"The Last Leaf" was published in 1907 and reflects life in New York City at that time. O'Henry's narrator, at the beginning of the story, gives several reasons why artists choose to live in Greenwich Village, which are as follows:
First, because the streets around Washington Square in Greenwich village are winding and irregular it is easy for impoverished artists, to lose, confuse, and so avoid meeting up with bill collectors. As the narrator puts it:
the streets have run crazy and broken themselves into small strips called "places." These "places" make strange angles and curves. One street crosses itself a time or two. An artist once discovered a valuable possibility in this street. Suppose a collector with a bill for paints, paper and canvas should, in traversing this route, suddenly meet himself coming back, without a cent having been paid on account!
Second, the picturesque gables are attractive to artists, and the attic windows that let in light from the north are good for painting. As the narrator states:
So, to quaint old Greenwich Village the art people soon came prowling, hunting for north windows and eighteenth-century gables and Dutch attics.
Third, the rents are cheap.
Of course, because the artists live in close quarters, it is easier for disease to spread, such as the pneumonia that strikes Johnsy.