Letter From America.(state of real esate in New York city)(Brief Article)(Column)(Statistical Data Included)

New York's tabloids are agog over Gotham's latest grisly murder. Three thugs burst into a man's apartment, beat him brainless with a baseball bat, strangled him, dumped him into a bathtub, drained his blood by slitting his wrists, then sawed him into bits. One of the suspects, it turns out, had strangled a neighbor only a few months before. The motive then, as now: they needed a place to live. Their likely plea? Insanity.

Sure, the crimes were horrific, macabre, tragic. But insane? In a town where the average apartment now sells for $870,000, what could be more rational? Last week I viewed an $8 million apartment on Park Avenue. The real-estate broker had called me out of the blue, wanting to drum up publicity for her exclusive. "I want the building address and my name in the piece," she told me in no uncertain terms. Of course, I rushed right over. In New York, nothing seduces like real estate. It's all people talk about--at cocktail parties, over dinner, in bed. It drives everything in the city, from relationships to how many kids we have to who gets murdered and carved up.

The place did not disappoint: 4,500 square feet, 10 rooms, an elevator opening into a private vestibule, views in three directions. But ugh. That Louis XIV furniture. Carpeting as deep as quicksand. George and Barb Bush framed in gold. The broker called it a "grande dame" apartment and suggested it was perfect for CEOs with "important" art collections. Goya's "The Red Boy" had once hung in the 40-foot living room, she added, as I thought of my husband's tacked-up movie posters back home.

I tried not to be upset. Last month we bought our first apartment in New York. The entire thing would fit in the Park Avenue place's kitchen. The bedroom faces a concrete wall. On hot summer evenings the rats on the block rummage through the garbage. But it has a certain gritty charm, I tell myself. Panhandlers and salsa music permeating the streets certainly have more character than the shrubbery and doormen of Park Avenue. Right?

Alas, the indignities of living in New York. The Wall Street boom may be foundering, but the real-estate market hasn't looked back. New Yorkers now spend more than 35 percent of their income on rent. That's more than in Hong Kong (29 percent) or London (about 18 percent, including rent and mortgage payments). For buyers the picture is ...