Residential market defying recession trend.

The real estate phenomenon that's underway today is like no other we've ever seen. Typically, the real estate market rides the tails of recession when it rears its ugly head, and conditions are directly affected by the economic downturn that follows. We all remember the 80s - in particular when the real estate market tanked - and more recently felt the industry hold its breath just last summer when signs emerged that times ahead might once again turn dismal.

In terms of disaster, things certainly could not have gotten worse considering the tragedy of Sept. 11. Lives were lost, buildings were destroyed, jobs were dissolved, people were disheartened. To make matters worse, by late November, our government officially declared the country in a state of recession, marking the end of longest uninterrupted expansion of economy in American history. Yet besides the New York spirit and resolve of the city's people, one other thing did surprisingly remain resilient - the New York real estate market.

Sure, activity was at a halt right after the attack, and pretty much all of October but, by December, things began turning around and regaining momentum to return somewhat back to normalcy. People rallied for their city, showed their compassion, and toughed out the times - again, it was unlike any other recession. They weren't leaving, and neither were Manhattan's companies. The city was on the road to rebuilding. As a result, property values, though they may have taken a slight dip, stayed strong, as they are still.

There are several reasons why, at least where real estate is concerned, this recession has affected our industry differently. For one, mortgage rates have been consistently lowered over a short period down to the lowest they've been in 40 years, keeping property purchases attractive and sales activity on track. Secondly, more people, even lay people, are investing in real estate. Confidence in the stock market has plummeted, and the public firmly believes that real estate is far less volatile. They're right. There's no question that real estate remains today's most solid investment. In fact, historically it's been shown that despite cyclical downswings in the real estate market, values have always rebounded and provided positive returns. No such support exists when it comes to the stock market, and there's absolutely no guarantee that people who've invested there will ever see a penny of their money again.

Another reason for people buying and holding onto property seems just as obvious. Investing money in real estate brings a far greater return than merely putting funds into a two-percent yield savings account at a bank. You might not be able to pull it out as quickly, but you certainly won't get rich that way either. Letting money sit in a bank over time won't even come close to accumulating what you need as a down payment to put a roof over your head!

From the banks' standpoint, foreclosures right now are a thing of the past. Why? Because banks have been substantially more responsible as far as lending over the last six years than they were in the late 80s/early 90s. Conservative is the word of the day. With consumer loans to individuals, banks of late are only loaning 70 to 80% based on either the lowest, purchase price or on the appraised value of a property.

In the commercial arena, much of the same was true. Today, however, banks are playing it smart here as well. Their general lending ratio is 65 to 70% loan-to-value, meaning that even if the market drops 35%, the bank will still be covered on their loan. Rents will of course drop, but basically the landlord is the only one who'll suffer. Summing up, real estate, whether in the heart. of Manhattan or throughout the tri-state area, is the most conservative of risks-when it comes to planting your money somewhere, and can often be the most profitable and secure of all investments, despite the presence of recession.