The economists at UCLA Anderson Forecast are still holding the view that the surging housing market will eventually break and the consequences of such a burst could push California into recession, while causing a noticeable slowing in U.S. economic growth.

The state's economy has been boosted artificially by increased spending from Californians feeling wealthier thanks to home price rises of 40% in the last two years, the UCLA forecasters said. When those prices stop rising, consumers will rein in spending, possibly triggering a recession, they said.

And it won't even take home prices to fall, just to flatten out, they said.

"This process will have a detrimental impact on the economy even if prices don't fall," UCLA senior economist Christopher Thornberg said.

Elsewhere, Federal Deposit Insurance Corp provided data that suggests that the top 55 U.S. housing markets, where prices have appreciated 30% or more in the last three years, represented about 40% of the total value of all U.S. housing in 2004, FDIC spokesman David Barr said. The Los Angeles-Orange County market alone was valued at more than $1 trillion, as was the New York City metropolitan area.

Separate data points out that the gross value of all residential real estate in California more than doubled, to $4 trillion, since 1997.