Leamer: Housing Market 'Rocket' Has 'Lost Its Fuel,' Trajectory is Clear

This is from the San Francisco Chronicle, but I think it also applies to the Sacramento housing market.

"The big question is, is the market due for a downturn?" DataQuick analyst John Karevoll said. "That can't really be predicted right now with all the variables -- it will depend on job growth, interest rates and inflation."

But UCLA economist Ed Leamer, who has been skeptical of the recent run-up in home prices, says the trajectory is clear.

"The housing market was like a rocket that has gone up and now it's lost its fuel," Leamer said. "Some people think it will stay suspended up there magically. We think it's going to come back to Earth -- sales will drop even more, and then next comes weakness in pricing."

Leamer predicts that prices will stagnate for several years as incomes catch up, but if the job market deteriorates, prices could drop.