Real estate prices will rise and fall to reflect demand. If prices are ridiculously high, that's because lots of people really want to live there.
Or:
1. It's extremely difficult to build. Only moguls can build new properties in New York, hence the emergence of the massively overpriced "luxury buildings" with unnecessary and expensive conveniences.
2. Government irresponsibility. The New York government should be barring the parentally-funded nonproductives (e.g. fashion interns who whine to their daddies and get $5000/month apartments and useless hipster idiots) from living here, because of their effect on the rents, but right now that isn't happening.