Eli Broad: ‘Nowhere Near Bottom in Housing’

Billionaire home developer Eli Broad could be forgiven for seeking a positive spin on the disaster that is the current real estate market.

After all, he founded KB Home, the fifth-largest builder in the country.

No such luck. "I don’t think we’re anywhere near the bottom in housing,” Broad told Bloomberg during the Milken Institute Conference in Beverly Hills, Calif.

"We’re going to have a big inventory of unsold, unoccupied homes that’s going to take three or four years to clear out.”

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In fact, Broad sees home prices likely to drop by "another 20 percent.”

Real estate experts agree with that dour assessment. Housing guru Robert Shiller recently said that a 30 percent total drop — worse than during the Great Depression, but down from a tremendous rise — was certainly possible.

"Former Fed Chairman Alan Greenspan expects housing prices to bottom before the end of the year,” Robert Sheridan, a founder of developer Sheridan Partners, tells MoneyNews.

"From our vantage point, that’s hard to believe. Although this market decline is now more than 27 months old, we agree the worst is still to come. In fact, we don’t see a bottom for many markets until late in ’09 or ’10.”

Prices for houses in 20 metro markets in the U.S. fell in February, according to the latest S&P/Case-Shiller home price index.

The index fell by 12.7 percent in February, the last month for which complete data are available, and has significantly fallen every month since January 2007.

Some housing experts, however, remain optimistic, though realistic, about the chances of a shorter term rebound in certain metro areas.

"The bubble markets where prices skyrocketed are just now seeing the greatest price declines,” Seth Weissman, a senior partner in the law firm of Weissman, Nowack, Curry & Wilco, and general counsel for the Georgia Association of Realtors, tells MoneyNews.

"Housing bubbles like Atlanta’s, where the prices increased at a more-normal rate, are seeing much smaller price declines. For all the bad news, nationally, home prices in the Atlanta region have fallen only 4.8 percent over the last year.”

Weissman said that cities like Dallas — which are seeing huge population growth — will likely lead the U.S. out of the real estate recession.

"It is always darkest right before the dawn,” says Weissman. "Dawn is breaking in many segments of our market and buyers should act accordingly.”

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