Is it 2009-2010 or 1972-1973? If you're paying college tuition this year, it may be hard to tell. Tuition is up only 4.3% for the coming school year, the lowest rate of growth in 37 years, according to a survey of 350 private schools by the National Association of Independent Colleges and Universities. This is down substantially from the 5.9% increase for the 2008-2009 school year. Of course, this is for tuition only and does not include room and board inflation.

Before celebrating, though, remember that depressed housing prices and constrained financial markets make it tougher to dip into home equity to pay for school (a favorite strategy of the past few years), and layoffs are putting an obvious strain on household finances. So, the bargain in all this may be hard to find, even with financial aid increases of 9.2%.

The Congressional Oversight Panel announced in a report this morning that it feels more bank stress tests are needed, especially if unemployment rates continue to rise. The group believes that the stress tests should be repeated periodically as long as banks continue to hold toxic assets.

The panel used a risk-modeling approach that is described as "reasonable and conservative," but added that it is impossible for an outside party to mirror the loss projections that form the core of the stress tests. The group noted that the "more adverse scenario" assumption for the U.S. unemployment rate in the tests has nearly been met in 2009. The yearly average for the unemployment rate stands at 8.5%, which isn't far from the 8.9% assumed in the first round of stress tests. The group recommended that the "Treasury publicly track the status of its stress test macro-economic assumptions (unemployment, GDP, and housing prices) and repeat the stress test if the adverse scenario assumptions have been exceeded."

In the current housing market, it has been hard to find any sort of silver lining, but we do see a little positive news today, as existing home sales in July jumped more than expected, mainly due to lower home prices.

During July, sales of existing homes rose by 3.1%. This was well above the 1.6% that Wall Street was hoping to see, but analysts caution against assuming that this is a sign that the market has finally bottomed out. Despite beating Wall Street estimates, we still have to consider the fact that home sales were over 13% lower than the same period a year ago.

While we can view the July sales figures as promising, we must also take a minute to look at home inventories, and here the picture is not so rosy. Here we see that the number of unsold single family homes is running at all time highs. Currently the market is trying to deal with a total of 4.67 million unsold homes. This is the highest level that we have seen since 1968 when the National Association of Realtors started monitoring the data.

The housing market can use all the good news it can get, and the latest news out of Southern California is definitely good, as home sales in the month of April reportedly jumped 22% in that part of the state.

California has been hit pretty hard in the recent housing crunch. Of course, the reason why California has been so hard hit is because it was also one of the states that had the best growth during the housing boom.

The flip side of the story is that the rise in home sales was mostly led by bargain hunters who swooped into the market and picked up foreclosed properties. According to the report, 38% of the homes purchased last month had been involved in foreclosure procedures at some point over the past year.

Despite the weak housing market, not everyone is feeling the pain, including Donald Trump who recently made a killing selling a home in Palm Beach for a reported $100 million.

While Trump concedes that the housing market is still weak, he states that he thinks things are about to turn a corner. Trump said that what is most troublesome to him right now is that people are still pretty shy about investing in America, and is what he calls the "saddest part" of all concerning the current economic situation in the country.

Since the American economy is driven so much on oil, Trump admits that there are better investments that you can make by looking abroad.

If you are like me, you are probably getting pretty tired of reading bad housing news day after day, so today it is nice to bring you some good news on the housing market, as mortgage applications rose last week for the first time in three weeks.

According to the Mortgage Bankers Association, the week ended May 2 saw a 15.6% jump in the association's index of mortgage applications. The index takes into account both new purchase as well as refinance loans.

It is a good sign for the housing market, which is entering into its peak buying season. Perhaps this is the moment we have been waiting for, when buyers are finally ready to come back into the market and sweep up some heavily discounted houses. Home prices have been steadily falling for the past year, but signs are starting to point to a possible stabilizing early in 2009.

AP reports that home sales dropped to levels not seen since the George H. W. Bush housing recession in 1991. And home prices are plummeting faster than they have since 1970.

Here are the details: new homes dropped by 8.5% in March to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991. And the median price of a home sold in March dropped by 13.3% compared to March 2007, the biggest annual price decline since a 14.6% plunge in July 1970.

What the current Bush housing collapse and the earlier one share is the after math of too much capital flowing in to the housing market. Under Bush the elder, the capital flowed in due to the deregulation of the Savings & Loan industry -- resulting in a $250 billion bailout. Under Bush II, the problem was the $1.3 trillion subprime mortgage market which made capital available to people who couldn't afford to pay the mortgage -- after all, 47% of those loans required no documentation of borrower's income.

