NYC residential market poised to rise above economic jitters.

Despite aggressive action by the Federal Reserve and indications of additional future interest rate cuts, the residential real estate market in New York City has felt the anxiety caused by the swooning stock markets, a cooling economy and the recognition that sales prices may have been inflated. As the market continues to adjust we may see a further slide in residential real estate values, with prices falling between 10 and 20 percent from last summer. While the price correction is certainly a significant, the residential market is not facing a collapse, or anything like it.

Mid-market to luxury residences in established neighborhoods such as the Upper East Side, Upper West Side, Greenwich Village, Tribeca, Gramercy Park and Chelsea are best positioned to withstand possible retrenchment. However, those apartments in more peripheral areas such as the Lower East Side, Harlem and certain parts of the far West Side may give back some value.

It is important to note that New York City is still the hottest, most vital and deeply founded residential market in the nation. Corporate expansion and growth in tourism may slow slightly in 2001, but this does not mean people will disappear from the streets.

On the contrary, young professionals and families are still flocking to Manhattan, creating a dynamic and reliable tenant pool for residential property in New York City -- for both sales and rentals. Properties catering to this market include mid- to high-market rental space in both traditional areas and "hip" neighborhoods such as the Flatiron District and the Flower District.

The increasing cost of land in Manhattan justifies new rental development only in luxury or near-luxury property. As a result, recent new developments are targeted to higher-income individuals, and demand for many of the units now coming to market may be reaching equilibrium. As a general rule apartments are meeting a resistance point at more than $2,000 for studios, more than $3,000 for one-bedrooms, more than $4,000 for two-bedrooms, and more than $6,000 for three-bedrooms.

New York City's housing market generally reflects Wall Street's health, with a traditional lag of approximately six months.

The past year has been a trial for the stock market, however, it is important to realize that the anxiety over NYC's residential market is out of proportion with the realities of the industry. The traditional decrease in activity in the third quarter occurred at the same time as a drop in stock market performance, giving the impression that the housing market was performing badly. In truth, the state of the market presents prospective tenants and renters the opportunity to secure quality space at competitive rates. Manhattan's enormous draw promises that residential real estate will remain healthy in 2001 and beyond.