By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
Geoff Fellows, 32, couldn't take it anymore. After five years, he was officially priced out of New York City. "I just looked at my situationwhere would I be two years from now if I stayed in the city?" he said. "I'd most likely be living in the same small apartment, not making that much more money, still trying to pay off my credit cards, college loans. It was the right time to go."
Geoff, who left this month for cheaper pastures in Atlanta, is no struggling slacker or recession casualty. He's a success in advertising who made up to $90,000 a year in New York. But close to half of his take-home pay went to rent: $1,950 for a 450-square-foot apartment on the Lower East Side. In Atlanta, he is sharing a 2,700-square-foot three-bedroom with his girlfriend; the mortgage on the townhouse is about the same as his rent for the shoebox in Manhattan. If industry averages hold true, he can expect to make $10,000 less in Atlanta, but his Madison Avenue credentials go a long way down South. Geoff had interviews already lined up.
He's not alone in recalculating the cost of New York living versus the value of New York opportunities. Nor is this the only market forcing that kind of choice. This year, Forbes magazine named New York City, along with San Francisco, Boston, and Philadelphia, one of the worst rental markets for singles, based on their ratio of job growth to rents. In the very places young people once flocked for opportunity, they now face a prohibitive cost of entry with an uncertain reward.
One 24-year-old found this out the hard way. "I moved to New York City to go to culinary school," said Sara (not her real name). "I want to find a job in hotel catering sales or event planning, but entry-level positions in Manhattan pay about $25,000 a year. Obviously it is not possible to live in Manhattan on that salary." Now Sara works as an advertising sales assistant at a television network. Her $33,500 salary somehow covers $900 in rentfor a third-floor walk-up, a one-bedroom railroad apartment in the far East Village. She walks through her roommate's bedroom to get to her own. "I'm moving to Portland, where a two-bedroom in a really trendy area is $700," Sara said. Her plan is to break into her chosen industry out there, where wages are only slightly lower, then return to New York at a higher salary. But she'll have to contend with Oregon's 6.9 percent unemployment rate, the second highest in the nation.
Devika Srivastava is another soon-to-be New Yorker facing the harsh reality of the housing market. The 25-year-old Houston native is moving here to complete her Ph.D. in counseling psychology at Fordham University. She said she loves New York for its "cultural diversity, the urban mentality of the city," but she doesn't love the hot competition for inferior apartments. "Oh my gosh!" she exclaimed. "Everything goes within a day. Some places don't have doors, or the room that they're showing is really a nook or a cranny. I looked at a place in Park Slope the size of a small closet, and they were asking $600 for it." Devika will be surviving off loans, parental help, and a graduate assistantship; she expects to dedicate upwards of 60 percent of her income to rent, even if she manages to find a second job. She was looking in Jersey City, where her commute would have been around an hour. "I'm getting desperate at this point," she said.
Although it doesn't get much worse than New York, affordable housing for the middle class has become a serious concern nationwide. A study of the nation's largest housing markets, released by the Center for Housing Policy in July, found incomes lagging dramatically behind housing prices. Formerly solid middle-class occupations like nursing, teaching, and law enforcement will no longer pay for a middle-class home, especially in the nation's fastest-growing counties in the South. Ironically, many of the places people are headed for cheaper housing and increased opportunity are also characterized by lower wages. The median hourly wage in the New York metro area is $17.50; the mean annual salary for all occupations is $48,050. In the Atlanta metro area, wages and salaries are lower, $14.38 and $38,760; in Las Vegas, the fastest-growing metropolitan area in the 1990s, they are a dismal $12.82 an hour, $33,420 a year.
The same real estate bubble that has been such a boon to retiring baby boomers is bad news for younger workers. They are starting their working lives with fewer assets and more liabilities, in the form of student loan debts, than previous generations, and they are facing higher housing costs than ever. According to the Census Bureau, in 1991, 62 percent of U.S. residents between the ages of 25 and 34 could not afford to buy a modestly priced (below median price) home in the area where they lived. By 1995, the proportion had risen to 69 percent. In 2004, the home-ownership rate for those under 35 was just under 44 percent, compared to 69 percent for the population at large. The average age of a first-time home-buyer has climbed in the last decade from 30 to 33.