AREA HOME-PRICE PEAK IN SIGHT? ANALYST SAYS WHAT'S UP WON'T COME FAR DOWN.

Byline: Gregory J. Wilcox Staff Writer

Southern California's housing bubble won't end with a pop but a hiss as prices flatten, and any declines will materialize slowly, a UCLA economist said Thursday.

Christopher Thornberg, senior economist for the Anderson Forecast at the University of California, Los Angeles, said that the market is still hot but cooling and that each uptick in prices expands the bubble.

``It's enormous. We've never seen anything like this before,'' he said about the housing-price track as he led off the Richard S. Ziman Center for Real Estate's annual conference at the Skirball Cultural Center.

The center's annual event usually focuses on the multifamily market.

This year, with residential prices still on a record run, conference organizers decided to focus on the bubble, an issue that UCLA first raised several years ago.

Thornberg noted that in the hot 1970s market, prices rose 55 percent, in the 1980s boom they climbed 46 percent, and in this run-up they have jumped 80 percent.

``Right now, it appears to us we're at the peak of this market, but it could take off again,'' Thornberg said.

In his forecast, Thornberg also notes:

--Prices will flatten, not plummet, but could decline slowly by a nominal amount.

--There will likely be a slowdown in construction in the region as real estate cools.

--Reforms in the building industry are needed to encourage the private sector to build housing for those with low incomes.

``Today's housing crisis is critical and severe,'' said John S. Long, the Ziman Center's chairman.

And UCLA economists are concerned that today's buyers are overreaching to secure an asset that might not continue to perform as it has in the past.

``We are seeing all kinds of crazy mortgage products in California, and that's the sign of a market that's running out of steam,'' Thornberg said.

There is also concern that the overall economy, while still clicking along, might not be as strong as it looks on the surface. Most of the momentum is coming from consumer spending, which could take a hit if the market takes a dramatic turn.

It could also impact construction and mortgage sector jobs, which have grown during the boom real estate market.

``You won't see a crash-and-burn,'' Thornberg said of the coming market turn, ``but it will have an impact on the economy.''

Not surprisingly, building-sector representatives offered a more upbeat market assessment.

``I've been following economists' (predictions) for a long time, and eventually they will get it right,'' said Bill Rattazzi, president of the Los Angeles/Ventura Division of John Laing Homes.

His company is building a 44-unit project in Sylmar with prices ranging from $500,000 to $600,000. Today he looks at whether housing is attainable, not necessarily affordable.

And today for a family with two incomes, a $500,000 house is attainable.

``I think this is a market today where people are buying a monthly payment. They aren't buying houses,'' he said.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com