Plenty of people, including billionaire investors like George Soros and Eli Broad, say housing has a long way to fall yet.
Among them is Robert Shiller, who helped develop the Case-Shiller housing index. He says things could get as bad, in terms of percentage decline, as the Great Depression, off by 30 percent.
Hold the phone. The other half of that team, housing expert Karl Case, begs to differ — big time.
The S&P/Case-Shiller index tracks residential real estate prices in 20 U.S. urban markets. The index plunged 12.7 percent in February from a year earlier, its sharpest decline since it began in 2001.
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Despite that dismal performance, it’s worth noting that national housing starts last month fell below 1 million, Case says.
"Every single time we have gotten to this point, at this time, almost to the exact decimal point, things started to rebound," Case told the Boston Herald.
From the 1970s through the ’90s, the pattern repeats, Case says. "Eventually, steam runs out of a downturn," he says.
Case is well known in part for accurately predicting the big housing market decline in the midst of the real estate boom.
The current index puts house prices in the 20 major metros still averaging more than 75 percent higher than the index’s year 2000 baseline, thanks to huge run-ups in 2004 and 2005.
"Average” is part of the problem, of course. In inflated markets like Miami and Las Vegas, prices are getting demolished in double digits. In Charlotte, N.C., prices are going up — at least a little.
The National Association of Realtors, meanwhile, is forecasting a "flat pattern” in home sales, then an improvement over the summer.
Lawrence Yun, NAR chief economist, said recovery hinges on better access to affordable loans, something the federal government, through the Federal Housing Administration (FHA), has been trying to do by backing more mortgages above the so-called "jumbo” loan limit of $417,000.
"Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas," Yun says.
"As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available."
The trade group’s pending home sales index, a forward-looking indicator based on contracts signed in March, registered 83, a figure 20.1 percent lower than a year earlier. On the index, 100 is "average” home-sales activity.
"Our members are telling us that more buyers are looking at homes but are slow in signing contracts, and that’s contributing to the weakness in pending home sales,” says NAR President Richard F. Gaylord, a broker in Long Beach, Calif.,
Additional costs in many markets are hindering a recovery, Gaylord said.
"In many cases buyers are waiting for greater access to affordable credit, especially in higher cost areas, but some are disappointed with what appears to be unnecessarily restrictive lending requirements.”
Existing-home sales are forecast to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter of 2008.
For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year.
"Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied,” Yun said.
The median price is forecast at $213,700 this year, rising 4.1 percent to $222,600 in 2009.
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