The Pasadena Star reports from California. "Home sales in Los Angeles County dropped 21.6 percent compared to last year and some communities are showing drops in median home prices, according to figures released Thursday."

"The statewide median home price increased 1.4 percent in November, the smallest increase in nearly a decade, said Robert Kleinhenz, deputy chief economist for the California Association of Realtors. 'The 1.4 percent increase in the statewide median masks the fact that you've got markets across the state moving in different directions,' Kleinhenz said."

"The San Gabriel Valley had similar highs and lows. Hacienda Heights' median home price dropped 17.8 percent to $512,000. But Altadena's median home price increased 15.2 percent to $702,500."

"Sales have dropped substantially and defaults and foreclosures are up, said Michael Carney, a professor of finance and real estate at Cal Poly Pomona. More money might be flowing out of speculative housing and into stock markets, Carney said."

"Some sellers who were waiting for a market peak are panicking and putting their homes on the market, he said. 'How long this will go on is the issue. If there's going to be a recovery, I think it will be well into 2008 before we see it,' he said."

The LA Times. "Optimism was voiced Thursday by economists for three of the biggest industry lobbying groups. They see home sales bottoming in the current quarter and picking up in 2007."

"However, after three years of record sales, the slowdown will continue to be a drag on the nation's economy until at least the middle of next year, they said. 'A lot happened in that boom and we have some paying back to do yet,' said David Seiders, chief economist for the National Assn. of Home Builders."

The Sacramento Bee. "California home sellers face several more months of pain, leading housing economists said Thursday. But while they believe the current 'correction' will be shorter-lived than those that hammered home values during the early 1980s and 1990s, the three cautioned that residents of California, Florida and much of the Eastern Seaboard are likely to endure the most prolonged pain."

"That's because prices during the past five years reached levels in all those areas that became unaffordable to buyers and unsustainable for sales, they said."

"'I would just emphasize that all real estate is local and there will be markets in this country that will continue to experience some pain in 2007,' said David Lereah, chief economist of the National Association of Realtors. 'It may be a 2 percent drop, a 5 percent drop. Maybe it even gets to be an 8 percent drop in that area.' Lereah said about 25 percent of the country falls into that category."

"Local experts say that includes the Sacramento region, where year-over-year prices have fallen up to 14 percent in Placer County alone and 2006 sales of all homes and condos are running 14,000 behind the same time last year."

"Sacramento-area sales prices are expected to keep falling, up to another 10 percent during 2007 before stabilizing, according to predictions last month by (broker) Mike Lyon. The chief culprit: excess inventory, with 12,652 homes on the market in El Dorado, Placer, Sacramento and Yolo counties, according to real estate researcher TrendGraphix."

"A year ago, Lereah and Seiders were among housing economists nationally and in California who provided outlooks for a market that in hindsight proved to be overly sunny."

"'Affordability is the problem in housing right now,' Lereah said."

"Folsom-based home-builder consultant Greg Paquin has predicted sales of 9,500 to 10,000 new homes in 2007, lowest since the 1990s and well below 17,155 sales in 2004. Paquin also recently told the North State Building Industry Association he doesn't expect significant price hikes for new Sacramento-area homes until 2009 or 2010."

The Tracy Press. "Mortgage foreclosures have tripled in San Joaquin County during the past year, making this one of the leading areas in the nation where people default on home loans."

"An Irvine-based company that tracks foreclosures in California shows that foreclosures in San Joaquin County have tripled from last year. The company reported 1,228 foreclosures in the second quarter of 2006, compared with 374 for the third quarter in 2005. In November alone, 594 loans were in default compared with 139 for the same month last year."

"'There are a certain amount of loans out there that are probably going to cause problems for the consumer if the consumer isn’t prepared to refinance right now,' said Dale Gray, executive director for the Central Valley Association of Realtors."

"He added that there were a lot of investors who took advantage of rising prices and could use risky loans if they could build equity quickly. Those opportunities disappeared last year when the market hit a slowdown."

"'If they missed that window and bought it for an investment, it could be those property owners who find they can’t hold that property,' Gray said."