According to Michael Slattery of REBNY, key reasons are high construction costs and elimination of tax breaks. While housing supply is limited, New York City's population continues to grow and this is resulting in higher rents and lower vacancy rates.
Even if property building permits pick up, supply is still behind demand from the city's population which is expected to hit 8 million.
REBNY: Construction permits by decade
Total Housing Units
* Decade Estimate based on annual average for 2010-2011