SAN FRANCISCO — The bad news: It’s "almost unprecedented" that home prices are falling "this swiftly and this steeply in this short period of time" in some California market areas.

That’s according to Delores A. Conway, director of the Casden Real Estate Economics Forecast at the University of Southern California Lusk Center for Real Estate, who spoke Thursday during an economic and housing forecast presentation at PCBC, an annual builders’ conference.

Prices have fallen about 30 percent in the past two years in some market areas in the state, she said.

"Things look pretty bleak now," she said, with foreclosures "really mounting" in some areas and prices falling sharply in inland California market areas like Stockton, Sacramento, San Bernardino and Riverside.

Historically, there have been price declines of similar magnitudes, Conway said. For example, there was a 20 percent decline in home prices in the Los Angeles area in a past market cycle. But that took place over a 6-year period, she noted.

More bad news: "Banks really don’t have as much money to lend. The lending criteria have really tightened up. The other piece is buyer psychology. When buyers see prices falling they don’t want to jump in … they may risk losing their down payment or any money they put into the house."

The falling prices and rising foreclosures "tend to really create almost a downward spiral."

Liquidity remains a major issue, particular for homes above $1 million that exceed the conforming loan limit. "It is very difficult to get jumbo loans. The inventories are mounting (for these homes)," she said.

A view that "everything is a disaster — everything has collapsed and is never going to return again" is erroneous, he said, and provided examples of market areas where the up and down cycle was muted or even non-existent.

"The local context is really important," he said. Mountain states markets, such as Billings, Mont., and Ogden, Utah, experienced slow rises in home prices and have not seen the sharp descent exhibited by some California market areas, he noted.

Those markets that were "late to the party" in appreciation are generally weathering the downturn better than others, he also said.

The markets experiencing a high volume of foreclosures now tend to be those markets that had heavy building activity during the housing run-up and may be slower to recover as a result.

Richard Green, director for the USC Lusk Center, said some lenders have severely pulled back on jumbo lending. "What they’re saying is we’re closed for business" for high-value loan amounts, he said.

The mortgage market is factoring in default rates for prime mortgages that are four to five times higher than what it had considered in previous years, he said, which could be out of line with the actual risk.

Green said he is watching the TED Spread, a measure of credit risk that compares the interest rate in U.S. Treasuries contracts with that of contracts in U.S. dollars at banks outside the United States. The spread has been rising lately, he noted, and tends to be greatest in times of financial crisis.

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