Basically, the reasons you thought.<p>* Geographic constraints to adding housing, plus a difficult regulatory and business environment to do new construction in.<p>* 0.8% of houses are owned as speculative investments, not housing.<p>* Prices capture access to the world's best public transportation system and all the shops and restaurants connected to it.<p>* Salaries are higher and so there's less pressure from tenant price ceilings.<p>I'm not sure I understand why the investment property thing is such a potent force, even though it was given multiple grafs and an chart in the article.
> Right now, nearly half of the rental housing stock in New York City over all (as well as in Manhattan specifically) is rent-regulated, meaning the apartments are either rent-controlled or rent-stabilized. Another 17 percent of the rental housing stock across the city is public or subsidized (20 percent in Manhattan specifically).<p>In other words, almost 2/3 of private-market housing is rent-regulated!<p>One of the things that's not often mentioned in this connection is that housing regulation has ripple effects through time. It takes time to build up a wide array of housing stock for different price points. Most housing stock in major cities was built in the 1960's-1980's. So New York doesn't just suffer from its rent regulations now, it suffers from the rent regulations that constrained housing construction over the last several decades.<p>Compare Chicago, which has very affordable housing, and which has never really had rent-control (with the exception of federally-mandated rent control during World War II) and where there is a state-wide ban on rent-control ordinances at the municipal level (since 1996). See also Philadelphia, which also has no rent controls and very affordable housing. Of course, these cities are not built as densely New York, and you'd expect to pay a premium in a place like New York simply by virtue of the lack of space. But had New York allowed the construction of high-density housing to meet demand in the 1970's and 1980's, you'd see far more affordable prices today (and see far less "waste" in the form of vast swaths of low-rise buildings on much of an island that has no business having low-rise buildings).
NYC is such a desirable place for people to live that demand will be very strong and supply will be tight for a very long time. Economics 101 suggests that prices will be elevated as a result.