(Photo: James Leynse/Corbis)

Townhouses below 96th Street
According to the Stribling Luxury Residential Report, the townhouse business has been phenomenal. Total sales increased in 2004 by 118.7 percent. (One 32-foot-wide house in the East Sixties sold for $9.5 million and was flipped the same day for $11.5 million.) Expect that ardor to cool off if the market nose-dives. It’s a niche business as it is, representing only about 1,000 properties, and these unique creatures often stay on the market for a long time. Of late, the market’s been propped up by nontraditional customers—foreign buyers, mostly—who, frustrated by the shortage of big co-ops or worried about board turndowns, bought houses instead, explains Stribling’s Kirk Henckels. It’s not so much that prices will free-fall if things go sour—they’ll simply grind to a halt, as owners stay put until business picks up. If you live in Greenwich Village, NYU has your back; the university’s demand is endless as it gobbles up townhouses like Pac-Man. Houses between Fifth and Madison are similarly protected, as are ones off Central Park West. And if your mansion’s in Murray Hill, where the undervalued brownstones haven’t peaked yet, you’re in the catbird seat. One spoiler: If the slump lasts and crime becomes an issue, expect a townhouse’s value to lose 25 to 50 percent more than a comparable apartment would. “No one wants to have vagrants sleeping on their doorsteps,” explains Jeffrey Jackson of appraisal firm Mitchell, Maxwell & Jackson. Still, a brownstone is never going to be a truly poor bet. “Even if things are bad, there’s always someone willing to step in and pay to live in one,” says townhouse broker Jed Garfield.

Risk Factor: 3.0