Don't shoot the messenger.
Moody's Economy.com is where you want to target your brickbats if you've already grown weary of doom and gloom reports about the real estate market.
The economic, financial, and industry researcher has just released the gloomiest report yet and in the process, recalls the Dark Ages of the national economy.
"Housing at the Tipping Point - The Outlook for the U.S. Residential Real Estate Market" says the nation's housing market will slip like it hasn't slipped since the Great Depression, with home price declines in 2007 approaching 20 percent in some areas where the word "crash" could replace "soft landing."
The West Chester, PA-based firm says, nationwide, the median sales price for an existing home will decline in 2007 by only 3.6 percent, but that would be the first full-year decline in home prices since the 1930s' Great Depression era.
Other reports have already revealed those unsustainable double-digit home price increases of the last half decade have begun to crumble and when the smoke clears, many home prices on the coast will be cold toast, says Economy.com.
The report continues, adding, more than 100 of the nation's 379 metropolitan areas, accounting for nearly half the nation's single-family housing stock, reveal a significant probability of experiencing price declines by the fall of 2007.
"The highest probability of price declines is in metro areas throughout California, and in and around New York City. Probabilities are nearly as high in the rest of the Northeast Corridor, many Florida metro areas, and in sundry areas in the Midwest and Mountain West," according to the report's summary.
Declines are less likely or expected to be much less severe in Texas, most of the Southeast, the Farm Belt and the Pacific Northwest.
The greatest annual decline will visit sunny Cape Coral, FL, where home prices are forecast to decline 18.6 percent from the peak price. Other large home price declines will come from Reno, NV (17.2 percent); Merced, CA (16.1 percent); Stockton, CA (15.7 percent); Sarasota, FL (14 percent); Naples, FL (13.8 percent); Tucson, AZ (13.4 percent); Las Vegas, NV (12.9 percent); Chico, CA (12.6 percent) and Fresno, CA (12.5 percent), with another 11 metros suffering double-digit, home price declines.
Economy.com says the findings are based on measures of housing market imbalances that have historically led changes in house prices -- housing affordability (or the lack thereof), non-housing related employment growth, the physical supply and demand balance, and a measure of house price over-valuation/under-valuation.
Experts are already debating Economy.com's forecast with the fervor of a global warming debate, but Economy.com is sticking with it's story -- the heat on the housing market is off.
"New and existing home sales and single family housing construction are sliding, inventories of unsold homes are surging to new record highs, and house prices are falling in an increasing number of areas. Housing's problems began just over a year ago when activity peaked, but have increased substantially in recent months. The bright optimism of home buyers, builders and lenders has abruptly devolved into increasingly dark pessimism."
Swiftly fleeing speculators, exiting investors and tighter money in the adjustable rate mortgage market are the primary factors currently squeezing the market, which Economy.com says is wringing out in a "generally orderly" fashion, "characterized best as a correction and not a crash."
The housing market's currently paced unraveling could come with a sharper ripping sound should jobs, consumer spending (spurred in the past five years by a growth in home equity wealth), and financing wither.
