Unfortunately, Airbnb is probably the only way a middle-class family can earn money on investment properties. No one in their right mind would rent a $1,000,000 condo for (1% rule) $10,000.
So a million dollar condo would be 50K a year, or about $4200/mo, which is exactly in line with current nyc rents.
On the other hand, all the properties I manage do 0.5% per year and have all been profitable, not even including the appreciation on the property.
I'd go so far as to say that if single family residential is your strategy it's better to take the multi-million dollar investment in a single home in the Bay and make one in 5-7 (or more) homes elsewhere. The appreciation is drastically lower but the cap rates are amazing (much higher cash flow) and the risk is spread out. Of course, with that kind of investment it's better to go multi-family or commercial anyway.