What struck me most about this New York Times article about new condo developments in Manhattan turning to auction companies to sell off slow moving inventory was the very last sentence "The average sales price of a two-bedroom Upper East Side condo was just above $1 million in 2002. It rose to $1.5 million in 2004, and to $2.2 million at its peak in 2008."
What is so shocking is that not only did the Upper East Side 2BR's significantly outpace San Francisco in percentage appreciation, but look at the following chart and the real dollar difference between the two cities. From 2002 through 2008 Upper East Side 2BR condos increased $1.2 million, or the entirety of Pacific Heights 2008 average price.
Pacific Heights has basically caught up with the Upper East Side's 2002 price. Now I'm from New York City and realize that the Upper East Side and Pacific Heights are two vastly different areas. Maybe I should throw in Russian Hill to pull in some of the expensive Coop buildings like 999 Green. But either way, New York City has gone through the roof while San Francisco experienced a much more even pace of appreciation.
Meanwhile, New York is getting crushed right now by the financial crisis after having been the biggest beneficiary of the out sized Wall Street bonuses. Sprinkle in a little Ponzi scheme from Madoff, and then compare to San Francisco.
The bottom line, New York has to fall in half to be "as cheap as San Francisco" is today, which it might. But will San Francisco's better neighborhoods like Pacific Heights fall like you'd expect New York to fall? When I left in 1997 to move here, New York was cheaper than San Francisco. So you can draw your own conclusions.