'07 home-price fall is largest in 20 years

Largest drop in 20 years? What's everybody waiting for? My guess is everybody's waiting until prices are heading up. Of course, nobody will notice an upward price trend until it has become, well, a trend. And we all know what that means ... people must be waiting to pay higher prices. - MT



Prices of existing homes plummeted nationally through 2007, ending the year down 8.9% -- the largest decline in 20 years, according to data released Tuesday.

In comparison, home prices fell 2.8% during the 1990-91 housing recession, according to the S&P/Case-Shiller Home Price Indices.

"We reached a somber year-end for the housing market in 2007," said Robert J. Shiller, a Yale University professor and chief economist of MacroMarkets LLC. "Wherever you look things are bleak, with 17 of the 20 metro areas reporting annual declines and the remaining three reporting flat or moderate growth rates."

In metro Detroit, home prices fell 13.6% through the end of December compared with a year ago.

Cindy Kozlowski, a real estate agent with Max Broock Realtors in Rochester, said the 13.6% figure sounds a little higher than what she's been seeing in Oakland County's upscale neighborhoods.

"I'd say it is between 8% to 10%. They are factoring in the actual Detroit area, which is a completely different market," she said Tuesday. "They have more foreclosures than we have in Oakland County."

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Zell Sees Start of Housing Recovery

I agree with Zell. It's almost like people feed off of negativity today. I'm not saying the real estate market hasn't been hit hard. I'm saying it's been getting hit hard for going on three years. The market decline may only be 3 months old to the general media, but for the rest of us, housing has been in decline for 3 years. - mt

Zell Sees Start of Housing Recovery in the Spring

The US economy will avoid recession as the housing market begins to recover this spring, according to billionaire investor Sam Zell.

Speaking on "Squawk Box" this morning, Zell attributed much of the current economic troubles to fear-mongering and politicking by Democratic presidential contenders Hillary Rodham Clinton and Barack Obama.

"Obviously what we have going on is an attempt to create a self-fulfilling prophecy," said Zell, chairman of Equity Investments Group and owner of the Chicago Cubs, Chicago Tribune, Los Angeles Times and other companies. "We have two Democratic candidates who are vying with each other to describe the economic situation worse.

"The reality is that if you live on Wall Street and you're in the credit markets the world couldn't be worse. If you're a farmer and you're getting $25 for your wheat, you're having a great time. If you're a CEO and you've got a balance sheet that's bullet-proof, you're in a great position. This whole thing is way out of control, way out of hand."

Zell said that although he doesn't try to pick bottoms in markets he believes housing has hit its nadir and will turn around this spring as inventory clears out.

As for the credit situation, he projected that once markdowns are out of the way banks will begin to regain their footing.

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The Bottom?

I think we are much closer to the bottom than we are to the top. People who buy today are not going to be disappointed 5 years from now. - mt

Sales of Existing Homes and Prices Both Fall in January

WASHINGTON (AP) -- Sales of existing homes fell for the sixth straight month in January, dropping to the slowest sales pace on record. Median home prices were also down and many analysts predicted further price declines in the months ahead given high levels of unsold homes.

The National Association of Realtors said Monday that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units. That was the slowest sales pace, going back to 1999, and was seen as evidence that the steepest slump in housing in a quarter-century has yet to hit bottom.

The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago. Particularly alarming, analysts said, was the fact that the inventory of unsold homes jumped to a 10.3 months' supply, meaning it would take that long to sell the 4.19 million homes on the market at the January sales pace.

That was up from 9.7 months in December and just below a two-decade high of 10.5 months hit in October. During the peak of the housing boom in 2005, the supply of homes relative to sales stood at 4.5 months.

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