Sule Aygoren Carranzais managing editor ofReal Estate Forum and editor of MultiHousing forum, from which this article is excerpted.

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New York City—The slowdown in the housing marketnationwide apparently hasn't made a dent in the Big Apple'sresidential sector. According to Prudential Douglas Elliman,prices for cooperative units, condominiums, luxury residences andlofts in the city were at or near record levels at the end of Q32007, the most recent figures available.

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Across the residential spectrum, the average price per sf for aunit was $1,144, a 9% increase from the $1,050 reported in Q3 2006and 0.4% higher than the $1,139 in the second quarter. For a unit,the average sales price came in at nearly $1.37 million, up 2.7%and 6.3% from the prior quarter and year, respectively, when theprice was $1.33 million and $1.29 million.

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Meanwhile, the median sales price of a unit in Manhattan was$864,397, up 2.3% from 2006's $845,147 but down 3.4% from secondquarter 2007's record median sales price of $895,000.

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The price of three- and four-bedroom units saw the biggestgains, with their average prices increasing 17.9% and 16.4%. Still,studio prices declined by 5.1% and one- and two-bedroom units fellby 6% and 4.7% between the second and third quarters of 2007.

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Though the inventory of units available for sale has declined,the number of sales continues to increase. The third quarter saw3,499 transactions, up 65.6% from Q3 2006's 2,113 units but down11.2% from the 3,939 units that traded in Q2 2007. The elevatedsales activity has served to reduce inventory levels over the pastyear by 31.7% to 5,204 units, down from 7,623 units in the prioryear and down 0.6% from the prior quarter total of 5,237 units, thelocally based firm maintains.

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The strong sales have caused the listing discount and days aunit remains on the market to shrink. Fewer units on the marketmeans the ones that are available are snapped up quicker--unitswere on the block for 123 days in Q3, down from 150 in Q3 2006.

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Regionally, price gains were seen in all the city's submarkets.The average price per sf for an apartment unit Downtown was $1,120,up 12.8%--a record price. On the East Side, units were trading at arecord $1,271, up 13.4%; apartments on the West Side werecommanding a record $1,187 price per sf, up 6.6%, and Uptown pricesrose 15.2% to $645 per sf, the second highest level on record.

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The largest gains in prices this year were seen on the luxuryend of the market, which accounts for the top 10% of all salesprices. High-end units commanded $2,000 per sf mark, a 16.7%increase over their price last year. Prices for three- andfour-bedroom apartments, representing the upper 6% of the market,went up 17.9% and 16.4%, respectively, over Q3 2006. "These marketsegments far outpaced the remainder of the market, which saw modestgains over the past year," states Prudential Douglas Elliman.

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"The high level of sales activity, combined with declininginventory levels, listing discounts and marketing times has notresulted in significant price appreciation year to date," thefirm's researchers write. "This suggests a market psyche containingreasonable expectations of both buyers and sellers."

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This, the company says, is a great departure from the"contentious" conditions between market participants over the pastseveral years, as seen in the patterns of sharply rising prices anddeclining sales. "Buyers were being priced out the market andsellers had been conditioned to a rapidly appreciating market overthe prior five years. In addition, Wall Street mortgage and creditmarket problems that appeared in mid-July and August have yet toshow an impact in market data for the current quarter. Existingmortgage underwriting guidelines have become more strictly enforcedwith fewer exceptions allowed. A lower number of mortgage optionsand higher qualifying requirements for buyers are expected totemper the flow of sales activity."

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Results aren't yet in for the fourth quarter, but PrudentialDouglas Elliman says if Wall Street bonuses exceed last year'srecord--and they are expected to--those earnings will likelybolster apartment prices in the borough.

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