The beleaguered luxury real estate market in New York is beginning to show some positive signs, but there is expected to be a lot of stumbling along the path to recovery.

The high-end market here has been harder hit in terms of both price drops and activity than any other sector, and there's still a sense of nervousness among many about buying multimillion-dollar properties.

However, in this month's Q & A, The Real Deal talked to market analysts, top luxury brokers and heads of firms who said that while there is still a lot of caution, they are beginning to see a mild increase in activity in Manhattan's most exclusive property trades.

Within the last two months, some say they have noticed an increase in buyers, who for the first time in the last year are not convinced that prices will continue to go down.

But sales are still way off, and one analyst disputed the notion that prices are going to head back up anytime soon, saying "inventory is still grossly overpriced for the current conditions."

Meanwhile, many of the transactions that have taken place are from all-cash buyers who are paying lower prices, or from buyers who are putting in at least half of the cash needed to finance the purchase. That means the jumbo mortgages that drive the segment are still not getting easier to obtain -- a reality that does not bode well for the sector in the near future. And many of those interviewed said sellers are still not dropping their prices to the levels they need to be at to lure buyers. They said the $2.6 million to $5 million range and the $10 million to $20 million range have suffered most.

For more on what's going on, which areas of Manhattan have seen the largest drops in the luxury sector and which ones are holding stronger, we turn to our panel of experts.

Leighton Candler

senior vice president, the Corcoran Group

How is the luxury market faring in relation to the overall Manhattan market?

The luxury market lags the lower market by several months. In the lower entry-level market, the first-time buyers come forward sooner as they seize the opportunity quickly, when prices have reached a level where they can enter the market for the first time.

What would you say is the primary challenge of selling luxury real estate in New York today?

The balance the seller weighs of waiting for a stronger market, or accepting the lower valuation.

Which segment of the luxury market would you say has suffered most by property type?

Properties that needed renovations suffered the most, as they always do in a downward-sloping market. Buyers are hesitant to purchase and then continue to invest in a renovation if the property is not increasing or holding steady in value. Without question, the best values on the market are those needing renovation, and those will see the highest value differential in the recovery.