Belief in a bubble doesn't mean there is one.

IS there a bubble or isn't there? Experts are all over the map.

On the same afternoon that analysts at Credit Suisse First Boston warned that Los Angeles was in the midst a housing bubble, a statement that sent homebuilder stocks into a tizzy, economists at Union Bank of California concluded that any local housing correction wouldn't come with "much pain."

UCLA economists argue there's a bubble and when it bursts so will the region's economy. Over at USC, economists believe that as the housing market returns to historical norms, prices will level off and hold steady.

There's seemingly no shortage of opinions. Here are just a few prognostications.

Overvalued 

Researchers at National City Corp., a Cleveland-based mortgage company, maintain that while there's no national bubble, a smaller regional "bubblette" may exist in parts of California.

Eight of the 10 housing markets it considers most overvalued are in California, with Los Angeles pegged at No. 4, behind Chico, Stockton and Santa Barbara.

To figure out what home prices should be in each of the 99 largest metropolitan areas, the company controlled home values by differences in population density, relative income levels, interest rates and historically observed premiums and discounts.

They took that "normal" number and compared it to the actual median price of a home in the market. By this measure, L.A. is 34 percent overvalued.

National City researchers then looked at historical regional home price corrections and found a median 23 percent over-valuation level triggered a market readjustment.

Still, the company's chief economist, Richard DeKaser, wrote that while overvaluation presents a risk of subsequent price declines, that risk may go unrealized. Like tech stocks from the late 1990s, some housing markets will hold their value if the underlying expectations are sound. So while many tech stocks became worthless, he said a few--like Dell Inc.--held their value.

Bubblicious

Economists at UCLA's Anderson Forecast have been predicting a correction in L.A.'s housing market for the last two years.

While it hasn't happened, they argue it's only a matter of time--mainly because of the growing difference between the rent a home can command and the monthly mortgage payment it would take to buy the same home.

Historically, the two rates are fairly parallel but in recent years rents in L.A. haven't risen as fast as the wild 20 percent year-over-year appreciation in housing values.

Based on this widening gulf, UCLA economists believe buyers are paying a premium for homes in L.A.--expecting future price appreciation. Hence, the rush into the housing market.

A further widening of the gap in payments--and more specifically market valuations--isn't sustainable, according to UCLA Anderson senior economist Christopher Thornberg, who believes the correction will come when the market once again begins to reflect a home's rental value.

No Pain

Keitaro Matsuda, a senior economist at Union Bank of California in San Francisco, is not that concerned, noting that while sales volume may slow and interest rates may rise, the results won't hurt California home values.

Recently, as the volume of people buying homes has fallen from year-ago figures, the amount of money people are paying for homes continues to rise more than 10 percent year-over-year.

He argues that even in 1982, when mortgage interest rates were about 20 percent and the market experienced a sharp slowdown, nominal home prices still rose 3 percent.

During the early 1990s, home prices dropped by nearly 12 percent but he says that was triggered by an economic crisis and huge job losses. But today many areas of the state, including Los Angeles, are experiencing employment growth at rates above the national average.

"When people are employed and their income is rising, nominal home price corrections are possible but not likely," Matsuda wrote. "If you are a California homeowner concerned about the value of a primary residence, future housing 'corrections' should cause you little pain."