California Home Sales a Mixed Bag

Wall Street Journal article:

In California, San Diego and Sacramento both have become much more affordable, she says. Ms. Kahn also thinks prospects are relatively good in Denver; Raleigh, N.C.; San Jose, Calif.; and the Texas cities of Austin and San Antonio—areas that generally avoided the housing bubble and so don’t have as much need to adjust.

Thomas Lawler, an independent housing economist in Leesburg, Va., says areas that seem to be nearing stability include San Diego, Sacramento, Minneapolis, Boston and the Virginia suburbs of Washington.

Among metro areas that “still have a long road to recovery” are Detroit, Phoenix, Las Vegas, Miami-Fort Lauderdale and Chicago, says Ms. Kahn. Mr. Lawler includes New York, Seattle and Portland, among others, in this category. Problems in these areas include high unemployment and large numbers of vacant homes.

Of course, there are lots of variations within metro areas. The most appealing neighborhoods, offering short commutes and good schools, may vastly outperform marginal areas that thrived during the boom.

The job market outlook is a major wild card for those seeking to divine the direction of house prices. Looking ahead one year, Moody’s Economy.com sees the metro areas of Washington, Minneapolis, Houston and Dallas among those likely to have unemployment rates below the national average. Those expected to be above the national average include Detroit, Las Vegas, Los Angeles, Miami, Orlando, Sacramento and Portland, Ore.

Unemployment may be the most important factor in assessing a metro area’s housing-market prospects, says Mark Zandi, chief economist at Moody’s Economy.com. “If people don’t have jobs or fear losing their jobs ,then buying homes is out of the question,” he says.