by Calculated Risk on 9/21/2006 01:53:00 AM

Professor Thornberg is quoted in the San Mateo County Times: Home sales decline, prices stay flat

"We can say, with some certainty, price appreciation is zero and may even be slightly retracting. The market is flat and the bubble has popped," said Chris Thornberg, an economist with Bay Area-based Beacon Economics.
...
Thornberg of Beacon Economics doesn't expect the Bay Area to see substantial price appreciation — which he defines as being in annual range of 2 to 4 percent — until 2010 or 2011.

The reason for the sluggish forecast is that the soaring rise in home prices in the last few years far exceed the size of mortgages that can be paid by average household incomes, said Thornberg.

Until household income and rents rise significantly, housing appreciation will remain flat, he said.

"This thing hasn't shaken out. Price appreciation has pushed home prices to never-seen before levels. It's going to take some time," said Thornberg.

Thornberg's forecast appears to be for 4 to 5 years of flat nominal prices, or about a 15% real price decline.