Friday, June 27, 2008 (SF Chronicle)
Hope for housing market in state
Carolyn Said, Chronicle Staff Writer

Some glimmers of hope are on the horizon for the beleaguered housing market, according to experts from the University of Southern California Lusk Center for Real Estate.
  "We don't have a lot further to go (down in price)," said Delores Conway, director of the Casden Real Estate Economic Forecast at USC. "Unless there's a major shock in the economy or the capital markets seize up even
further, we would expect these (housing) markets to return. ... In the next 12 to 18 to 24 months, prices should level off, and move at more normal rates."
  One promising indicator, she said: Housing prices have already fallen to the point where monthly ownership costs are getting closer to the cost of
renting. During the big real estate run-up, monthly house payments (which include taxes) spiked sharply above average rents. It's extremely rare for
homeownership costs to fall below rental costs, she said.
  Raphael Bostic, director of the USC master of real estate development program, said San Francisco and San Jose were in the best shape of major California cities, with home prices flattening, instead of plunging like
those in Southern California and inland. Richard Green, director of the USC Lusk Center, said history shows the U.S. economy is remarkably resilient.
  "We have been through periods of profound turbulence in our financial markets, only to see things respond more rapidly than anyone had predicted," he said.
  Now that banks have finally decided to cut their losses by writing off soured mortgages, they may actually be overstating the extent of the problem, Green said.
  "When institutions decide to write down assets, they tend to overshoot,"he said. "Once you've already come clean that you're losing money, you might as well get the pain out of the way."