[The Man]

Your understanding of economics is woefully flawed. If the demand is so strong and high, there will be more incentives for capitalists to build more housing, thereby making themselves filthy rich off of this high demand.

As more and more housing is built, the supply level rises to meet the demand level, and prices level off and stabilize (and often drop).

Right now, there is an artifically low level of supply vis a vis the demand, because of rent control.

And no, you are probably not going to be paying as low as you would in any other city, but it will be lower overall eventually if rent control is scrapped.

[Black Agnes]

Manhattan is an island. Supply therefore, will always be limited. Demand, unfortunately, hasn't been limited anytime recently.

[firebrand]

But as even Malanga pointed out, all the other incentives or nonincentives in New York are very important. In addition, not mentioned was interest rates. When rates are low, people build. In fact, there is quite a bit of rental building going on in the city right now.

There are many factors governing what out-of-towners are willing to pay for rent, also, such as going salaries, the state of the economy in general, and demographics (large graduating classes cause rentals to go up).

As for the schools: The situation is that NYC (and Washington) has an elite worker class, served by minorities. Because NY is a magnet city, the influx of very qualified college grads is constant. Why should an employer (absent federal laws, of course) hire a poorly prepared high school grad when she can hire an Ivy Leaguer? Thus the kids have nowhere to go but service jobs, to make sure the elite have their packages delivered, their tables bused, etc. Having nowhere to go tends to stifle incentive to do well in school. Even graduates of the city colleges (open admission until recently, with remedial classes) are poorly prepared in comparison with someone from New Trier High School.