Florida Real Estate Market Predicted To Take 20 Years To Recover

There are tentative signs the depressed housing market may finally be close to bottoming out. That might sound like good news, but hitting bottom doesn't mean an upward rebound will follow anytime soon. Economist Celia Chen of Moody's Economy.com has published a forecast suggesting that residential real estate could take 10 years to recover in most states--and 20 years in Florida and California. Chen predicts that house prices will stop falling by the second quarter of 2010, which is consistent with what the Federal Reserve and many other forecasters have said. But her longer-term outlook helps explain why many economists are gloomy about the nation's economic prospects for the next several years. Some of Chen's predictions: By the time house prices stop falling, they'll be down 43 percent from peak prices reached in 2006, as measured by the Case-Shiller home-price index. That will mark the deepest housing correction since 1890, and probably ever in the United States (meaningful data go back only to the late 19th century). The prior worst housing bust was from 1916 to 1932, when house values fell 37 percent. Beating that dismal record suggests we're no smarter now than in the Great Depression.

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