based on current income levels, how much more should prices drop?

I don't think NYC real estate is based on nyc income levels. What about all of the pied-a-terres?

Agreed, it's definitely not based on NYC income alone. However, the recession is global and even the rich got less richer. Besides, some of us actually consider NYC to be more than just Manhattan. :)

income levels are 99.9% useless for predicting the movement of housing prices. The income level includes people on welfare, celebrities, and everyone in between. Are welfare and section 8 people going to be buying anytime soon? I think not.

What percentage of the market do you think comprises pied-a-terres? Do you think that percentage "makes the market" in any way?

"income levels are 99.9% useless for predicting the movement of housing prices."

The income levels of poor people may not effect the prices of high end Condos, but that's quite the straw man you've set up to be knocked down. There is no question that the income levels of the LIKELY PURCHASERS of any piece of RE effect it's pricing, as well at interest rates: or do you think interest rates also don't effect pricing levels? Because those items are absolutely linked.

http://www.nytimes.com/2009/04/22/business/economy/22leonhardt.html?_r=1&emc=eta1