(U-WIRE) LOS ANGELES – As the price of real estate continues to increase, especially with the high cost of living in California, the University of California-Los Angeles’ Anderson School of Business economists and corporate contributors concluded in their June 21 quarterly forecast that there will be a slight slump in the real estate market.

After years of anticipating that California home prices would soon begin to plummet, Anderson revised its original conjecture after it did not follow suit with the actual economic trend.

But though real estate prices will begin to decrease, it will not be enough to create an economic recession.

“There will be a reasonable dip, but no crash,” said Chris Cagan, director of research and analytics at First American Real Estate Solutions.

Several Anderson analysts also said a housing market dip could lead to job losses in some industries, especially construction.

The prediction of a slowdown in the real estate market did not come as a surprise to many forecast attendees.

Addressing an audience of mostly corporate businesspeople, Mike McCook, president of Kenwood Investments, asked members of the crowd to raise their hands if they thought real estate was never going to slow down.

The crowd laughed at the nonexistent show of hands.

Analyzing the current and future condition of real estate value and its effects on employment, the 2006 forecast predicts that home prices will barely change in the short term, but by 2008, they could drop by 4.1 percent.

Edward Leamer, director of the Anderson Forecast, began the event by jokingly requesting that audience-members keep their cell phones on, in case they were called and told their house was offered a sale before house prices begin to decrease.

Real estate is the best indicator of a recession, and if the real estate market is headed downwards, it could cause problems for the overall progress of the economy, Leamer said.

He added that if there were to be a significant recession, job loss would come mainly from the construction sector.

However, he also said a housing market slowdown could lead to lower commissions for real estate brokers, and could eventually produce job loss in that sector as well.

Anderson Economist Ryan Ratcliff said a significant recession, though not immediately predicted by the forecast, could lead to job loss in all “real estate-sensitive sectors.”

But despite its speculation, the forecast concluded that though California’s economy would grow slowly, such a major economic depression would be unlikely.

“It won’t be a cold, it won’t be a flu, it won’t be a plague,” said Cagan, referring to the prediction that California’s economy would only suffer minor setbacks.

The slowing housing market, which would increase interest rates, could cause stagflation, which is a combination of stagnant economic growth and rising inflation that could lead the economy downhill.

But whatever the forecast predicts for the future of real estate, Richard Ziman, Chairman of American Value Partners and a keynote speaker, warned that the Anderson real estate forecast could well be just as wrong as it was a few years ago.

“Do not come away with any specific conclusion of what will happen six months from now. There is a possibility that things can get much uglier,” Ziman said.

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