As you already know if you follow Manhattan real estate or read this blog, the market for luxury condos in New York City has recovered almost completely from the crash of 2008. 2011 was a pretty good year for real estate in Manhattan. Condos sales had a banner year in Upper Manhattan and Harlem, and the market more or less avoided the usual slump that’s expected with the early winter months. To ring in the new year, the Real Deal polled a group of real estate experts and industry insiders to get their predictions on how the market would play out in 2012. What they said wasn’t particularly surprising; most of them agreed that this year would see a continuation of last year’s trends. But, good news for all, they provide an overall positive view of the market for luxury condos in Manhattan.

As any Manhattanite knows, there’s a tradeoff for buying real estate inside the Big Apple: there isn’t a whole lot of space. Now, although luxury Manhattan condominiums and co-ops have the persuasive appeal of amenities and friendly service, some New Yorkers are still keeping their eyes out for vacancies in the city’s limited supply of townhomes and brownstones. So, basically, all eyes on Lenox Hill, which stands out among some of the taller Manhattan neighborhoods with its historic charm and lines of single-family homes.

Lenox Hill, the bottom half of the Upper East Side, runs from 59^th to 72nd Street. Most of the townhouses in the neighborhood have been bought up, gutted out, dusted off and listed with stark prices that have defied the economic downturn. With single-family homes a furiously hot city real estate, closing prices for the Lenox Hill gems range from $8 million to $48 million, according The Wall Street Journal.  A limestone townhouse on 64^th Street for instance, sold out to renovators in 2002 at $5 million. Renovators added a pool, elevator, gym, and subsequently a ringing grand total of $21 million.

When Lehman Brothers went bankrupt in the fall of 2008, perhaps no neighborhood was more greatly affected than Harlem. The ill-timed flurry of construction in Harlem that preceded Lehman’s collapse left about a dozen new developments stranded, so to speak. In other words,  those new luxury condominiums either on the market or about to be on the market at that time suddenly had no buyers and a bleak future. So, almost overnight, the new construction revival in Harlem created a glut of luxury condos that no one wanted to live in. This unfortunate turn of events had defined Harlem real estate for the past few years, but it looks like the damage wrought by those events has finally abated: in the third quarter of this year 150 condos sold in Harlem, marking the fifth quarter in a row where condo sales in Harlem exceeded 100 units. Despite the odds, sales of new luxury condos now exceed pre-Lehman levels. Granted, this is due to greatly reduced inventory and an extreme shortage of quality inventory elsewhere in Manhattan, but this recovery is still impressive, and it spells good news the Manhattan luxury real estate market as a whole.

The New York City luxury condo market is generally recognized as its own real-estate niche. Certainly, national real-estate market forecasts have repercussions on NYC's real-estate beat--but they're limited. So don't write off the Manhattan luxury condo market to broadcasted waves of statistics just yet. Yes, according to The Wall Street Journal the national housing inventory crashed into rocky lows this year; but refocusing the real-estate market lens to apartments for sale in Manhattan, the city has seen units going up, and several buildings being re-launched after bitter 2010 presales, according to The New York Post. Manhattan is proving yet again to be the exception to the rule.

The days of massive condos that were a staple of the boom period in New York City condo construction are over, at least for now. An extremely difficult loan market has forced developers to adjust their strategies and abandon earlier efforts to build condos with hundreds of units. The result is a sharp drop in size: according to data compiled by StreetEasy.com, new condo projects in 2005 and 2006 averaged 83 units per building, while so far in 2011 the average is 34 units. Additionally, StreetEasy.com reports that developers built 10 condos of 100 units and over in both 2005 and 2006, but this year there is only one such condo being built.

The crux of the problem is that the money just isn’t there. New York City’s overall real estate market may be healthy – at least in comparison to the rest of the country - but financing large projects is difficult at best. Extell Development Co. president Gary Barnett told the Wall Street Journal that, "It's extremely difficult to finance large condos. Rentals you can get done, you can get small projects done." The residential high rises that define many neighborhoods, such as Midtown Manhattan, have also tapered off severely for similar reasons. In the eyes of the banks the market demand for these kinds of buildings is simply not strong enough to justify their creation. Loans in the ranges of $25million – $75 million are now the norm, a far cry from loans of $500million+ needed to build larger projects.