Homeownership — and the buying and selling of residences — is an economic keystone that carries overwhelming weight in Californians’ personal sense of financial well-being.

But the momentum of the state’s housing rebound has faltered, with sales falling and prices softening despite bargain-basement interest rates. Foreclosures in California are still high. Sales of new homes are at historic lows. The construction sector is in the doldrums. And millions of the state’s homeowners owe more on their mortgages than their properties are worth.

Real estate historically has helped give a boost to economies exiting a recession, but the severity of this bust is nearly unprecedented: Californians have lost $1.73 trillion worth of equity in their homes since prices peaked in 2007, according to Moody’s Economy.com.

Although California’s housing market free-fall ended in spring 2009, the weakness after the expiration of federal tax credits for buyers last year has called into question the sustainability of the recovery.

The Times asked five California experts for their take on the state of real estate and what they think is needed to get the housing market moving again. They range from the pessimism of a foreclosure specialist to the decidedly more upbeat view of a Realtor association economist.

• Richard Green, director of the USC Lusk Center for Real Estate, predicts home prices will remain flat in 2011.

California’s recovery will hinge on location, said Green, who held professorships at several universities and worked as a principal economist at Freddie Mac before becoming director of the Lusk center.

“Draw a line from El Centro up to Sacramento and think of all the towns up and down that line. Unless we have hyperinflation in general in the economy — prices going up a lot — I would guess that in my lifetime we will not see a return to the prices that we had at the peak,” Green said.

“Now, places like La Jolla, Malibu, Laguna, Huntington Beach, Atherton, Palo Alto, the city of San Francisco, Marin County, those are places where within the next five years I could easily imagine prices returning to their peak.”

“The markets in the Central Valley were much more bubbly than the markets on the coast,” he said. “You have very few people who make a lot of money in these places.”

“Whereas a place like Silicon Valley, or a place like West Los Angeles, there is a critical mass of very high-income people.… That means you have a large number of people who can afford to spend in the neighborhood of $1 million on a house, and these are desirable places.”

“The more a property is a commodity that you can easily substitute for something else, the less the chance it will ever come back to its peak. The rarer a property is, the more likely it’s going to come back quickly.”

• Leslie Appleton-Young, chief economist for the California Assn. of Realtors, predicts home prices will rise 2% in 2011.

There are few professionals who would like more to see the housing market bounce back to the heady days of old than Realtors. Real estate agents made a killing when the housing market soared and then took a pounding when it tanked.

During the boom years, Appleton-Young said, she espoused the theory that rising prices mattered more than making solid loans. That theory appeared correct as long as values kept rising.

“What happened this time was prices plummeted and everyone was in trouble,” she said.

These days, the economist sees little chance of the market returning to its previous heights anytime soon.

“We are in a very slow-moving recovery with prices stabilized at the moderate and low end,” Appleton-Young said. “We are still seeing price attrition and price softening at the upper ends of the market.”

You hear it from bankers. You hear it from real estate brokers. I hear it from people trying to buy or sell a home. And, everyone hears it at cocktail parties.

It’s common knowledge throughout Denver and the suburbs that Denver’s better than the rest of the country. At least, our home prices have depreciated the least and home sales have held up the best.

Denver Home Price Are More Stable Than Most Cities

Over 1000 heard good news about the Denver Real Estate Market at The Kentwood Company Forum.

These facts were just confirmed at the Colorado Real Estate and Economic Forum hosted by the Kentwood Companies. Over 1000 folks showed up to hear a variety of speakers including Erik Davidson Senior Director of Investments for Wells Fargo Private Bank not only repeat the mantra but prove it!

The most recent Case-Shiller Report continues to show that home prices in Denver have declined the least of the 20 major markets they track. Denver has always been a resilient market during the last 20 years. It was then that employment became more diversified and depended less on the energy sector.

Denver Job Growth Continues

Wells Fargo forecasts that home prices will continue to decline in the Denver metro area but only at about a 3% rate next year. That’s actually great news. You see home prices are declining much faster in depressed and areas that have been blighted by massive foreclosures. These are generally areas north and east of the city. But the better areas of Denver and the south suburbs have maintain prices much better. So, a 3% decline in overall home prices means that the better areas of town should see stable prices and may even see pockets of price appreciation.

The fact that underlies the strong Denver economy is that unemployment has been running much less than that of the national economy. Wells Fargo forecasts that that trend will continue into 2009.

