Real Estate Expected to Flounder in 2007

Donald Anthony stands in the kitchen of a home he is trying to sell in Antioch, Calif., Tuesday, Nov. 28, 2006. Anthony has knocked down the price of his 4-bedroom ranch not once, not twice, but three times -- and along the way put more than $40K worth of improvements into the place -- and still has not sold it. (AP Photo/Jeff Chiu) (Jeff Chiu - AP)

Meanwhile, insurance companies dramatically raised premiums after Hurricane Katrina. Depending on where they live and their policies, Florida home owners may pay as much as 10 times more for flood and wind insurance than last year; premiums can exceed $30,000 per year on mansions. That's caused monthly costs to skyrocket, pinching current owners and making it all but impossible for renters to buy.

Throughout Florida, 12,773 existing single-family homes were sold in October, down 22 percent from a year ago, according to the Florida Association of Realtors. Florida's median price was unchanged at $242,500, but more than half of the urban areas posted declines. Around Fort Myers, the median price plunged 44 percent to $249,200 from October 2005.

Not everyone is pessimistic _ even in beleaguered Florida.

Long-term demographic shifts from the Midwest and New England bode well for the notoriously boom-and-bust state, said Dave Denslow, professor of economics at the University of Florida. Florida, which gained 430,000 new residents in the past year, is a popular destination for Latin American immigrants and retirees from northern states, Canada and western Europe.

"People start thinking about buying a retirement home in their late 50s, and baby boomers are approaching that age," Denslow said. "The demand for residential housing here is only going to get stronger through 2020."

Meanwhile, back in Antioch, where Don Anthony is struggling, Zach and Katherine Chouteau are looking for a house or condo with a home office and room for twin Pug dogs.

They'd love to buy in Antioch, but the couple _ who moved from suburban New York five years ago to start their own business _ are reluctant to commit.

Like many shoppers, they're discouraged by higher interest rates _ and rampant appreciation in recent years and the perception that many San Francisco Bay Area owners have halcyon-day notions of multiple offers and bidding wars.

"It's definitely a friendlier market than earlier this year, but not a dramatically cheaper one," Zach Chouteau, 41, said. "People have gotten really spoiled by the rapidly escalating prices, and it seems like they're in denial that things have leveled out. They're just fishing for the best price."

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AP Business Writer Mark Jewell in Boston contributed to this report.