Double-digit California home price drop seen

Subprime borrowers comprised a relatively low percentage of buyers of KB Homes, about 6 percent in the second quarter, before the market for such mortgages evaporated.

Mezger and the others emphasized that they simply were speculating. Mozilo, who could be overheard saying he thought the fall would be about 10 percent, later told Reuters: "You may have heard that. That was just talk between (panelists.) I really don't know."

Countrywide last week forecast that U.S. home prices overall would drop 7.6 percent by the end of 2008.

A large majority of voting conference attendees saw a decline of 5 percent to 15 percent or more in California home prices in the next 18 months.

Panel moderator and real estate lawyer Lew Feldman of Goodwin Procter said he expected a relatively low drop of 7 percent to 8 percent, agreeing with Mezger's thesis that most of the fall would be in secondary and tertiary markets.