The value of apartments in Manhattan is plummeting, even as the price of apartments in dollar terms has, according to several reports by real estate firms, soared to record highs.

The average value of a Manhattan apartment over the past six years has plunged nearly 39%, to 1,727 ounces of gold, even as the average dollar price of an apartment in Manhattan over the same six-year period has nearly doubled to $1.4 million, according to figures in several real estate reports published today for the fourth quarter of 2007.

RELATED: Graph Showing Manhattan Real Estate Prices in Dollars and Gold

None of the reports from the real estate industry values the apartments in gold, but the gold value of apartments — and other assets — is being glanced at more frequently by sound-money advocates, and others, as the Federal Reserve governors scramble to deal with the credit crisis by loosening the monetary reins, a policy underscored in minutes the Fed released yesterday of the December 11 meeting of its Open Market Committee.

“I expect a huge collapse in Manhattan real estate, with apartments in New York City losing 90% of their value in terms of gold,” the president of financial brokerage firm Euro Pacific Capital, Peter Schiff, said. “The dollar is a deceptive way to measure the value of any asset, because the dollar itself is losing value, so prices have to rise just to stay constant.”

Despite the fact that the Manhattan real estate market is losing value in terms of gold, it set records in the fourth quarter in dollar terms. The average sale price jumped 17.6% over the prior year quarter, to $1.44 million, while the average price a square foot increased 18.2%, to a record $1,180, according to Prudential Douglas Elliman.

The sale of units at the Plaza and 15 Central Park West helped spur the record prices, brokers said. The two buildings accounted for 7% of all condominium sales in the fourth quarter, and with an average price of nearly $7 million, it made “a huge impact” on overall prices, the chief economist at Brown Harris Stevens, Gregory Heym, said.

It was the advent of foreign buyers, driven by the weak dollar, who acquired many of the units at the Plaza and 15 Central Park West, as well as other luxury condominiums.

“You can’t underemphasize the impact the foreign buyer has had on the condo market this year,” the CEO of the Corcoran Group, Pamela Liebman, said. “New York is basically on sale to foreigners.”

Corcoran reported yesterday that the luxury market — consisting of the top 10% of all apartment sales — leaped 42%, to an average price of $5.685 million, compared with the prior year’s quarter. To be considered luxury, a property must have sold for at least $2.75 million, the report found.

While these dollar amounts appear to illustrate the dizzying heights of Manhattan real estate, they are far from accurate, economists and market watchers say. Yesterday, the value of the dollar dropped to less than an 856.7th of an ounce of gold, a record low.

Experts expect the trend to accelerate. This is because the Federal Reserve looks likely to continue cutting interest rates and releasing more dollars into the market in an attempt to stem a recession. The result is increasing inflation and a weakening currency, several Fed watchers told The New York Sun yesterday.

“There is no doubt that the huge run-up in the price of gold has been fueled by the sense that there are too many dollars in the world,” the director of international economics at the Council on Foreign Relations, Benn Steil, said. “Dollars are too cheap, and the world is becoming concerned with the currency’s internal value.”

In the minutes released yesterday, the Fed indicated a willingness to continue cutting interest rates.

Officials “agreed on the need to remain exceptionally alert to economic and financial developments and their effects on the outlook, and members would be prepared to adjust the stance of monetary policy if prospects for economic growth or inflation were to worsen,” according to the minutes. Mr. Steil called the FOMC minutes “very bearish news for the dollar.”

In September, when the Fed first began cutting rates — its December rate cut was its third straight reduction totaling 1 percentage point — inflation was at 3.5%. As of December, inflation stood at 4.3%.

“There is no doubt that what the Fed is doing is inflationary, and I definitely think we could see stagflation,” Mr. Steil said, referring to the combination of sluggish economic growth and inflation.

There are also growing indicators that foreigners are dumping their dollars, which could be bad news for the real estate market.

“I think foreigners are more likely to be sellers of real estate rather than buyers in 2008, even in Manhattan, because they see all the downside risk to the dollar,” Mr. Schiff said.

“My view is that the Fed believes they can use monetary policy to fine tune the economy, and keep it at a constant minimum growth rate. But there is more and more evidence that foreigners are losing confidence in the American monetary policy,” Mr. Steil added.

Not all economists worry about the collapse of the dollar against gold, despite the fact that the element is inert and has long been a traditional store of value. They see its soaring price in dollars reflecting a variety of factors affecting other commodities, including a booming industrial sector in some parts of the world.

Others worry that the dollar is likely to continue its freefall, plummeting to as little as a thousandth of an ounce of gold this year.

“I would say that the $1,000 threshold is a conservative estimate,” a managing director at commodities firm Casey Research, David Galland, said. “I have no idea how everything will play out, but generally speaking, things tend to be lining up against the dollar.”