The economy was growing there and it was becoming popular.
The constant habit of trying to compete with others’ social status, wealth, and possessions. was the reason why the rush to build overly extravagant mansions in New York started.
People need to keep up with certain social level among their neighbors so if a person built a 3 floors house or a new room all the rest needed to have the same at least, even more, if it was possible.
The reason why huge mansions began to be built in New York during the late 1800s and early 1900s was because of social competition. This is sometimes known as "Keeping Up with the Joneses." As more families acquired wealth in new industries (such as coal, steel, banking and railroads), they began to fight for status and a chance to belong to the highest class of society. In order to achieve this dream, they would invest a lot of money on luxury goods, including gigantic mansions. This is a behaviour that can still be seen among the rich class nowadays.
The reason why huge mansions began to be built in New York during the late 1800s and early 1900s was because of social competition.