No Housing Upturn Until 2010 - Home prices are forecast to fall as much as 30% in 'the most severe housing recession' since the end of World War II.

This MSN Money Central story (http://articles.moneycentral.msn.com/Investing/Extra/ReportNoHousingUpturnUntil2010.aspx) certainly doesn't make me feel warm and fussy. If these predictions hold true, it will wreak havoc on the U.S. economy, with spill over into the international economy. A thirty percent drop in values will leave many home owners with little equity in their homes so far under water that they either (1) cannot sell their homes without paying huge amounts out of pocket or (2) simply walk away and abandon the property. So-called short sales are one way out, but can have negative tax implications for sellers since they will have phantom income arising from debt forgiveness. It a word, it is all a huge mess. I will be actively marketing my knowledge of short sales and "subject to" sales as normal transactions become fewer and fewer. Here are some story highlights:

Housing markets from Punta Gorda, Fla., to Stockton, Calif., will crash and suffer price drops of more than 30% before the housing crisis is over, a report from Moody's Economy.com said today. On a national level, the housing market recession will continue through early 2009, said the report, co-authored by Mark Zandi, chief economist of Moody's Economy.com, and Celia Chen, director of housing economics.

The report paints a worsening picture of the hard-hit housing sector, which is in the midst of its worst downturn since World War II. While activity will stabilize in 2009, it will be 2010 before a measurable improvement in sales, construction and pricing will emerge, the report said. "This is the most severe housing recession since the post-World War II period," Zandi told Reuters.

Punta Gorda, Fla., and Stockton, Calif,, are the hardest hit markets in the United States, with price declines from peak-to-trough forecast at 35.3% and 31.6%, respectively. These markets have been hard hit due to several reasons, namely the exiting of investors from the areas, a fair amount of subprime mortgage loans causing an increase in foreclosures and overbuilding by home builders, Zandi told Reuters. The Moody's Economy.com's report, titled "Aftershock: Housing in the Wake of the Mortgage Meltdown," said that when house prices hit their nadir, some 80 of the nation's 381 metropolitan areas will experience double-digit peak-to-trough price declines.