A recent N.Y. Times article, Looking for Bottom in N.Y. Real Estate, caught our eyes. It dealt with the same question we touched on last week... ? Here's a fascinating theory on the nature of the downturn:

Large drops in prices are not new in the city. The last decade-long increase in prices was followed by about seven years of falling prices starting in the early 1990s, said Ingrid Gould Ellen ... “It’s possible that rather than seeing price declines spread out over a six-year period, this time it could be concentrated in a two-year period.”

Plenty of other good stuff throughout the article. Some analysts predict more slumps, but...

"Values are coming down,” said Pamela Liebman, the president of the Corcoran Group. But, she said, “there’s no way the Manhattan market is dropping to those levels that are being talked about. Certain apartments might, but as a whole it will not happen.” Hall F. Willkie, the president of Brown Harris Stevens, said he, too, would be surprised by a decline that large.

Higher-end apartments are also likely to level out first, giving the market a stable base:

Many expect that the million-dollar segment will stabilize first because it is powered by first-timers who are drawn by falling prices and don’t have to sell before they buy.

The Times also shows that Manhattan co-op resales may be the best bet for buyers, noting that some notoriously conservative boards are starting to get the picture.

“What we see is that boards are scrutinizing the purchases carefully but not striking down the deal because the price isn’t high enough,” Mr. Peters said.

What do we think? Source: Looking for Bottom in N.Y. Real Estate