by Calculated Risk on 4/21/2006 11:48:00 AM

Several economists from the UCLA Anderson Forecast (One of the top rated forecasters) will present at a San Diego conference on May 3rd. Here are some previews:

Christopher Thornberg, a senior economist at Anderson Forecast, said the forecast will be focusing on San Diego because its housing market is the first to follow a nationwide trend of depreciation and a cooling of the real estate bubble.

"A bubble is a function of a period of time where there is expectation in the marketplace and, as a result, people cash in and it feeds up the price," Thornberg said.

He said forecasters are worried about how the housing market will affect the economy.

"We see depreciation starting to flow and overall sales starting to decline, and when real estate markets cool, construction jobs are lost, and real estate and mortgage brokers lose their jobs," he said.
...
Edward Leamer, the director of Anderson Forecast, said the term real estate bubble refers to the extremely high and unsustainable prices for certain assets.

"When the market is hot you get a lot of sales. When the market is cold, the result is that there is a lot of withholding and people don't sell. We're at the initial early warning signs," Leamer said.

He said the housing bubble is 20 to 30 percent off its absolute peak, and with another three to four months of sales volume drops, it will be absolutely clear that the housing bubble has peaked.

"Sales volumes will drop substantially. The popping will be more in terms of sales volumes than with real estate prices," Leamer said.