With housing seeing record numbers, how do the poor survive?

The cost of living in New York is soaring. And that begs the question: how do the poor manage to live here. In other words, how can New York real estate be so expensive when the median income is so low?

According to Bloomberg News, there are a few possibilities:

1. “Ultimately, something under 45 percent of New York’s rental stock i trading in a free market; the rest is going at below-market rates to people who cling to those apartment like ancient barnacles.

2. “All that rent-controlled housing pushes up the cost of what little market-rate housing there is. Landlords don’t want to build anything except luxury apartments, lest politicians start eyeing their buildings as a potential goody to distribute to tenants at below-market rates. And rent-controlled tenants tend to stay in their apartments longer, rather than moving or downsizing, so most of the vacancies occur in the market-rate sector. As a result, bidding wars over the market-rate housing push the price above where it would be if all the housing was market-rate.”

3. “New York City provides a lot of extra social services. For example, in 2013, 3.2 million New Yorkers were on Medicaid. That’s almost 40 percent of the population… About 91,000 New York City residents receive Section 8 vouchers. Almost 2 million residents receive food stamps.“

4. “People have roommates.”

5. “There’s a lot of outside money flowing into the city. It’s not just foreigners paying top dollar for absurd condos with car elevators, but also the more prosaic transfer of parental wealth to kids who have taken high-status, low-pay jobs in the Big Apple. Those kids nominally have low incomes, but with Mom and Dad paying half the rent and, maybe later, Junior’s boarding school fees, you see a lot of people living well above their earning power.”

So the answer is actually pretty simple: in most cases someone else is footing the bill. [Bloomberg News] – Christopher Cameron