"Leveraged buyers will remain subdued in the months ahead as conditions in the credit markets stabilize," says Edward Jordan, regional manager of the Manhattan office of Marcus & Millichap, in a prepared statement. "Well-capitalized private buyers are expected to stay active, however, as will institutions and foreign investors."

The report notes that "no one knows for certain how Wall Street's problems will affect demand for rental housing. For now, it is likely that housing demand will be supported by staffing increases in other employment sectors, although growth will not be as strong as in the past couple of years. As a result, vacancy will rise slightly in the quarters ahead, and rent growth will not be quite as substantial as in '07, when asking rents advanced more than 8%."

Across the entire city, employers are expected to create 5,000 jobs during 2008. The figure contrasts with the 44,600 positions that were created in '07. In Manhattan, total employment is forecast to expand by 0.1% with the addition of 3,000 new workers, according to the report. "Due to turmoil in the financial markets, though, the potential for a substantial decrease in citywide employment exists," the report states.