Even as affordability declines, California's housing market won't see a "hard crash" like in the early 1990s, said Delores Conway, director of the Casden Real Estate Economics Forecast at USC.
"Most homeowners live in their homes and they're not inclined to sell even if it is a seller's market," Conway said.
Conway warned that home buyers are increasingly taking on greater risk with so-called exotic loans such as interest-only loans.
These loans allow a home buyer to qualify for a larger mortgage by deferring principal payments for several years.