Consumer prices rose 0.3% in December, above the 0.2% consensus estimate, but the core rate rose just 0.2%, in-line with the 0.2% consensus estimate, the U.S. Labor Department announced Wednesday.

Prices at the retail level increased at an above-average rate during 2007. For 2007, consumer prices increased 4.1% - - the biggest increase since 1990. Energy prices rose 17.4% in 2007 while food advanced 4.9%.

Meanwhile the core CPI rate increased 2.4% last year - - above the Federal Reserve's 'comfort zone' for inflation. The Fed uses the core CPI rate as the primary gauge of consumer-based inflation.

In December, energy prices rose 0.9%, gasoline increased 1.1%, natural gas climbed 2.3%, medical expenses increases 0.3%, and housing prices rose 0.3%.

Economic Analysis: A lukewarm CPI statistic. December's 0.3% CPI increase was above the consensus estimate, but the core CPI rate rose just 0.2%. The December core statistic should help convince the Fed that inflation - - while still at intolerable levels as measured by the producer price index (PPI) - - has not shown up fully yet at the retail level. That should enable the Fed to cut interest rates by 50 basis points at its next meeting, and later this winter to help stimulate the slowing U.S. economy.

Housing prices in July posted the largest single month decline in 6 years. We have now seen home prices drop during every single month in 2007 and continue to ask ourselves just how long the current situation is going to linger.

The 10-city S&P/Case-Shiller home price index that was released this morning fell by 4.5% in July. The 20-city index showed a pull back of 3.9% from July of last year, with 15 out of 20 cities showing declines.

The five cities were prices rose were Atlanta, Charlotte, N.C., Portland, Seattle. Atlanta and Dallas. Atlanta and Dallas better enjoy the good times while they can though because they are getting very close to moving into negative territory, according to S&P.

Will the current housing slump actually lead the country into a full blown recession? That debate is still out, but Robert Shiller, the Yale University economist whose name is on the index, stated last week that we are facing a "significant risk" of the dreaded "R" word.

[phto D'Arcy Norman]

Michael Fowlkes is an analyst for the online investment advisory service Investor's Observer

Yesterday I was stunned to learn that Fed Chair Ben Bernanke had cut the Fed Funds rate 50 basis points to 4.75%. However, I had predicted that if he did cut the rate that much, the Dow would soar between 200 and 300 points. My high end estimate was 30 points too low.

What worried me the most about the cut was that the stated reason was pretty vague -- something about the risks to growth outweighing those to inflation -- and not supported by any numbers. Then I read this morning's New York Times [registration required] which suggested that at last month's Fed retreat in Jackson Hole, WY, economists presented economic forecasts based on the assumption that housing prices decline between 20% and 40% in the next several years.

I doubt the Fed's rate cut can do much to stop this problem -- although borrowing more money might delay the worst effects until the next president is in office. If this is the reason for the unexpectedly large interest rate cut, Fed officials should say so. While we have no power to decide interest rates, in a democracy I believe we at least have the right to know why those decisions are made.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter.

Earlier this month we took a look at how foreclosures were at record levels for the April - June quarter, and according to new data, August was no better for homeowners. According to RealtyTrac Inc., there were a total of 243,947 foreclosure filings in August, representing a 115% rise from the same period last year.

To get a better idea of just how hard Americans are getting hit, just consider this: during August, the national rate for foreclosures was one home out of every 510 households. While this figure is scary enough, it gets even worse for California residents. California had the largest amount of foreclosures of any state in the country with 57,875 foreclosures. That works out to one out of every 224 homes, and a 300% jump from last August.

The current trend is, unfortunately, not showing any signs of reversing itself. A big reason for the recent surge in foreclosures can be attributed to the large amount of adjustable interest rates that were issued during the housing boom in the early 90's. As these loans have gone through rate hikes many families are finding out the hard way that they just can't keep up their payments. It is estimated that there are going to be somewhere in the neighborhood of another 2 million of these loans adjusting higher before the end of this year. It definitely doesn't paint a pretty picture.

Over the past few months I have written a lot about the housing market, and almost all of what I have written has been negative, so when i ran across an article today discussing some markets where prices are thriving I felt it only fair to discuss.

According to a report from CNNMoney.com there are 11 metro areas that have enjoyed double digit growth in home values over the past twelve months. Just goes to show that the old saying is still true... when it comes to real estate, its all about location, location, location.

