For example, if you buy in a semi-rural area or suburban area the pool of applicants can be much smaller and with an increase in supply it creates a downward pressure on prices and higher days on market averages.

Form what we are seeing and experiencing, nationwide rents are decreasing and evictions are increasing.

A capital expenditure typically either increases the value of an existing asset or adds an entirely new asset.

The cash flow is good given I am on a very low interest rate besides I am a DIY live in landlord currently .PITI is a little less than 4k while I make a rent of 5k while living for free and there is lot more room to increase rent.

Yes, in recent memory, aside from the sub prime mortgage crises which caused prices to drop, over time housing prices in New York City has increased substantially. 

It has worked out well for me and I like not having to pay taxes on the gains which helps me increase the amount I'm able to lend next time if needed.

It is brand new build, so no room to increase value outside normal appreciation.

So our cash flow was reducing during our hold due to poor ADR increase and large insurance and prop tax increases.  

High property taxes and increases in insurance are very real there as well.

[Source: National Association of Home Builders]Demand: The chart below illustrates the steady increase in household formation, a key driver of housing demand.