April 14 (Bloomberg) -- Home prices in the New York City metropolitan area will fall as much as 15 percent as Wall Street firms cut jobs and slash bonuses, according to Kenneth Rosen, an economist at the University of California, Berkeley.

Luxury vacation markets such as the Hamptons on the east end of Long Island, New York; Lake Tahoe in California; and Aspen, Colorado will also suffer as the recession deepens, said Rosen, chairman of the Fisher Center for Real Estate and Urban Economics. Prices may fall 20 percent in those areas.

“These declines are happening but aren’t showing up in the data yet,” Rosen said in an interview. “Any place hit by the financial crisis will have substantial declines.”

The S&P/Case-Shiller index of prices in 20 U.S. cities fell 19 percent in January from a year earlier, the biggest drop on record. New foreclosures, a glut of unsold homes and eroding household wealth are driving down prices amid the worst housing crisis since the 1930s. The U.S. economy shed 663,000 jobs last month and the unemployment rate rose to a 25-year high of 8.5 percent, according to the Labor Department.

In New York City, apartment prices fell 19 percent in the first quarter from a year earlier to an average $805,000, the Real Estate Board of New York said last week.

Rising Unemployment

City Comptroller William Thompson predicted in March that 250,000 jobs would be lost in the five boroughs before the recession ends. New York City’s unemployment rate rose to 8.1 percent in February from 6.9 percent in January, a record month- to-month increase, according to the state Labor Department.

Across the U.S., Rosen predicted house prices will fall another 7 percent, with parts of California, Florida, Nevada and Arizona posting additional declines of as much as 15 percent as those states absorb record foreclosures.

The housing market’s cumulative price drop from peak to trough will be 25 percent with, a “bottoming” period that begins this year and may last two years, Rosen said.

“Job losses are large and the foreclosure inventory is rising,” said Rosen, who also runs Rosen Real Estate Securities LLC in Berkeley, a hedge fund with about $300 million in assets. “It’s going to get worse before it gets better, even with the best government efforts.”

Almost 162,000 U.S. properties received a foreclosure filing for the first time in February, the highest in records dating to 2005, according to RealtyTrac Inc. The top U.S. lenders own as many as 700,000 foreclosed homes they have yet to offer for sale the Irvine, California-based seller of default data said.

To spur the housing market, banks should reduce down payment requirements to 5 percent or 10 percent from 20 percent, said Rosen, who spoke in advance of a speech scheduled today for the Fisher Center.

The housing-rescue package announced by President Barack Obama on February 18 should add a one-year “foreclosure reprieve” to help homeowners who lose their jobs in a worsening economy, he said.

Supporting Underwater Borrowers

In addition, more borrowers who are current on their mortgage payments yet owe more money than the homes are now worth should be allowed to refinance into cheaper loans backed by government-run Fannie Mae and Freddie Mac, Rosen said.

Obama’s plan permits refinancing only for homeowners underwater by a maximum 5 percent. Rosen recommends raising that limit to 25 percent.

“The underwater problem is a big one and needs to be solved,” Rosen said.

At least 7.6 million U.S. mortgage holders don’t qualify for Obama’s plan because they exceed the 5 percent underwater threshold, according to an estimate by Seattle-based online valuation service Zillow.com.

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net.

Last Updated: April 14, 2009 13:46 EDT