"The fear is that the same pains of contraction that were felt in the public schools of the seventies and the colleges of the early eighties will now start to be felt in the housing market," says James Hughes, dean of the School of Planning and Public Policy at Rutgers.

There is one little flaw in the eggheads' predictions, however: They don't seem to be coming true. Not only is New York sizzling these days, but last year saw national sales of existing homes jump a whopping 14 percent over the previous year, which had itself set a record. "It was a Mark McGwire economy," says Hughes. "We not only broke the all-time existing home-sale record, we smashed it."

So all these tweedy Cassandras are simply wrong? Not necessarily.

For one thing, the boomers aren't quite finished yet. Right now, they're still in their prime earning years, and lately they have more bags of cash than ever to toss around. "What is driving the market now is baby-boomers trading up in the housing market," Rutgers's Hughes says. "Remember, the peak of the baby boom was 1957. That boomer is only 42. So the trade-up market has a ways to go."

But Mankiw himself offers another, far less sanguine interpretation: We're enjoying the longest peacetime economic expansion in history, money -- in the form of mortgage rates -- is cheap, the job market is tight, and Wall Street's made plenty of us rich. But still, housing prices nationally are up only 22 percent over the past decade. Meanwhile, overall inflation for the same period has been 23 percent, he says.

"One could put two different spins on this," Mankiw suggests. "One could say, 'God, these Harvard professors said that housing prices would decline 2 to 3 percent per year, and in fact, we've been flat for a decade. They're wrong.' But another way to say it is, 'Despite the fact the stock market has gone through an incredible boom, despite this incredible shock to demand, housing prices have been flat.' There must have been some other factor keeping them down.' "

So maybe it does look bad for America, long-term. The question is, does it also have to look bad for New York? Luckily, despite Mayor Giuliani's best efforts to normalize existence here, Planet Manhattan remains "the biggest real-estate exception in the country," in the words of one local developer. Our best hope, then, is that just as one megatrend, the baby-bust effect, works to pull us down, another -- a genuine urban renaissance that's particularly acute in New York -- will tug even harder in the opposite direction and more than cancel it out.

Unlike Phoenix or San Diego, New York is for all practical purposes already built. Particularly within Manhattan, there is essentially nowhere to expand. When Con Ed recently put nearly four and a half acres of land up for sale to develop on the East River, it was a lead story in the Times Metro section -- an event.

"New York's a very unusual market," says Michael Carliner, an economist with the National Association of Home Builders. "You have the whole rent-control situation, which greatly affects supply, and it's also very difficult to build something new. So any change in demand, supply still doesn't respond very well."

Indeed not. Last year, permits for the construction of fewer than 9,500 new units were granted, and only 3,700 units in Manhattan -- this for a city of 8 million. In 1996, for instance, Las Vegas, with a population of less than 400,000, saw 7,705 permits granted.

"The market is as tight as ever, maybe tighter," says Paul Stern, who as a managing director for Sonnenblick-Goldman Company, a leading real-estate-investment bank in the city, routinely arranges financing of huge residential projects like, say, a $75 million high-rise. He says that since developers are so eager to maximize their precious plots, most are building luxury housing, leaving little for the middle class. Also, he says, "the trend toward rent deregulation only creates new buyers, as rents increase substantially."