NYC is a big place and its not all the same. One could, for example, live in Brooklyn, pay a more reasonable rent and be surrounded by interesting people all with access to great food and bars. I suppose you could stretch that a bit further to Queens as well.
Manhattan itself is quickly changing into a business district. You go there to work, grab dinner or hit the theater, then leave.
This is by far the best way to live comfortably in NYC. People forget how diverse the city is. Everyone thinks that you just have to be in Manhattan. Yes if you are working for a startup in NYC it will be located in Manhattan (Etsy is an exception), but there's no real good reason to live there. It is a fantastic place to work and dine, that is for certain, but in terms of living it is overcrowded, overpriced, and quite noisy.
In Brooklyn or Queens you can have plenty of room for much cheaper than Manhattan/SF/Seattle. There are one bedrooms in Astoria that start around $1200 and with a roommate you can easily be paying less than a grand each for a BIG place in a great part of the City. Almost all of the creative and intellectual activity in NYC comes from Brooklyn/Queens, whether its the rise of new and interesting publications (N+1, for example), art houses being opened, exhibitions being held, wild house shows or rooftoop parties and so on and so forth. It has a great vibe that I have yet to get from any other city.
I remember being on a rooftop in Greenpoint with some friends, having a nighttime barbecue, and they had a marvelous view of Manhattan. I mentioned that it would be nice to live there and my friend just laughed, saying "The city looks so beautiful now. Why would you want to ruin it by living there?"
What parts of Brooklyn? Isn't it hard to get to work in midtown if you live in Brooklyn? The "nice" parts of Brooklyn always seem just as expensive as Manhattan when I check.
The nice part about Midtown is that it's connected to everything - every subway line except the G and the L go through it, so if you live anywhere along a subway line (again, not the G or L), you can get to Midtown.
What you say is true though, the "nice" parts of Brooklyn are as expensive as, if not more expensive than Manhattan. Manhattan's cost of living, relative to NYC in general, is plateauing, while Brooklyn is shooting upwards. Rent on the Upper East Side is downright affordable now, and even not-super-cool neighborhoods like Chelsea have stabilized.
Compare with Park Slope, where the price ceiling is nowhere to be found, or Williamsburg which is definitely more expensive than all but the most desirable areas of Manhattan. Dumbo too.
But, good news is, there are lots of gentrifying-but-not-quite-done-yet neighborhoods in Brooklyn. Bushwick and Prospect Heights come to mind, though I'm sure there are others I'm not remembering.
This always reminds me how much neighborhoods can change. I still remember my friends in Bushwick who wouldn't let me ride the subway home (I lived in Flatbush). This was after her dad's bodega had been held up for the third time in a month.
To think of that neighborhood as going upscale is almost unimaginable.
The parts of Brooklyn that are closer to the waterfront have become quite expensive, I agree. They are not on par with Manhattan when you compare the actual size of the space, but they are getting closer. They should still be high on the list of living places, because Brooklyn has more of a community feel to it than Manhattan does. Rather than going further back into BK, I would suggest looking into Queens, esp Astoria. This will also offer you easy access to Midtown. Same with Long Island City.
To the list I should add Jersey City. It's rapidly changing and has multiple train (PATH) stops that quickly get you in to the city (well, not now with Sandy repairs, but normally). It remains far more affordable than Manhattan. The fact that the NYTimes in the past month has wandered in to JC twice to review restaurants is a sign of the changes taking place. And along it's waterfront it has some pretty stunning views.
