I have some co-workers from NYC (Queens/Brooklyn) and from what they were telling me; Only Manhattan is really crazy, not all of NYC? I'm not sure how accurate that is as I've never lived in NYC.
Most of New York is really crazy. There are many places in Manhattan that are cheaper than places in Brooklyn and Queens now.
If you have a million dollars to spend, though, you may be able to get a pretty nice studio or a pretty crap 1 bedroom, though.
(I'm sure Staten Island and the Bronx are relatively cheaper though. Ultimately the neighborhoods I want to live in are neighborhoods that most other people in my income group want to live in. Thus prices go up.)
NYC is in a much better situation than SF or Palo Alto. A lot more choice here, both in and around the city. You do have to be OK with apx 1 hr commute.