Speaking at a New York District Council of the Urban Land Institute meeting this morning, Albert told a crowd of approximately 250 that--at this moment--smaller homes are hot. The coupling of low mortgage rates and high rental rates led to more people buying condominiums in the city, a large portion of which were one-bedroom units. Across all neighborhoods, one-bedroom condos sold for $500,000-600,000 or an average of $700 per sf. New two-bedroom condos sold for approximately $1.2 million, or an average—below 96th Street—of $700 to $1,000 per sf. Four-bedroom condos sold for an average of $2.5 million this year; however, they only accounted for 1.5% of the transactions in the market, she explained.

And as we look to the future, Albert said that a number of a new condo sites are planned for 2004 and 2005 but those will only bring 1,400 new units to the market—a proportionately small amount compared to the market size. This low level of inventory will lead to increased prices, she added.

As for the rental market, she explained that before Sept. 11, 2001 rents were averaging more than $50 per sf, with prime buildings averaging more than $55 per sf. However, the last couple of years have taken their toll on the rental market. "Over the last 24 months the rental market changed from a landlord market to a renters market," she explained, adding that incentives were used to draw in new residents. However, she anticipates approximately 2,000 new rental units coming on line in 2004 and approximately 3,500 new units in 2005. So for next year, assuming there are no more terrorist attacks, wars, or natural disasters, and if the economy continues to improve, the market is poised to soar, Albert said.