“Residential real estate in New York City is a sound and safe investment, as opposed to the stock market,” said the principal of Levine Builders and Douglaston Development, Jeff Levine. “Real estate is like a tax shelter. It is the best investment you have made, in essence a form of forced savings.”

Mayor Bloomberg said yesterday at the Crain’s New York Business Forum that “residential property values have increased nearly 80% citywide since 2001. The brightest and the best want to live and work in New York City.”

Over the past few weeks, I have met with many of the city’s real estate leaders to get their perspective on the state of residential housing.

The president of Adelco, Matt Adell, said, “Residential development is fueled by strength and faith in New York City, and the record low interest rates.”

A principal at Apollo Real Estate Advisors, Richard Mack, said, “The quality of life in New York City has never been better. There is no bad neighborhood. Today, people would rather live in the city than in the suburbs.

“The residential market is very hot,” Mr. Mack added. “There is a limited amount of supply of new housing.”

Mr. Levine said, “New York City is hot as a pistol. We have seen significant population increases over the years, as many as 600,000 new residents.”

A principal at Swig Burris Equities and partner at Brown Harris Stevens, Kent Swig, said, “In the 1960s, developers were building 20,000 new housing units a year, and today we are only adding 7,500 units to the housing stock.” Mayor Bloomberg said, “We’re on course to complete the city’s biggest affordable-housing initiative since the 1980s, a $3 billion, five borough commitment to build and preserve affordable housing for 200,000 New Yorkers.”

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The president of Sidney Fetner Associates, Hal Fetner, who is developing a market-rate rental development on West 31st Street between Sixth and Seventh avenues, said, “The relatively strong and stable New York economy, coupled with a continued low interestrate climate, has given more individuals the confidence to buy a home rather than continue to rent.”

I agree with the president of Allan Riley Company, Allan Riley, who said, “Many individuals are purchasing condominium units and becoming landlords as opposed to living in these units.”

“People are buying condominium units and then renting them for as little as a 3% annual return,” Mr. Mack said. “Many people are purchasing units hoping that the prices will continue to rise.” He also added that investors, who purchased units at his company’s development at 505 Greenwich St. and paid an average of $950 a square foot, are capitalizing on the market.

“In many instances, they are closing on the purchase, promptly reselling the unit in the following week for a price of $1,350 per square foot,” he added.

The New York Sun has learned that as much as 25% of many condominium developments on the Upper East Side are being offered on the rental marketplace.

“People are investing in residential condominiums in the same way as people in the late 1990s, when individuals quit their jobs and became day traders,” Mr. Levine said. The president of The Muss Development Organization, Joshua Muss, said, “People are afraid they are missing the boat.”

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A principal at Allied Partners, Eric Hadar, said, “Young professional New Yorkers all are anxious to get in the game of ownership, as they hear about all the ‘equity’ their friends have made as homeowners, while their brokers assure them that the market is up 20% over last year and climbing.

“The result is a culture of house poor, debt-laden youngsters hoping that they will build up equity quickly. In many cases, this equity is borrowed via home equity loans in order to support lifestyles based on their assumption that incomes keep increasing,” he said.

Mr. Swig said, “This is a demand driven market. In the past, you were paying a premium to rent. Today, people want to own and, once you get on the merry-go-round of ownership, you want to buy and then sell a unit and upgrade.”

Mr. Mack said, “It makes more sense to rent, but, psychologically, people want to own their home.”

The chairman of Massey Knakal Realty Services, Robert Knakal, said, “As buyers get priced out of Manhattan, demand will grow in the boroughs significantly.”

Mr. Muss said, “Williamsburg is the place for displaced persons who want to live in Manhattan.”

All the boroughs have a need for residential development, Mr. Mack said, pointing out that there are more than 30,000 new residential units planned for the Williamsburg and Red Hook sections of Brooklyn.

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Residential rental and condominium developments are going up in Long Island City. Rockrose Development and AvalonBay Communities are building market-rate rentals directly across from Manhattan. A number of former manufacturing facilities have been sold to developers for planned conversion to condominiums. One of these projects is a planned condominium in a

450,000-square-foot former home of a manufacturing company scheduled to go to market later in the year, with prices beginning at $600 a square foot.

The president of the Marketing Directors, Adrienne Albert, said, “We are having incredible success at The Windsor, located at 108-40 Queens Blvd. in Forest Hills. Apartments are selling well over $650 per square foot on the average for the building, with much higher prices for the higher floors. There is tremendous pent-up demand.”

The president of The City Investment Fund, Thomas Lydon, said, “One location which has great potential for new development is Riverdale. Location and access to Manhattan is excellent.” He added that the neighborhood has established public and private schools, along with a thriving retail area.

“Several new projects will be built in the next 24 months for condominium sale with pro forma prices ranging from $550 to $600 per square foot,” he added.

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Mr. Levine said real estate developers are really investment bankers. “We must purchase the land, design the project, wait two to three years for final approval, and then we are making a bet that the world is going to be in a better place. Development is a life experience, and it takes time to learn, and those who have experience will survive.”

Prices for developable land have reached all-time record highs. The price per square foot in Manhattan is averaging more than $225 a square foot. Land prices in Brooklyn are approaching $125 a square foot, $100 a square foot in Queens, and $75 a developable foot in Staten Island and the Bronx.

After the developer purchases the land, they must incur hard costs of construction averaging between $250 and $300 a square foot. If you add the soft costs of development, including the interest, marketing, and other related expenses, the development costs range from $500 to $700 a square foot.

Based on these costs, it is almost impossible to build a rental development, and the minimum selling price for a condominium must be at least $1,000 a square foot. According to Mr. Muss and Mr. Levine, it is virtually impossible to find a new condominium development south of 96th Street priced at less than $1,000 a square foot.

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Today’s market is unbelievably strong for residential housing, as long as the prices are reasonable, said Mr. Swig. The question I and many real estate leaders have is this: What is an affordable and reasonable price for the people working in New York City? The managing director at Beacon Capital Partners, Adam Popper, said, “There are too many people being priced out of the market.”

“We have to create affordable housing for the young work force,” said Mr. Mack. He also said the city needs to attract young, bright workers and address the shortage of affordable housing to keep people in New York.

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Providing affordable and market rate rental and condominium housing for individuals earning incomes from $40,000 to $120,000 per annum is a necessity. A relatively small percentage of people living in the city, less than 10%, earn more than $100,000 a year. Given that, they cannot afford to spend $750,000 to own a condominium in one of the five boroughs.

The senior partner in charge of the real estate practice at the law firm of Stroock & Stroock & Lavan, Leonard Boxer, said, “Affordable housing is vital in creating stability to the overheated housing environment. Without it, the work force needed to fire our growth engine will be forced to flee the city, leaving an enormous soft spot in NYC’s game plan to retain and attract business.”

I agree with Mr. Boxer, who says, “A long-range housing program creating incentives for low- and moderate-income housing should be a priority for City Hall and Albany.” The mayor said, “On the Far West Side, 14,000 apartments, including thousands of affordable units for low- and middle-income New Yorkers, will be developed. Pending rezoning of Greenpoint-Williamsburg and West Chelsea can provide housing for 60,000 New Yorkers.” The administration must work with real estate developers to address the dire need for market-rate housing for New York’s growing population.