By August, Inland Southern Californians can expect that home prices in the region will have risen 5.53 percent from a year earlier, but what happens after that seems to be in the government's hands, according to a home price forecast released this week.

Price increases, if they materialize, would be a result of aggressive government programs to subsidize home buying and lending, according to First American CoreLogic, a leading national real estate data and analytical company based in Santa Ana.

But as the government programs wind down, home prices could remain flat or even begin another decline, said First American CoreLogic senior economist Sam Khater. Other economists doubt there will be a decline, saying that even if economic conditions can't support the higher prices, the federal government would intervene to prevent another collapse.

Inland median home prices began edging up in June because of the effect government efforts have had on supply and demand, Khater said. That includes suppressing mortgage interest rates, offering tax incentives for first-time buyers and promoting mortgage modification programs to defer or prevent foreclosures. As a result, prices on a shrinking inventory of distressed homes are pushed up by multiple offers.

The CoreLogic forecast is based on a database of millions of real estate transactions nationally over 30 years.

The government is providing short-term support for home prices but is not solving the underlying problems in the housing market, Khater said. He cited high unemployment and the continuing foreclosures of "upside down" homes with mortgages that are far larger than their value. He predicted that as early as next fall, these negative forces will cause home prices throughout the region to stagnate or take another dip.

"Mortgage distress continues to increase" Khater said. In August, 110,000 mortgages were at least 90 days delinquent in the Riverside-San Bernardino-Ontario metropolitan area, up from 77,000 a year earlier.

Despite Khater's gloomy forecast, other economists do not expect the federal government and the lending industry to allow a new wave of foreclosures to develop that would topple the housing market just as it is regaining its footing.

"Those close to the situation feel if there was a possibility that things would deteriorate severely, if a huge increase in foreclosures was anticipated, the government would get right on it to prevent that from happening. Nobody wants to see home prices plunge again," said Robert Kleinhenz, deputy chief economist for the California Association of Realtors.

Although there are a large number of potential foreclosures in the wings, in part because of the slowing of the foreclosure process due to modification attempts, he said, it is in the interest of lenders to make certain they are not dumped on the market at once.

Kleinhenz said the price gains that First America CoreLogic sees for Inland Southern California by August seem realistic. He predicted that within the next two months, California will see year-over-year gains in the median home price for the first time in more than two years. It will take a few more months for Riverside and San Bernardino counties to see year-over-year improvement, he said, because the area's housing prices fell farther and longer than those in most of the state.

MEDIAN PRICE CRASHES

The association reported that in September, the middle-priced existing home in Inland Southern California was $172,000, down almost 59 percent from its peak of $415,260 in January 2007.

Low prices and interest rates and the federal tax credit have prompted Shane Valdez, a 37-year-old truck driver who rents a home in Anaheim Hills, to spend six months struggling to buy his first house. He said he is looking in Riverside, Corona and Lake Elsinore. He has made offers on 37 houses so far, he said, but got beaten by other buyers, including investors paying all cash.

Valdez said he doesn't believe home prices will fall anytime soon. His worry is that he will not buy before home prices again rise above his reach.

"I am offering above list on just about everything and I keep getting outbid," he said. "I don't think prices are going down."

Inland economist John Husing would agree on that point.

Even with a soft economy, the unprecedented affordability of Inland homes will continue to drive buyer demand and absorb any increase in foreclosures, Husing said. Not only can 68 percent of Inland households now afford to buy half of the homes being sold, he said, but the region is even more affordable for coastal residents who have traditionally moved inland to get more house for their money.

He is optimistic that Inland home prices and sales will continue an upward trend, although at a subdued pace because of high unemployment. He said he sees no sign of inflation and so no reason for the federal government to raise interest rates.

Besides, he said, "they have to keep the economy rolling if for no other reason than there is an election next November."

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