Silicon Valley has high housing prices BECAUSE of the established momentum in technology. New York is going to have high housing prices as long as it is a highly remunerative place to work. It's possible to address the housing problem directly in the case of low income residents, but addressing it for the middle class has never worked out. Better transit lets people work in the city and commute from further away, which is one way of mitigating the housing expense problem.
This is caused in large part because the disposable income excluding housing increases far more than 30% and you don't need a car. Add in a culture of people willing to have roommates and a limited housing market due to rent control and you are going to see huge price increases.
The biggest issue, as Edward Glaeser points out: http://economix.blogs.nytimes.com/2010/05/04/taller-building... involves the many restrictions on new buildings. Until very recently, most buildings in the 1990s -- when real estate became not just expensive, but absurdly expensive -- were smaller than their predecessors: "Market forces pushed for taller structures, but structures got shorter, at least until the Bloomberg years, because of a regulatory environment that made construction increasingly more difficult."
All sorts of really dumb laws make housing more expensive. Rent control and projects take huge swaths of housing out of the market, reducing supply and raising costs. Onerous regulations and NIMBYism make building new buildings difficult (e.g., hippies in the village often block construction of new apartments). Because of rent control most new buildings will be either luxury buildings (not subject to rent control) or condos.
There is a simple solution to housing prices: move subsidized housing out to Jamaica (increasing supply), end rent control and let developers build. Unfortunately, the local culture makes this exceedingly unlikely.
A lot of the new housing going up (and the reason for the NIMBYism) typically has these attributes (a close friend was in a similar building in BK):
* Extremely shoddy construction (2 years after being built, severe water damage from leaking windows)
* Blank concrete walls with giant leaky windows
* Extremely poor soundproofing
* Overpriced for their size and quality
* Thus, attracting more affluent, less intelligent, and typically more dickish yuppy types
The "simple solution" you propose would be terrible. It would ghettoize Jamaica even more than it already is - even if not done for racist reasons (I'm convinced that's not your reasoning), it would come across as this and get an immense amount of backlash from the council, the population, and community boards throughout the city.
Thus, attracting more affluent, less intelligent, and typically more dickish yuppy types
Therein lies the real reason. "If we allow new construction, people who are different from us will move in!"
By the way, companies building rental buildings rarely construct them poorly. It's just bad business - once the building starts to leak, renters will move out, and it's the responsibility of the management company to fix it.
As for shipping projects out to jamaica, I didn't mean to single out Jamaica. You could spread it around all the cheapest areas in NYC. But yes, you are correct that it is unfeasible, since people will fight it for cultural reasons.
The problem is not lack of new buildings. There are dozens, if not hundreds of mostly empty new buildings in Williamsburg, Greenpoint, LIC and downtown Brooklyn.
The expense of housing in NYC is not tied to any real "fundamental." The owners are charging what they think the market will bear. The smaller tenement style and brownstone buildings in the hot rental areas of Manhattan and Brooklyn were usually purchased and fully paid for back in the 1980s... My old landlord owned a block of avenue B that he bought for about $80K per building back in the 80s. Paid off decades ago. He's charging $2400/m per unit. Shit apartments, roaches, old appliances, noisy... The whole alphabet city experience from the 80s still available to BFFs from Maryland psyched to be at NYU!
