When will housing prices bottom?

When will housing prices bottom? When will the housing market recover? Those are the questions everyone who works in real estate, owns a home or wants to buy one wants to know.

Things have gotten so scary in this economy, that answering these questions have become the only way many people would even think of buying real estate right now.

Obviously, there's some good reasons to buy real estate right now. Prices have come down so much that everybody is thinking about it (NY Times Story). But many people are doing nothing more than thinking. Fear is holding them back. True, if you're having trouble qualifying for a loan, that will hold you back, too. But if you have the money and aren't buying amid this severe drop in housing prices and the historically low interest rates, fear must be the only reason.

But it's a very, very good reason. So let's look at some new and some old predictions about where real estate is headed from here.

Let's start with Doctor Doom.

NYU Professor Nouriel Roubini famously predicted the economic problems we're now facing -- even when nobody else was listening to him. He has answered the question in two ways:

1) Because housing (overall) doubled, Roubini says it needs to come down 50%. If you account for inflation, this means a drop in real dollars of 40%, he says. So housing prices have dropped 25%, and Roubini expects another 15-20%. (In the Greater Los Angeles region, prices overall have fallen 44 percent and many things are much more affordable. But this of course means some areas are above and some are below this. Some have farther to fall, some probably don't have much more to go, it's just a question of how long before they rebound. But if you're buying long term, then that's less of a concern.)

2) Roubini has thoughts on just how long this downturn will last: "My view is that that recession is going to continue at least through the end of 2009 ... If our policy reaction is appropriate, by 2010 there will be some recovery of growth." (For more from Roubini, CLICK HERE)

Chris Thornberg, founder of Los Angeles research firm Beacon Economics, predicts that housing prices will fall another 10-15%. As does Patrick Duffy, principal for MetroIntelligence Real Estate Advisors. (MORE)

Then, there's Sam Zell, the beleagured Tribune Company owner, who seems to know little about newspapering, but has an amazing track record with real estate. He's a tad more optimistic on timing than Roubini: "I believe ... we will see the first signs of equilibrium in the housing market in the spring of 2009 and I will expect by spring 2010 the housing market in the U.S. will look a lot better." (MORE) -- (Side note: I wonder if he still goes on his yearly motorcycle trek through Italy. If not, I'll be happy to go to keep his place)

The UCLA Anderson Forecast was previously more optimistic than things ended up. At the height of the real estate market in December 2005, they predicted cooling real estate but no recession. Their gloomier report earlier this month says: "The outlook for California calls for a very weak first three quarters of 2009, with the glimmer of a recovery in the fourth quarter."

OK, so the consensus of these three very different sources is that things may start to get better later in 2009 and very likely get better in 2010.

Wait a second.

Wasn't that the same thing many were predicting before the stock market, banking system, world economy, auto industry, retail sector and everyone else collapsed?

You mean to tell me that maybe all this unprecedented pain, this unheard of economic catastrophe is still on track for the same recovery timeline?

SEE MY POST FROM JANUARY (And remember, this is before any of the credit crisis spread beyond housing.)

Hmm.

I have not been the least bit optimistic about things this year -- particularly, real estate -- SEE MY OWN QUOTE IN THE L.A. TIMES HERE.

But maybe this isn't the end of the world. Maybe there really is light at the end of this tunnel.

And maybe it really is time to buy something -- before it becomes obvious to everyone else.

Hmm.