Unemployment Continues To be Lower Than Other Cities

I guess it’s fair to say that Realtors have to be optimistic about the future. But bankers don’t. So, it is interesting to hear their Wells Fargo is forecasting a much rosier future for Denver than it is for much of the rest of the country. There is no doubt that the housing trends are changing both in Denver and nationally. But it’s reassuring to hear that these changes may continue to rock the boat but are unlikely to sink it!

I guess all of us who live in Denver are “Denver chauvinists”. We love living here and we know that Denver has some inherent advantages over the rest of a country. Every once in a while, it’s reassuring to hear that we have a right to our justifiable pride in Denver, its economy and its future.

Click here to download and listen to the full, free Podcast “Planet Money #225: The End of the Housing Bust”  http://www.npr.org/rss/podcast.php?id=510289

Here, for example, is what housing means for small businesses’ ability to hire new employees:

Most small businesspeople when they want to get a loan, have to put up their home as collateral. And if your home is falling in value, no bank is gonna give you a loan. And if you can’t get a loan, you’re not gonna hire, and if you’re not gonna hire, then everyone’s got a problem.

And here’s what housing means for local governments’ ability to pay schoolteachers and other employees:

Many local governments — and local governments are the largest employer in our country — rely on property taxes … the part of the economy that’s losing the most jobs right now are state and primarily local governments, and a lot of it goes back to the housing bust.

If you want to know when the bust will end, Zandi says, look at foreclosures and short sales. Those typically occur at a big discount to prevailing prices, so they push overall prices down.

At the moment, almost a third of all houses being sold are foreclosures and short sales. The housing bust won’t really be over until that percentage falls sharply. Zandi says that’s likely to happen by the end of next year.

Regardless of your views on the PACE (Property Assessed Clean Energy) program, there does not appear to be any chance of resolving the current logjam caused by concerns over lien priority. With PACE in limbo due to Fannie Mae and Freddie Mac’s rejection of the program and the ensuing litigation, up-front cost continues to be the biggest obstacle to energy retrofit for residential and commercial property. The current economic climate prevents an enormous amount of energy retrofit of the existing building stock, thereby creating demand for financing mechanisms tailored to meet this market. The advantages of retrofits include reduced energy consumption and operating costs, reduction of greenhouse gas emissions, job creation and increased property value.

Clearly, with PACE programs authorized in at least 22 states, there is a demand for programs that solve the problem of up-front retrofit cost while providing the benefits mentioned above. There are many alternative financing sources that meet the market demands for energy retrofit. The problem is that they are not as well-known as PACE and therefore have not received the attention they deserve as solutions to the energy retrofit challenge. The list below is not comprehensive, but offers a range of programs to meet the specific needs of the market. If you are interested in residential or commercial retrofit, please contact SKE Development Company to discuss your options.

1.       Institutional lenders secured loan for solar programs

2.       Solar leasing  and power purchase agreements

3.       Unsecured private lending programs

4.       FHA – Energy Efficient Mortgage Program

5.       FHA Power Saver loans

6.       Rebate Programs

First American CoreLogic reported today that the shadow inventory of residential property has risen to 2.1 million units as of August 2010 (8 months’ supply), up from 1.9 million units (5 months’ supply) one year ago. The shadow inventory is significant because it now represents an additional 50% over and above the 4.2 million units in visible inventory for a total of 6.3 million units of unsold inventory or a 23 months’ supply. With 6-7 months’ supply considered normal, it is evident that the housing crisis is not behind us.

The increased inventory, mixed with high unemployment and a tight credit market provides unprecedented opportunities for real estate investors considering a buy and hold strategy. Although real estate prices may fluctuate in the short term, it is likely that prices are skipping along the bottom at least in desirable markets like Southern California.

Undoubtedly, as the U.S. treasury takes on more debt, inflation is inevitable, leading to increased value for real estate that is properly located and well maintained. More homeowners are converted to renters due to economic conditions in general and foreclosure in particular, creating a robust rental market. Additionally, interest rates are low, allowing positive cash flow from rental property that allows investors with long-term vision the opportunity build a valuable real estate portfolio.

SKE Development Company offers the assistance needed to seize this opportunity. With decades of experience in the Southern California and Arizona markets, we can locate acquisition targets, assist in take down strategies, direct necessary renovation, and serve as property management while adding value at each point in the transaction.

Please contact SKE Development for more information on how we can assist with your acquisition and property management concerns.