NEW YORK CITY-The price of residential condominium units seems to be rising at every price point demonstrating the fiscal health of New York City, the continued increase in rents of available rental units in a city where not nearly enough housing is built each year to house an ever increasing population, and the huge amount of foreign money coming into New York. Although there are regular reports of apartments selling above $3,000 a square foot and many at higher levels, prices are increasing at all levels while buyers compete for the limited inventory.

The current condominium craze is occurring in both new construction and conversions where sponsors are attempting to rush plans through the Attorney General's Office, which has increased its review and disclosure requirements as a result of issues that arose during the Great Recession.

Of course, the increased review has slowed the process, which had exacerbated the shortages and is a further reflection of the price appreciation. An article in the Wall Street Journal last week warned that the sales activity at the end of 2012, resulting from changes in the Internal Revenue Code, could have an adverse impact on prices and sales activity in 2013, but the reality has been the opposite. Since January and notwithstanding the cold and wet winter, the number of sales and the prices for the units under contract have continued to increase to record levels.

The reason for the market surge is a combination of the perennial shortage of housing in New York City, the flight to safety from a Europe in recession, unrest in the Mideast, the softening in the Chinese economy, asset inflation caused by the Federal Reserve's continued pumping of money into the economy to bring down unemployment and to build the capital and reserves of the banking system through QE-3, and the Fed's other measures to strengthen the economy. Of course, with bond prices soft, a stock market at record (and unsupportable based upon likely earnings) levels, and the virtual disappearance of interest paid by banks, owning an appreciating asset is a good investment. Moreover, if the investor can either reside in that investment or rent it to third parties at a profit, an expensive apartment provides a home and, ultimately, a financial return. Of course, that presumes that New York City will continue to be a world financial, cultural and entertainment capital with a housing shortage. Those factors make investing in New York real estate less risky than almost any other kind of investment.

One other factor to note: Not only is there an upsurge in residential sales, but also in development rights (also known as air rights). Since last summer, more and more property owners are being approached by developers seeking to purchase the development rights that, in many instances, the property owners did not even know they had. As the real estate market has strengthened, those rights become more valuable and many owners are benefitting from being able to sell something they were not using.

Stuart Saft is a partner at Holland & Knight in New York City. He can be reached at [email protected]. The views expressed here are the authors' own.