So why exactly are there some parts of the country where prices are still going through massive increases while other sections of the nation have seen dramatic drops in prices? There are a couple factors at play according to the report:

1. Strong job market
2. Solid population growth
3. Areas that never went through the massive boom earlier in the decade that sent prices sky high in most of the nation

Some economists, including ones cited in a recent story by the New York Times and the authors of "Freakonomics," don't have much use for realtors.

Research cited by the Times showed that people who sold their homes through realtors didn't get a higher price than those who sold it themselves, although agents sold homes faster. Though the researchers caution against extrapolating their data to a nationwide trend, it's likely going to happen. Of course, the National Association of Realtors has its own studies showing the exact opposite conclusion.

The growth of sale-by-owner homes would seem to be an inevitable consequence of the housing slump since people are going to try and squeeze every last dollar of profit from the sale of what is likely their most valuable asset. But realtors don't seem to be suffering.

In fact, they are making higher commissions, according to writer Kenneth Hamey of the Washington Post Writers Group, writing for Realtors Magazine Online.

Properties simply need more marketing muscle to sell, which means that real estate practitioners must work harder and spend more money in order to help the sellers get top dollar," he writes. "Some agents also are adding services, such as staging or professional photography, to get the listings noticed in markets where inventory is supple."

Maybe there are different methodologies in the studies done by economists and the industry. Regardless, I don't think the job of the realtor will ever go away completely. Buying a home is pretty scary, particularly if it's your first time, and it can be comforting to have someone guide you through the process. Plus, there are thousands of details that are too much bother for many people.

Even so, I'll sell my home myself if my wife and I ever decide to move. The economics are just too compelling to ignore.

Toll Brothers Inc. (NYSE: TOL) may be worth considering for the truly adventurous and patient investor.

The luxury home builder today posted better-than-expected second quarter results. Granted, expectations were lower than a limbo poll because the Horsham, Pa.-based company already said it wasn't going to be able to hit earlier profit forecast.

Net income fell 79 percent to $36.7 million, or 22 cents per share from $174.9 million, or $1.06 per share, a year earlier. Revenue fell 19 percent to $1.17 billion The profit beat analysts' expectations of 14 cents a share, according to Reuters.

There were a few bright spots.

Toll's cancellation rate fell to 19 percent, down from 30 percent in the first fiscal quarter and 37 percent a year earlier. The backlog, though high, was $4.15 billion at the end of the quarter, down from $6.07 billion a year earlier.

This doesn't mean that the housing markes has turned. What it may indicate, though, is that slowly but surely things eventually will get better. The company. which says the overall market remains "soft," already is seeing some signs of improvement in markets such as New York City, the Philadelphia suburbs, Raleigh. Austin and Silicon Valley in California.

Shares of Toll are down about 8 percent this year. They trade at a forward price-to-earnings multiple of 18. Four analysts rate the company either a buy or a strong buy compared with 9 who consider it a hold. The average price target is $30.50. slightly higher than where it trades today.

Has the bad news already been factored into the stock? Perhaps. The shares do seem reasonably priced.

Happier times will come to Toll eventually. It's just a question of when.

I was listening to NPR's Marketplace this morning only to be assaulted by a stunning statistic -- Bill Gross, the manager of the largest bond fund, $102 billion Pimco Total Return Fund, thinks that housing prices could fall 20%. Is Gross right? If so, what should you do?

Gross's assumption is that 2003 was the last time home prices were 'normal' -- based on lower interest rates and demographics. He believes that since then, prices have jumped above that normal value and will therefore drop 20% in order to get back to where they belong. (This is not just idle speculation: home prices in Irvine, CA have already sunk 17% since June.) Gross believes that despite the Fed's talk of inflation vigilance, such a drop in housing prices will lead the Fed to cut interest rates from 5.25% to 4% to cushion the economic pain.

I think Gross may be right. As I've noted here, inflation continues to be a problem. But the Fed seems to be counting on an economic slowdown to solve the problem. And if housing prices do fall 20%, the economic impact may cause the Fed's fear of deflation to exceed its fear of inflation -- due to excess productive capacity in the U.S. economy.

What you should do depends on your situation. If you were thinking of buying a house, wait two years so you can buy after prices have tumbled and sellers are more desperate. If you must sell, cut your price and get out immediately. If you can wait to sell -- I would suggest holding for at least a decade which is how long I think it will take for things to return to normal.

I think 2007 is the year when home owners will be jolted into the realization that trees do not grow to the sky and prices can indeed drop. What do you think?

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter.