NEW YORK - With home prices skyrocketing, Deutsche Bank Securities analysts warned that there is more of a downside risk in this cycle than at any other time in recent history at the investor gathering held here last week. Specifically, analysts expressed concern over California, which has seen a housing mega-boom' and is the epicenter of mortgage innovation.'

In her presentation, Karen Weaver, global head of securitization research at Deutsche Bank, noted that there hasn't been a year-over-year decline in the nationwide home-price index, and that, in aggregate, affordability - which is the key component in assessing the sector's viability - remains relatively high. While Weaver does not expect nationwide price declines, should declines occur, they would likely be limited to areas such as California. Moreover, "Even if we are at the peak, it will take well over a year to impact mortgage performance," Weaver added.

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