What do you think has been going on? There are buildings downtown going for pennies on the dollar and they are still not moving. There are plenty of hotshot developers & RE "playaz" who all of the sudden were deep in the hole as the banks stopped providing cheap credit. I don't know what half these guys are counting or hoping for, but it's quite similar to a bad trader/investor unable to face reality & take the loss. Well if you're really so sure, put your money on it. But betting on hope rarely pays out well. There are some astute investors buying right now, but their valuations assume no appreciation for years. It's all based on current income with conservative estimates.
Don't forget the RTC portion of the cycle. In the last depression, people buying RTC assets on the cheap had clear competitive advantage and could offer space at like 50% of in-place lease rates. they could steal good tenants & offer lots of concessions, including build-to-suit suites. One result was that marginal properties and owners were tipped over as the price/lease structure ratcheted lower with each new RTC deal. Better to be a little late than way too early. Interest rates weren't at these low levels last time either.
Gees, the chart looks messed up. You mean the highest average median sales price was in '02, just months after 911? I don't think the national median sales prices would follow that same pattern. (I checked a few, they don't) That's odd.
First of all, NYC is a way different animal then anywhere else in the country. Secondly, if you look at those charts, the number of homes sold was down considerably so there was less "sample data". People with money used that opportunity to buy more expensive homes, but as you can see the total number sold was way down.
If you look at trulia and check the median prices of the 5 boroughs in the same time frame, the trend is up and not peaked in '02 as the chart suggests. The chart is misleading, imo.