Is Manhattan Immune from the Real Estate Bust?

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Many of the strictest buildings often insist that prospective buyers have liquid assets equaling as much as three times the apartment's asking price. So, if you're talking about a $5 million apartment, you need at least $15 million in the bank. Other real estate holdings don't count.

Subprime loans and foreclosures, as a result, are rare.

"Here you have to put skin in the game," said Mitchell Hall, associate broker with Coldwell Bankers Previews International. "It's not easy to buy a place in New York—you have to be really qualified." Translation: rich.

Nail-Biting Time

The fact that Manhattan has—at least so far—escaped the downturn doesn't mean it won't get hit. With a recession looming, plenty of job losses are expected this year on Wall Street, where bonuses are also expected to shrink.

The new condos being built—with ever increasing prices—could also create an oversupply of luxury real estate.

Even Spinola of the Real Estate Board concedes that the market could flatten in a recession.

New York real estate is by no means immune to dips. Prices dropped during the recession in the early 1990s and following the 1987 stock market crash. The biggest postwar decline came in the 1970s, when the city went bankrupt.

Jonathan Miller, president of New York appraiser Miller Samuel, said even though prices are rising, sales activity is off from last year's record levels.

The boroughs are doing worse. Expensive Brooklyn neighborhoods such as Brooklyn Heights, Cobble Hill, and Park Slope have mirrored Manhattan's strength. But middle-class communities farther out have been weakened by the subprime crisis and the credit crunch.

Median home prices in Queens fell 12% in the first quarter from a year earlier, according to the Real Estate Board. The median price dropped 9% in the Bronx, 2% in Staten Island, and 1% in Brooklyn.

"Look we've had a very brisk real estate market for the last four or five years," Miller said. "The New York region has held up better than virtually any market across the country. But we are not immune to situations on the national scale."

See the BusinessWeek.com slide show for the most expensive real estate listings in Manhattan.

Gopal writes about real estate for BusinessWeek.com in New York .