The Prices of Fancy New York Apartments and Where You Could Live on a Decent Salary
As I continue to look through the Sunday October 10, 1926 New York Times real estate section, I wanted to get a better understanding of what a dollar could buy when it came to apartments.
First I did some income research.
According to FRASER (the Federal Reserve Archival System for Economic Research) , a little over 4 million individual tax returns were filed in 1926.
The average net income on those returns was $5,306.43.
The average amount of tax liability was – get this – only $176.11!
So you might think that everyone was doing fairly well. Good incomes, low taxes.
But, take into account that the proportion of the population filing taxes was only 3.52%. The U.S. population was 117,397,000.
According to the Economic Bureau of Research, 44 million Americans were gainfully employed and the average annual US income was just $2,010.00.
So what could you rent or buy in New York on an above average salary, figuring 1/3 of your income would be used for housing? Let’s say your 1926 job is assistant manager at a company and you make $4,000 per year (adjusted for inflation,) which is nearly $50,000 in 2011 dollars with very low deductions for taxes.
(After a comment from a reader we decided to display alternate formulas on buying power over time – click here to see how far old money would take you today depending on the situation.)
Below are three pages of advertisements (click and click again to enlarge an ad to full size high resolution.) The first page highlights Park & Fifth Avenue apartments. Note that most prices are given in annual costs, not monthly.
The “15 minutes to Wall Street” best describes the sort of person expected to rent an eight room apartment at 1035 Park Avenue on the corner of 86th Street for $4,800 per year. The other ads on this page are clearly appealing to people whose income is at least five figures. So these apartments are out of your range.
The next set of advertisements on another page look like this.
Six rooms at 22 East 89th Street (between 5th and Madison Avenues) are half the price of its Park Avenue neighbors at just $2,400 per year. So if you wanted to live the good life but stretch yourself financially, you might be able to afford a better apartment. Of course, remember that many of these buildings will not allow you to rent or buy if you are Jewish. As one ad by Byrne & Bowman points out: these are “apartments of the better type in restricted localities…”
“Restricted” was the word used to let others know that Jews, (no need to mention other undesirables like Blacks or Hispanics – who were never accepted) were not welcome in buildings or resorts. The movie that won the 1948 Academy Award for best picture “Gentleman’s Agreement” dealt head-on with this rarely discussed subject.
A 1969 article seen here in New York Magazine by Nicholas Pileggi profiled the continuing issue of restricted co-ops. Does it still happen today? Ask a real estate broker.
Getting back to 1926, The Drake, an apartment hotel at 56th Street and Park Avenue does not divulge prices, but points out that it is for “fastidious people” who “fancy themselves hard to please” and “at prices that are moderate for the luxuries offered.”
So if you were not fastidious or rich, where could you live and what would a regular apartment cost? You had many more options as evidenced by the regular line listings seen below.
52 West 91st Street three rooms “beautifully furnished” would set you back $75 per month. If you needed more space, a five room apartment at 416 West 57th Street was $85 per month. If you wanted to raise a family or just needed to stretch out – 164 East 37th Street offered seven rooms at $100 per month.
The tenements and walk-ups where most people lived, were not advertised in the New York Times. They were two or three room cramped apartments in densely crowded areas and could be rented for $25 -$50 per month. Brooklyn, Queens and the Bronx started wooing more families with better amenities and lower costs than similar Manhattan apartments. The populations of the other boroughs grew dramatically as mass transportation was extended and improved.
The conclusion, as you might have guessed, is that really nice Manhattan apartments were expensive and out of the reach of most people in 1926. Today, those same apartments are astronomically expensive.
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Claim that “buying power and affordability today are greatly diminished compared to the past” is grossly misleading to the point of being simply incorrect when considering full range of housing……not just super high-end apartments that only fraction of the “one-percent” could afford then……and now.
First…..compared to 100 years ago………you are generally obtaining much greater performance from any dwelling today that is less than about 60 years old……including heat, plumbing and lighting.
However, most important is that real estate market always reflects ….and is driven by…..amounts that those seeking shelter can afford to spend. Interest rates applicable to housing are likely most important factor over time.
