This economic report on California’s housing sector from UCLA was reported all over California and picked up nationally but this article from San Diego was the best one.

In California, the pace of new-home construction has declined by about half since the 2005 peak, and sales of all types of housing have fallen off by close to half. Foreclosures are spiking at levels approaching those of the recessionary 1990s, the forecast shows.

In contrast to past recessions, when waves of foreclosures were triggered by job losses, most recent foreclosures have been the result of families having overextended themselves. Many stretched to buy houses they could barely afford and chose to take out loans with rates that adjust upward after two or three years. The biggest wave of those rising house payments is due to take place in early 2008, the report shows.

It could be the middle of 2009 before the market turns the corner, according to the report.

Surprisingly, though, the housing slump has had minimal effect on the wider economy so far, he said. Job growth has slowed slightly in construction and real estate finance, but for the most part those housing-related industries have avoided widespread layoffs.

That is about to change, Ratcliff wrote in his report. And the job losses that are coming will hold down California’s overall job growth rate to less than 1 percent over the next year, he said.

“…The rest of 2007 and beginning of 2008 will be the period when real estate weakness finally spills over into the job market,” Ratcliff said.

FYI: These UCLA economists lean pessimistic but their analysis is plausible.