NYC housing market could stall in late 2008

By Jonathan Stempel

NEW YORK (Reuters) - New York City's real estate market could deteriorate late this year if Wall Street and the economy perform poorly and overconfident sellers refuse to cut their prices, the chief of a major city brokerage said.

Pamela Liebman, chief executive of the Corcoran Group, said Tuesday at the Reuters Housing Summit that a lack of supply and a surfeit of foreign buyers taking advantage of a weak U.S. dollar has meant the city has "absolutely stood alone" in skirting the nation's decline in housing prices.

While bidding wars are less common than a year ago, Liebman said demand remains very healthy, especially for the largest, multimillion dollar apartments -- but that could change.

"If Wall Street has a terrible year, and the press is really talking negative about the economy and the election, I think things could really slow down at the end of the year," she said.

"I don't see New York City crashing or coming to any kind of a standstill, because the product is too good and there's too much belief in the city," Liebman continued. "What will stall this market is a negative economy, nervousness and skittishness about job security, consumer spending, layoffs, and sellers with unrealistic prices."

Earlier Tuesday, Jonathan Miller, director of research at Radar Logic, said at the Summit that Manhattan's housing market was "definitely going to see weakness" within a year or two. Radar Logic tracks home price changes in 25 U.S. metropolitan areas.

In the fourth quarter, the average price of a Manhattan apartment soared 17.6 percent from a year earlier to $1.44 million, according to Prudential Douglas Elliman.

Contributing to the increase was the addition of two high-end condominiums, The Plaza and 15 Central Park West.

The median apartment price rose 6.4 percent to $850,000, while the average price per square foot rose 18.2 percent to $1,180, Prudential said. The number of apartments for sale fell 13.5 percent to 5,133.

Despite the tight supply, Liebman said some smaller homes may go unsold, with "aggressive" sellers in some cases trying to fetch $1.5 million for one-bedroom apartments.

But she said buyers have grown more realistic, and are no longer counting on easy credit conditions and double-digit annual price appreciation.

"This market is very unforgiving," Liebman said. "If you are overpriced, or you are challenged in some way with your property, it's going to have a hard time selling. Buyers are very sophisticated. They will not overpay."

Yet some will pay up.

"It's not a great buying opportunity if you're looking for a $10 million apartment," she said.

(Editing by Brian Moss)