Ummm…no it is not a grossly misleading claim or incorrect. It is actually completely correct. My evidence are facts backed by proof. You’re missing the forest from the trees here mentioning tangential factors like plumbing(?) performance and interest rates, especially for NYC rentals.
On a personal level – my entire family lived in NYC since the late 19th century (and I’ll put this in your terminology) as the 99% not the 1%.
My ancestors were not rich and most were unquestionably poor. They just didn’t call themselves that and never thought of themselves as ghetto-dwellers. Everyone they knew lived in the same circumstances. They struggled with a lack of money and many lived in cramped cold-water flats. But through working hard and thrift they were eventually able to afford better housing in the 1920s (nine people in five rooms for instance). Yet there is no doubt the affordability of what one man’s salary bought was significantly more then, even in sub-standard housing, than when compared with today- that is an economic fact. The evidence is first-hand if you lived through it as they did. Unlikely you’re 100 years old so you don’t have that evidence. That becomes second-hand evidence from knowing people who lived through the time and having them tell you what they got for their money renting or buying in Manhattan (I knew multiple people who would vouch for the accuracy of what I wrote and told me their stories.) Third, the literature proves this out – for the common family that things were more affordable then and buying power was greater then – including housing.
Though the article contained more on the upper end apartments, (it is sub-titled for goodness sake: The Prices of Fancy New York Apartments and Where You Could Live on a Decent Salary) I did not only examine that realm and did reference a broader range of price points. The article also contains a snapshot of what ordinary families paid and I pointed that out though you seem to have ignored that in your criticism. Again, the buying power today is greatly diminished for the overwhelming majority pf people (or the 99%). All the evidence proves this. Look at newspapers or periodicals of the time to see actual prices of goods and services. Or even better simply look at the 1930 census which has a column displaying what a family in a typical Manhattan apartment paid in rent and in the 1940 census another column was added which lists annual income. Then read the stack of non-revisionist literature which backs up everything I wrote about apartment costs.
To gain a working knowledge of apartment pricing structures and their impacts I suggest reading what I have already read below plus countless magazine and newspaper articles from the period:
Scarcity by Design : The Legacy of New York City’s Housing Policies – Gerard C. Mildner; Peter D. Salins Harvard University Press, (1992)
A History of Housing in New York City – Richard Plunz; Columbia University Press, (1990)
New York, New York : How the Apartment House Transformed the Life of the City, 1869-1929 – Elizabeth B. Hawes, Knopf, (1993)
Population, Land Values and Government; Studies of the Growth and Distribution of Population and Land Values; and of Problems of Government – Thomas Adams; Harold MacLean Lewis; Theodore Tremain McCrosky, Regional Plan of New York and its Environs, (1929)
The Housing Demand of Workers in Manhattan; An Income Analysis of the Workers in Manhattan to Determine Rent Levels for New Apartments in the Lower East Side and Other New York Areas, November, 1938. – Homer Hoyt Federal Housing Administration, (1939)
Apartments for the Affluent A Historical Survey of Buildings in New York – Andrew Alpern, McGraw-Hill (1975)
A Dream Fulfilled City and Suburban’s York Avenue Estate – Andrew Dolkart; Sharon Z Macosko, Coalition to Save City & Suburban Housing, (1988)
i think this one line “adjusted for inflation, that is nearly $50,000 in 2011 dollars” that is actually conflicting with the facts the rest of the article presents.
2-3 room rent manhattan is about 1000 dollars a year in 1926. 4000 yearly salary is totally tax free.
so this salary is 4 times the yearly rent.
if we translate above into today’s situation, 2-3 room apts costs 60000 a year at least in manhattan. this 4000 dollars annual salary is roughly 250k after tax, which is 400k before tax.
i like your article a lot because it provides evidence that the official CPI numbers grossly understate true inflation.
Thanks for your comment and analysis.
The adjusting for inflation reference – is using the inflation calculator that is linked to in the article. Is it accurate? Probably not as much as it could be. Obviously it is very difficult to compare the value or buying power of money over time. Wages in the past and what they equate to today is even harder to peg. What it comes down to is buying power and affordability today are greatly diminished compared to the past.
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