It may be that the locals who sold Manhattan to Dutchman Peter Minuit for $24 didn't actually live there, but many smart real estate deals have followed that legendary first sale. Indeed, for most of the past decade, it seemed that no price was too great to pay. A square foot of Manhattan living space that typically cost $397 to buy in 1998, is now worth three times as much, according to Miller Samuel property consultants.

Yet the market has begun to crack. As the only urban area apart from the San Francisco Bay where median home prices are still above $500,000, the city was spared the problems of subprime lending that have dragged down values across the rest of the country. It is only in the past six months that employees in finance and insurance - who at the peak of the boom took home as much as two-fifths of Manhattan's total payroll - have really felt the pinch.