In the long run, home prices and incomes have a balance to them, and right now in the Bay Area, it appears they've gotten out of balance.

In a number of areas, particularly on the coasts, they have a high risk of price declines in the next two years.

This dropped to 95 percent with a seven-year ownership term and to 92 percent with a five-year ownership term -- still a pretty impressive rate. Home ownership clearly can be an important strategy for building wealth over the long term.

These non-traditional loans transfer risk to the borrower.

The risk of price declines has increased somewhat, but the national and local economies remain strong, which should support a gradual return to an economic climate characterized by slow, steady appreciation.

The risks are going up nationally, but they're mitigated by a strong labor market and strong economy.

We expected what we are seeing in the third quarter data, which is a moderating of appreciation that, over time, is likely to bring prices back into line with the economic fundamentals that support them, particularly incomes.

We knew the kid of appreciation we had been seeing in some markets was not sustainable over the long term.

We expect to see the continuation of the slowing trend in many markets.

What we're anticipating is a soft landing nationally. The markets will be coming back to their long-term average, which is a 4 percent to 6 percent (annual) appreciation rate.