Explanation of NYC's 9/11 Boom.

911-real-estate-boom

Real estate (like oil in the short term, cf. "oil shocks" of the 1970s) is extremely supply-inelastic, 
such that a 1% loss of supply might cause prices to go up *a lot* more than 1%-- possibly 10%, 20%, 
even 2x. The result of this is that a destruction of real estate supply will actually increase the 
*total* market value: a cataclysmic loss of 5% of NYC's real estate would drive prices through the roof 
and make the price level look "healthy" (from the buyer-centric perspective common in the US when it 
comes to housing). But no value was created! Much was destroyed. 

The 2000s run-up in NYC's housing costs was driven largely by speculation after 9/11. While we 
*actually* had 12+ subsequent years with no major domestic terror attacks, there were a large number of 
(esp. foreign) speculators who expected future attacks in major cities and bought lots of RE in 
anticipation of massive supply destruction. That destruction never happened, but the bubble developed 
its own momentum, and later dovetailed with the (originally separate) worldwide housing bubble (due 
to a weak stock market).