New York City's real estate slump: A service economy on the skids

According a recent report released by Prudential Douglass Elliman Real Estate, Manhattan apartment sales have dropped by 50 percent over the past year, and the average price of a city apartment has fallen by up to 24 percent. While apartment prices have risen slightly in the last quarter, it seems likely that they still have a way to go before they catch up to the realities of New York's modified recession.

While New York's real estate woes are somewhat reflective of national trends, there are many ways in which the city's housing problems are sui generis. Since World War II, New York has increasingly moved from manufacturing jobs to service-related white collar jobs. In the process, it has tied its real estate values -- and tax base -- to the continued health of a few professions. When those sectors, particularly banking and finance, did record business, their employees brought home record salaries and paid record rents. At the same time, the blue-collar workers who once populated the city left it in droves.