The Red Devils' goalless draw at Sunderland allowed their near-neighbours to leapfrog them into second place in the Barclays Premier League.
And although Crerand said they posed a credible threat, he still back his old club to come out on top.
"For so long it was Liverpool who were looked on as the big challenge by United but I think that has changed now. Liverpool are struggling and City certainly recognised now by United as a top challenger," he told the Manchester Evening News.
"Without question I think all United fans have to be worried by City's emergence as a genuine force.
"We have really been top dogs for most of the last four decades since 1968 but you cannot dismiss what is happening at Eastlands."
Source: PA
Source: PA