There is a new – and I mean brand-spanking new – Tumblr called The Worst Room dedicated to one person's online search for decent and affordable (by NYC standards) accommodations in Brooklyn or Manhattan. Granted, s/he is looking in what is likely the most expensive market for rental quarters in the United States, but it is nonetheless staggering to see how substandard some of these places are – and at what price. If you doubt that these would-be landlords will find eventual takers for these hovels even at these inflated prices, befriend some young, marginally employed New York folks and they will set you straight. Sure, perhaps the guy asking $1900/month for a loft bed in Lower Manhattan might be overreaching, but I wouldn't put it past any of my New York comedy friends to live in these places. Hell, they'd probably try to fit multiple people in the $300/month breakfast nook.
There are many, many advantages to living in NYC, including nearly unlimited access to entertainment and cultural opportunities. The rest of us miss out by comparison. That said, it's pretty nice to pay under $800/month for a giant two-story house built in 1911 rather than $1200/month to share a third floor walk-up with two weirdos I met on Craigslist. I know, I know, the costs are low here for a good reason, namely that there is no demand. Nonetheless, every time I've looked at the costs of living in places like New York I've been floored to say the least.
Two quick anecdotes. First, I was once shown an apartment in Madison, WI in the attic of a house with a sharply angled roof. The ceiling was approximately 5'10", or approximately 4" shorter than me. The realtor continued to make her pitch, as if I would be renting this apartment in which I could not stand. Second, an old acquaintance moved to Brooklyn in the early 2000s and ended up paying a couple hundred bucks per month to live (illegally, of course) on the roof of an apartment building under a tarp. I mean, at that point I'd probably forgo the NYC dream and settle for Chicago.