Agreed. Thats exactly the case. Now i dont know if you are aware but NPR (National Public radio) is doing a very exclusive show about real estate in different cities and i guess they started with NYC. They totally uncover the whole gimmick. This whole game is played on such a broad scale but as you said in the end a normal working class person ends up with maknig a choice b/w spending more and living all squeezed up or bearing the pain of commute while having the family enjoy broader area.
Try to listen to that show, must be available on podcast