18 weeks 1 day 3 hours ago Housing market compared to Great Depression Play video

(Peter Howe, NECN: Business) - A famous Yale University Professor is using the word "depression" to describe what may be yet to come in the housing market.

NECN's Peter Howe has details.

Script:

The new numbers aren't so bad from the National Association of Realtors. Home sales and median prices down nationally, but actually up in the Northeast. What sent a jolt through the industry was a famous Yale Professor predicting we're just halfway through a real-estate shakeout that will be even worse than the Great Depression of the 1930s.

If you follow real estate, you know the name Robert Shiller. The Yale Professor is one half of the Case-Shiller price index, a widely followed housing price barometer. Tuesday morning, Shiller spoke in New Haven, Connecticut. He said there's a good chance housing prices will fall even more than the 30 percent they dropped during the Great Depression. By Shiller's count, the country's down 15 percent since the 2006 peak, and we've got another 15 to go.

Now that prediction comes as we heard not-so-terrible news about home sales in the Northeast. Nationally, prices in March were down 7.7% percent from a year earlier. The number of houses sold was way off, the realtors say. But the Northeast was the only region where both sales totals and prices increased. Median prices jumped 4.6%.

Shiller's invoking the Great Depression doesn't sit right with a top Boston realty analyst.

"Doctor Shiller is often

While "worst real estate price drop since the Depression" does sounds terrifying…remember, what really got killed then was stocks, not houses. From 1929 to 1932, the Dow Jones Industrial average plummeted 89%. No one's predicting an 89% housing collapse.

Tim Warren says New England got an early start in the unfolding real estate market correction.

Warren: "I think we were on the leading edge of when this decline in the real estate market began. I think we were probably six to twelve months in advance of other parts of the country."

Now, bad news on prices for sellers is often good news for buyers. Overall, how long until we're no longer talking about New England real estate prices dropping, but instead about prices increasing? Probably mid-2009 at the earliest, is the consensus of Warren Group and many other analysts.