Realtors predict prices will fall

The San Francisco reports:

Saying that the housing bubble has truly burst, the National Association of Realtors predicted Wednesday that the median price of existing U.S. homes will fall 0.7 percent this year, the first time that has happened since records started in the late 1960s.

The forecast was startling, coming from the normally upbeat industry group. Last year, in a sign of the start of the slowdown, the nationwide median price of an existing home rose a modest 1 percent.

California, and especially the Bay Area, are often out of step with national trends from politics to cuisine to culture, but the difference may be less pronounced on home prices if leading forecasters prove correct.

The California Association of Realtors predicted in October that statewide median prices will fall by 2 percent in 2007.

Economy.com analyst Mark Zandi called for an even sharper statewide drop of 6 percent.

California's struggling housing market is weakening as lenders tighten underwriting standards. "Mounting foreclosures will also be a weight on housing prices as these properties are dumped into the already fragile market at a significant discount," Zandi said. "This outlook assumes that interest rates remain stable and that the job market outside of housing remains stable.''

Statewide, the median prices for all homes, both new and existing, rose 2.2 percent in February, the most recent month for which figures are available, according to DataQuick, a real estate information research company that plans to issue its March home sales report today.

Prices for all homes in the Bay Area rose slightly last month, by 0.3 percent, also according to DataQuick. "We consider anything within 2 or 3 percent north or south to be a basically flat market,'' said Andrew LePage, a DataQuick spokesman, who noted the market has been flat since November.

When even the most bullish group isn't bullish:that's news.