Relief a long way off?

By JOHN CHRISTOFFERSEN, AP

NEW HAVEN, Connecticut (April 23) - An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression and bailouts will be needed so millions don't lose their homes.
Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said. "I think there is a scenario that they could be down substantially more," Shiller said during a speech at the New Haven Lawn Club. Shiller's Standard & Poor's/Case-Shiller home price index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month. Shiller, who admitted he has a reputation for being bearish, said real estate cycles typically take years to correct. Home prices rose about 85 percent from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history, Shiller said. "Basically we're in uncharted territory," Shiller said. "It seems we have developed a speculative culture about housing that never existed on a national basis before." Many people became convinced that housing prices would increase 10 percent annually, a notion Shiller called crazy. Shiller, who said it's difficult to forecast prices, endorsed legislation proposed by Democratic Sen. Chris Dodd and Rep. Barney Frank that would allow the Federal Housing Administration to back as much as $300 billion in mortgages for struggling homeowners. Servicers would have to agree to take a loss on the existing loans, while borrowers would have to show they could afford to make new payments on their refinanced mortgages. On Tuesday, the National Association of Realtors said that sales of existing homes fell in March while the median home price declined to $200,700, a decline of 7.7 percent from the median price a year ago. Sales of existing single-family homes and condominiums dropped by 2 percent in March to a seasonally adjusted annual rate of 4.93 million units. Many analysts said they do not expect a rebound for a number of months, given the problems weighing on housing from a severe glut of unsold homes to tighter credit standards for prospective buyers and a rising tide of mortgage foreclosures.

Bottom Fishing

Though my own personal opinion is that we are not yet at rock bottom for the real estate market prices, I do believe there are some serious bargains out there now.

Certain neighborhoods have not declined as much as they need to - but here is the kicker - some neighborhoods have overshot on the downside and are actually very good deals right now!

The local San Diego market is a very tricky animal. Do your due diligence and make sure you have a plan - then move fast! Now is the time you will look back upon in 5 to 8 years and say...
"That was the bottom and I wish (or I am glad I did) I bought 4 or 5 homes in 2008"!