooklyn charm with shops and restaurants galore. (In my day, the brownstones there had the potential to be charming but were mostly grungy, and there was one "nice" restaurant and maybe a fried chicken place on their block, while the neighborhood I lived in nearby was already more gentrified.) The average rent for a 2-bedroom in that neighborhood is about $6000 so their apartment seems like kind of a bargain. They are splitting the rent unequally given their different financial circumstances at the moment-- a generous move on the part of the tech worker, but they are old friends and she knows the value of having a roommate you can trust. The tech worker also has access to some money from her family, but happily, she seems quite focused on saving that for later and living within her means now. The grad student's family is less well-off, but I don't know more than that. I'm not sure what the salary prospects will be in her field but it at least seems like something that won't be replaced by AI.

Whatever happens, I'm sure these young women will be fine. They will have a roof over their heads and they won't starve. They've benefited from stable childhoods and good educational opportunities and have had advantages some people can only dream of, even more so than I had. People like them (and me) have always been part of the gentrification that makes cities get more expensive in the first place, but when I first moved to New York, there was still more diversity in the income levels and employment types of people who could afford to live in the city. Now it seems like all the working class and middle class people have fled, to be replaced by finance bros and homogeneous hordes of young people whose parents are willing to subsidize their life style. (See this very sad New York Magazine article: It Must Be Nice to Be a West Village Girl.) 

Maybe my young friends will stay in New York and maybe they won't. But "making it in NYC" will look very different for them than it did for people my age.