City counts blessings as numbers settle.

The health of the city's residential market continued to stabilize during the first quarter, with prices showing respectable gains but not racing out of control as they did last year.

"This market is coming off 2004 and [the first] half of 2005. Then, we were going 120 miles an hour; now we're doing about 70 miles an hour, but it feels like you're crawling," said Daren Hornig, president of Dwelling Quest.

"Business is sound. We're making money and doing transactions, just not at the pace and pulse of six months to a year ago. There are 5,000 apartments available in New York City today and millions and millions of people living here and tens of thousands a month wanting to move here. I still see it as a very good business. I think numbers will continue to get better over time." According to Halstead Property, LLC's first quarter market report, the Manhattan residential market is rising considerably, after dropping off during the last half of 2005. The report stated that the average apartment price rose to $1,258,420, up 8% from the same time last year and up 15% from the last quarter of 2005.

Prudential Douglas Elliman's 1Q06 Manhattan Market Overview, compiled by Miller Samuel Inc., also reported an increase, but at a significantly slower pace.

The report says that the average apartment sales price has hit $1,300,928, only 7.1% higher than the first quarter of 2005, and just 9.6% higher than the end of 2005. The average price per square foot hit a record at $1.004. only 0.2% higher than the previous quarter, but 10.3% higher than the first quarter of 2005. The Corcoran Group's first quarter report yielded similar numbers.

Some brokers say a handful of super-luxury sales--such as the $45 million 15 Central Park West condo sale and the $40 million Duke Semans mansion deal--may have artificially inflated the bottom line numbers.

According to Jonathan Miller, president and CEO of Miller Samuel, said that the large number of upper end sales propelled the median and average sales price to spike 9% over the last quarter and he said that could give the false impression that prices will continue to increase this much each quarter.

However, Gregory Heym, senior vice president, director of research and communications and chief economist at Halstead commented, "A handful of extremely large sales isn't going to swing the market one way or another.

"The numbers were up in every category, not just [in] high-end condo sales," he said. "As a whole, some of the largest growth we saw was in the studio and one-bedroom market. You're always going to have a couple of sales that are extremely high in any given period."

Heym believes the first quarter numbers forecast a return to a more moderate, sustainable growth, in the 5-10% range on an annual basis. Last year New York City saw 25-30% growth. "Unless something drastically changes, like interest rates, it's hard to imagine the market will swing one way or the other too wildly, because fundamentals for the market are still strong," he said.

Teplitzky says the market is strong, but she doesn't see prices going up. "I'm seeing a stabilization and ... [a] good balance between sellers and buyers. There is nice activity on marketplace and the market is responding to this activity. Buyers are coming to the table and buying property, but they're also being cautious."

According to Miller, "We're seeing some very modest appreciation, or, I'd call it flat. I'd characterize the market as moving sideways. Second quarters historically are the strongest in terms of the numbers of transactions and prices achieved, so there's an optimistic outlook for spring.

The double digit gains we've had over the last several years are not sustainable in a long-term scenario. You reach a point where purchase price and personal income levels disconnect."

Added Hornig, "Interest rates are still low, the economy is still strong and it's still a good business and a good market. It's just not completely out of control like the last few months were."

One cloud on the horizon, though, may be a surge in inventory coming on the market. According to Miller, the first quarter of 2006 was the fifth consecutive quarter where inventory increased. Currently, there are 6,904 units on the market, a 59.6% increase from the first quarter of 2005. According to Miller, that's the highest it's been since he began tracking inventory in 1999 and is nudging the historic highs of the early 1990s.

The increase in product will give buyers more to chose from and that, according to Teplitzky. will impact the length of time it will take to sell an apartment in New York City.

"In the first quarter, the number of days to sell an apartment was largely unchanged [from the previous quarter] to 138 days. We might see a little bit of a change in that," added Teplitzky, who said that posed no great problems for brokers. "As long as the market is in balance, we're going to be in a good situation."