Borough homes back in fashion.

Demand for moderately-priced housing in the boroughs, especially in areas once beyond the pale by property developers, is forecast to continue rising, according to urban policy analysts.

And not even a downturn in the economy or a major terrorist attack is likely to halt the trend towards building in the boroughs.

"The overall strength of the New York housing market and rising Manhattan prices is such that, in areas with subway access, you can continue to expect continued development, even in "edgy" neighborhoods," said John McIlwain, senior fellow for housing at the Urban Land Institute, a non-profit research and education organization.

"We have had as bad a terrorist incident as we can get and it slowed things down, but things went on. What terrorists don't understand is the size and power of a city like New York. The targets are in Manhattan. If you are nervous about Manhattan, I think you will find more people will move to the boroughs."

In recent years, neighborhoods such as the South Bronx, Red Hook and Queens Plaza, which often in the past made the news for more negative reasons, have hit the real estate headlines with record-breaking sales.

Earlier this month, Fillmore brokers, Nicole Galluccio and Marsha Yarde, sold a two-family home in Brooklyn's Red Hook for an unheard of $1,065,000.

"Red Hook has an emerging restaurant and bar scene," said Galluccio. "That, coupled with a very strong art community and relatively low property prices, have made Red Hook the city's new 'it' neighborhood."

Indeed, McIlwain said that while soaring city prices is the push-factor that drives moderate-income residents to look away from the Big Apple, the pull-factor is artists already populating low-income communities and establishing a vogue, turning peripheral places largely for the poor into trend-spots.

"When artists move in, they get interesting, which becomes a pull for younger people looking for something less expensive, but more interesting and it begins to pick up," he said.

Areas in and around Queens Plaza, a small-manufacturing district just north of the Queensborough Bridge, have also been slated for thousands of new housing units, including The Queens Plaza, a condominium complex being built by developer, Shlomo Melkman, a block from Queensboro Plaza train station.

"We opened not even two months ago, yet we are close to being 50% sold," said Highlyann Krasnow, executive director of the Developers Group, which is marketing The Queens Plaza.

A deluge of Manhattan residents to the neighborhood is expected over the next few years, according to the building's project manager, Shana Bowes, especially from first-time buyers who are currently renting in Manhattan.

"It's only a few minutes from Manhattan and people are fed up with high rents--that, and it's 10% down," said Bowes. "They want to get in now before it starts expanding out there because by then they would not be able to afford it at all.

"Queens Plaza is already a big artsy area and will see new coffee shops, boutiques and grocery stores for all of these people who will be in the area within the next two years."

The Developers Group is also marketing luxury duplexes in East Williamsburg, a neighborhood expected to follow North Williamsburg, which segued from a run-down neighborhood in the mid-90s to an evolving enclave of artists, hipsters and other trendsetters.

Developed by the Moses Group, 158-160 Manhattan Avenue and 199 Humbolt Street in East Williamsburg, will feature 24 duplex apartments with prices starting at $420,000. "We expect buyers to be attracted to the lavish residences, outdoor spaces and well-priced apartments," Krasnow said.

According to McIlwain, such trends have already changed the face of the city and so it is not necessarily surprising that they are radiating outwards.

"The city has always been finding new neighborhoods and changing them. Look at the dramatic change in Soho some 30 or 40 years ago. People forget that it was once all manufacturing. It is not new. What is new is that it's happening in the boroughs and not in Manhattan," he said.

Get in their now while it's affordable, said Magnus Magnusson, principal at Magnusson Architecture and Planning, whose firm has been designing housing in the Melrose Commons section of the South Bronx.

"There's a rise, an unbelievable demand for more moderate-income housing, but that is beginning to change to mid-level," he said

The trend isn't expected to be without its bumps and pitfalls, however, and the cooling market would probably slow down or even freeze some developments, at least in the short term, according to Jeffrey Otto, a policy analyst at the Citizens Housing and Planning Council, a non-profit public policy research group.

"A lot of neighborhoods that are experiencing gentrification at the moment haven't progressed enough to keep those gains through to the next downturn in the real estate cycle.

"So if we look historically at the Lower East Side, you saw signs of gentrification in the early 1980s, but it was not until several real estate cycles later that it solidly became a gentrified primary market. So neighborhoods like Harlem that are picking up at the moment are at particular risk in a slow market," Otto said.

Nevertheless, he said that despite such setbacks, such a movement in outer-borough redevelopment would probably only slowdown what is seemingly inevitable, especially in light of predicted high-population growth.

"There are still a lot of reasons to be optimistic" said Otto. "The city is forecasting nine million residents by 2030 and that means, in an environment with little spare land, there will be a lot of pent-up demand, irrespective of the real estate cycle.

"Our organization has been talking about the need to talk about community development issues outside of the five boroughs simply because we are not positive that New York City can handle the amount of population growth that is projected," he said.

But it's what's going on now in the market that matters most, according to Neil Binder, principal at the Manhattan brokerage, Bellmarc, who said that, while the going is good, outer-borough developments represent a great investment.

However, he cautioned that the overabundance of developments springing up outside of Manhattan means that if the market goes south in the city, the outer-boroughs could crumble.

"These markets will do very well as long as there is a continued upsurge of central activity in Manhattan. It's like a stone hitting water: if that central surge declines, so do the ripples.

"We have 25,000 plus new housing [coming to market] and I am concerned about that. An overabundance of supply changes the demand-supply relationship. Can the market accept enormous amounts of new product? It's a big risk both ways. When it's good it's great, but when the market is bad, you cannot sell product in the outer boroughs," he said.