A national economic research firm says Honolulu's housing market is set up for one of the biggest price falls by 2011 among large U.S. metropolitan areas.

Moody's Economy.com forecasts that the median price of Honolulu homes will bottom out in early 2011 after a 30.9 percent drop from the second quarter of 2008.

"Buckle in," said Jason Kunkel, an associate economist with Economy.com, which is an affiliate of giant credit-rating firm Moody's Corp.

Some local observers say the projection fails to address unique conditions of Hawai'i's real estate market. They also say that so much depends on the success or failure of the federal government's financial-industry bailout and economic stimulus plans, which in part aim to right the country's housing market, that a three-year projection is hard to make with much confidence.

The University of Hawai'i Economic Research Organization is working on a forecast scheduled for release before the end of March that will include a projected home price decline likely to be roughly half the Economy.com forecast.

Harvey Shapiro, research economist for the Honolulu Board of Realtors, said the Economy.com prediction will likely turn out to be overly pessimistic. "It's absolutely ridiculous," he said.

Kunkel said Economy.com's study assessed factors including employment, personal income, tourism, housing inventory and buyer demand.

The report anticipates that the local economic decline resulting in job losses and falling personal income will cause Honolulu's housing market to catch up with Mainland markets that already have tumbled.

Honolulu's median single-family home price last year decreased just 3 percent to $624,000 after soaring 115 percent from 2001 to 2007, according to Hono- lulu Board of Realtors data.

Shapiro said Honolulu home prices shouldn't be expected to follow what has happened in some Mainland cities where home prices have already collapsed by 50 percent or more.

Shapiro said Honolulu's inventory of homes for sale, which almost doubled from 2005 to 2006, was up only a bit last year over the prior year, and has been stable recently.

"In most other cities they're building up inventory, and we haven't been doing that in Hono- lulu," he said. "I think that is going to go a long way to keeping our market stable."

Shapiro also said that demand for Honolulu homes, which has been slowing for three years and included a 27 percent drop last year, to a large degree reflects the disappearance of investors and second-home buyers from outside Hawai'i. He said continuing purchases by owner-occupant residents should be enough to keep prices from falling severely.

Carl Bonham, a UH economics professor and UHERO's executive director, noted that the Economy.com forecast factors in an anticipated number of local job losses that is about twice as high as UHERO anticipates.

Some observers note that a few local real estate industry leaders anticipate that the median home price could decline about 10 percent this year, but doubt another 20 percent drop will occur by early 2011.

On the other hand, one real estate agent who is considering selling his own home said he wouldn't be shocked if Economy.com's forecast proves accurate.

"I hate to be the quoted pessimist ... but I think 30 percent would not be surprising," said Mark Jolly, an agent with Realty Executives Oahu. "I think we're in denial over here."

Jolly said he believes that much of the recent stability in Hono- lulu's median price — a point at which half the sales are for more and half for less — is attributable to higher proportions of homes selling in higher-priced neighborhoods than lower-priced neighborhoods. He guesses that if the mix were evened out, there already would be a 10 percent price decline.

Jolly's own expectation is for Honolulu median prices to decline by an amount that's closer to 30 percent than 15 percent by 2011.

To be sure, predictions are just that, and often turn out to be wrong. In 2007, Economy.com forecast a 0.6 percent decline to Honolulu's median home price. Instead, the median rose 2.1 percent that year.

Economy.com produced the recent forecast for Forbes, which reported the 25 best and worst markets and when those markets could expect to see prices bottom out. The price drops in the forecast are the difference between the second quarter of 2008 and the projected bottom, which for some cities was sooner than 2011.