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Why is New York City so Expensive? Part one: Rent, Healthcare, Transportation

Updated on April 15, 2015

New York cost of living

New York is the most expensive city in the United States, and was in the top 30 most expensive cities in the world in 2010. Some reports indicate that it takes a six figure income to achieve "middle class" status in New York City.

Sperling estimates that overall New York is 69% more expensive than the rest of the US. And City Rating estimates that New York state has a cost of living 15% higher than the national average, the highest of all 50 states.

New York City rent

The apartments in Manhattan are notoriously expensive, and this is due in large part to regulatory restrictions on construction. Manhattan is a relatively small island to begin with, and much of it is zoned for commercial or industrial purposes, further reducing available residential land. And needless to say, there is massive demand to live on this island, pushing prices up that much more.

The total population of New York City is over 8 million, and Manhattan's population density is almost 67,000 people per square mile. Manhattan has a residential population of 1.6 million, which effectively doubles to 3.9 million each working day as nonresidents enter the island to work, study or visit.

Regulations make evictions very difficult, causing landlords to require sterling credit checks and ample salaries from potential tenants. Residents of the city are familiar with the "40 times" rule used by most landlords, in which a potential renter must prove his or her annual income is at least 40 times the monthly rent. In August 2012, the average monthly rent for a two bedroom apartment in Manhattan was $4,366 in a non-doorman building. Theoretically, according to the 40 times rule, one would have to have a $174,640 salary to afford such an apartment.

City rent controls establish caps on rents in certain apartments, putting additional pressure on landlords and property owners. They can be expected to pass the costs onto other, non-rent-controlled apartments.

Despite Manhattan's sky-high rents, the surrounding boroughs of New York City are a little easier on the wallet. The average two bedroom in Brooklyn in August 2012 commanded $3,083 per month.

Average price for a 2 bedroom apartment in Manhattan neighborhoods (August 2012)

Most expensive is a doorman building in Soho at $8,440, and the cheapest is a non-doorman building in Harlem at $2,322.
Most expensive is a doorman building in Soho at $8,440, and the cheapest is a non-doorman building in Harlem at $2,322. | Source


Healthcare spending was $8,341 per person in New York in 2009, making it the seventh-highest spending state in the country (the US average was $6,815).

For individual health insurance, New York is again near the top of the list. In 2010, the average monthly premium per person was $357, fourth-highest in the nation, and far above the US average of $215.

Many have argued that New York's high healthcare costs can be traced to a significant amount of restrictions and regulations placed on the healthcare market. These include a number of services that must be covered by law, such as hormone replacement therapy or drug abuse counseling.



The basic cost for a single ride on the New York City subway or bus system is $2.25 as of September 2012. This is more expensive than San Francisco, Tokyo, Barcelona, Madrid, Los Angeles, Chicago, Washington DC and Singapore.

The Metropolitan Transportation Authority (MTA), which runs all bridges, toll booths, subway, buses and commuter railways in southern New York state and parts of Connecticut, has had budget problems for years. Financial issues brought on by the late 2000s recession have prompted fare increases, layoffs and service cutbacks.

One bright spot is car insurance. According to, car insurance in New York state is about in the middle of the country in 2012. With an average annual premium of $1,413, New York ranks 23rd out of 50 states and DC, slightly below the national average of $1,438.

When you need a place to park your car, New York City is the most expensive in the country. Midtown Manhattan is the priciest neighborhood of all, at $541 on average per month, and Downtown is second at $533. The US national average is just $155. Space is at a premium in Manhattan, where purchasing a parking space can set you back a million dollars, and complex government regulations (such as the deeply confusing alternate side parking) restrict supply. This is all on top of a unique 18.375% total tax on parking.

Central Park
Central Park


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    • secularist10 profile imageAUTHOR


      3 years ago from New York City

      Thanks! I appreciate it.

      I'm inclined to agree with you on rent control (despite having benefited from it myself). They would not be necessary if many of the regulations and restrictions on landlords were eased.

      There are still pockets of working class communities, but they are fewer and farther between.

      I think the big corporations, including the financial companies, enjoy significant political power, thus mitigating the otherwise leftward bias of the city.

    • lions44 profile image

      CJ Kelly 

      3 years ago from Auburn, WA

      Nice article. Having been born and raised there, I'm torn between the old "authentic" NYC and the new expensive, gentrified but much safer/cleaner version. I was astounded when I went back there after a decade absence.

      It's certainly not a city for working class families anymore. It's strange that politically it's so to the left but there's nothing blue collar about the town anymore. They could do things to mitigate the cost, particularly in healthcare, but the political will is not there.

      The subway is still a good buy. You can go from 242nd in the Bronx to Coney Island for less than $3 dollars. Rent control needs to go. That is counterproductive to obtaining more balance in overall rental units. Voted up and shared.


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