According to a report forecast, inflation-adjusted home-price appreciation, which was in double digits from 2002 through 2005, will be 7.5% this year, 0.3% in 2007 and negative 4.1% in 2008.

The housing slowdown will cause job losses, primarily in the construction and financial sectors. That's not surprising since sectors related to real estate fueled creation of 30 percent of new payroll jobs in 2005. Jobs such as mortgage lending, mortgage brokering and real estate brokering are expected to take a hit.

A full-blown recession generally is triggered by job loss in at least two major sectors. But most sectors are chugging away at decent levels. In 2000, the Bay Area contributed 22% of California jobs and Southern California's share was 53%. In 2005, the Bay Area had 19% and Southern California 54.

Ratcliff  said that was in part because real estate-related finance jobs were heavily concentrated in Southern California. Professional business services and retail and wholesale trade helped tourism boost the Bay Area job count. Southern California, with 48% of the population, has 47 percent of the income, while the Central Valley has 7 percent of income and 10% of the population. The Bay Area's highly educated population accounts for the disparity.

By M. Sese
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