Economy.com: Housing Far From Turnaround

The chief economist at Moody's Economy.com says the housing market has a long way to go before it turns the corner. "The housing downturn is now comparable to the Great Depression," Mark Zandi told the Conference of State Bank Supervisors' annual meeting at the Amelia Island Plantation in Florida. "And it is evident across the country." The "most fundamental problem" with housing is excess capacity, "and it's getting worse," Mr. Zandi said. Citing Census Bureau data, the economist said the number of "completely vacant" unsold houses now totals 2.25 million units. That's twice the number of houses that were sitting on the shelves in 2004, and the current situation "won't stabilize soon," he told the state regulators. The economist also said most places are now experiencing price declines. Not so long ago, he was predicting that prices would fall 20% or so from peak to trough. But he told the CSBS that the 20% figure "doesn't cut it anymore." Now, he's looking for a 20%-25% drop in prices by the time the free-fall is over, and perhaps 30% in some places in California, Florida, Nevada, and Arizona.